Uganda WT/TPR/S/93
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) INSTITUTIONAL FRAMEWORK
1. The Republic of Uganda became independent on 9 October 1962.  A new Constitution was
promulgated on 8 October 1995 after it was drafted by an interim 284-member Constituent Assembly.
The 1995 Constitution calls for a parliamentary regime with separation of powers among the
executive, legislative, and judicial bodies.
2. The Constitution provides for election of Uganda's President by direct, universal suffrage for
a five-year term, renewable once.1  The President serves as head of State, head of Government, and
Commander-in-Chief.2  The President, with the approval of a majority of Parliament, appoints the
Vice-President.3  The Cabinet consists of the President, the Vice-President, and Cabinet Ministers,
appointed by the President, with the approval of Parliament.4  The second direct election for President
since independence in 1962 was held on March 12, 2001.
3. The unicameral National Parliament has 293 members;  215 are directly elected.  The
remainder are filled by specific categories:  fifty-three district women representatives, ten
representatives of the army, five representatives of disabled citizens, one young female representative,
four young representatives at regional level (one each region), and five trade union representatives.Parliamentary elections were last held in June 2001.  The Parliament has three types of committee:
Standing, Sessional, and Select, each with responsibility for a particular subject matter.  The
Vice-President or a minister cannot be a member of a Standing or Sessional Committee, and a
member of Parliament cannot be a member of more than one Standing Committee.  Parliament has a
Speaker and a Deputy Speaker who are elected by members of Parliament from among their number.
4. Uganda has a four-level judiciary:  the Suprem e Court, the Court of Appeal, the High Court
and subordinate courts.  The President, with advice from the Judicial Service Commission andapproval of Parliament, appoints the Chief Justice (head of the Supreme Court), the Deputy Chief
Justice (head of the Court of Appeal), and the Princi pal Judge (head of the High Court), as well as the
Justices of the Supreme Court, the Justices of Appeal, and the Judges of the High Court.
5  A
commercial court, department of the High Court, handles issues of a commercial nature, including
trade matters.  There is also a tax appeal tribunal under the Ministry of Finance, Planning andEconomic Development (MFPED).
5. Uganda is divided into 56 administrative districts.  The districts are governed by District
Councils, which are vested with legislative and executive powers in areas that are not expressly
reserved to the national government.
6  Among the powers of District Councils, derived from the Local
Government Act, is the right to levy and appropriate fees, including a trade licensing fee, which mayvary from one district to another.  Election to the District Councils is by universal adult suffrage, and
members serve four-year terms.
                                                     
1 Articles 103 and 105 Constitution of the Republic of Uganda.
2 Article 98 Constitution of the Republic of Uganda.
3 Article 108 Constitution of the Republic of Uganda.
4 Article 111 (1) Constitution of the Republic of Uganda.
5 Article 142 Constitution of the Republic of Uganda.
6 Article 189 (3) of the Constitution provides that "District Councils have responsibility for any
functions and services not specified in the Sixth Schedule to this Constitution."WT/TPR/S/93 Trade Policy Review
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(2) FORMULATION AND IMPLEMENTATION OF POLICIES
6. The other members of the Cabinet aid and advise the President on the formulation of national
policies.  New legislation is generally initiated by the responsible ministry, which submits an outline
of the proposal to Cabinet for approval in principle.  A bill is then drafted by the Ministry of Justice in
collaboration with the Ministry concerned, returned to Cabinet, and after approval, published in the
Government Gazette  and introduced in Parliament.  Parliament debates and adopts the bill in three
readings, and submits it to the President for assent.
7. The Ministry of Tourism, Trade and Industry (MTTI) is in charge of making
recommendations to Cabinet on trade policy formulation.  Other ministries and agencies involved
with trade policy formulation include:  the MFPED;  Justice and Constitutional Affairs;  Agriculture,
Animal Industry and Fisheries;  Works, H ousing and Communications;  Water, Lands and
Environment;  the Bank of Uganda;  the Capital Markets Authority;  and the Uganda Investment
Authority.  Proposals for tariffs and tax changes originate in the MFPED.
8. Trade policy implementation is primarily the responsibility of the MTTI and agencies
established under the Ministry, such as the Uganda Export Promotion Board (UEBP) and the Uganda
National Bureau of Standards (UNBS).  The MFPE D and its agencies (mainly the Uganda Revenue
Authority) play an important role in the implementation of border measures and related trade policy
instruments.  The Uganda Coffee Development Authority and the Cotton Development Organization
have responsibility in their specific areas.  The mi nistries mentioned above, as well as the Ministry of
Foreign Affairs, also have a role in the implementation of trade policy.
9. According to the authorities, periodic reviews and assessments of trade-related policies are
carried out within the Government by the Presidential Economic Policy Forum, the MFPED, other
relevant ministries, and government departments.  Outside of government, similar assessments are
carried out by the Economic Policy Research Centre at Makerere University as well as other private
sector associations such as the Private Sector  Foundation, the Uganda Manufacturers' Association
(UMA)7, the National Chamber of Commerce and Industry, the Uganda General Importers and
Exporters Association, Uganda National Farmers As sociation, and the Uganda Small Scale Industries
Association.  The Government and private sector consult at meetings, workshops, and other fora on
trade-related issues.  Two parliamentary sessional committees, one on economy and one on trade, also
participate in reviews of trade policy.
10. The Constitution is the supreme law, followed in importance by Statutes of Parliament and
subsidiary legislation.  The President or a person he delegates, may sign international treaties.
Treaties are not self-ratifying;  if treaties require changes in the Constitution, Parliament must ratify;if not, Cabinet can ratify.  The WTO Agreements were ratified by Cabinet.
(3) P
OLICY OBJECTIVES
11. As was the case in 1995, Uganda's trade policies are defined in the context of its overall
economic development strategy.  After more than a decade of economic stagnation, the Government
of Uganda adopted an Economic Recovery Progra m (ERP) in 1987.  The focus of the ERP shifted in
the late 1980s and early 1990s from economic growth and macroeconomic stabilization, to structural
reforms.  Following a consultative conference organi zed by the Government to discuss the state of the
                                                     
7 The Uganda Manufacturers' Association, established in 1988, is the umbrella organization
representing Uganda's 250 or so manufacturing firms.  The Association is funded exclusively by its members,and is formally independent of the Government.Uganda WT/TPR/S/93
Page 17
economy8, foreign trade has been viewed as an engine of economic growth.  There was an
intensification of export promotion efforts between 1995 and 2000.
12. Uganda's trade policies are aimed at poverty reduction, promoting employment, economic
growth, and export diversification and promotion (particularly non-traditional exports).9  Vertical
diversification will be achieved through further processing of primary export products.  Incentive
schemes (e.g. duty and tax concessions) are available to producers and exporters to improve thecompetitiveness of local products (section (4) below, and Chapter III(2)(e), (3)(iv), and (4)(i)).  Trade
among developing countries will be promoted through regional integration (e.g. Common Market for
Eastern and Southern Africa, and the new East African Community).  The Government intends to
fully exploit non-reciprocal preferential treatment available to developing countries under, inter alia,
the U.S. African Growth and Opportunity Act (AGOA) and the EU-ACP Cotonou Agreement.
13. A deregulation programme has been launched to dismantle "unnecessary" licensing and
regulatory procedures.  Productivity will be enhanced through further trade liberalization.  The
privatization programme will be pursued, and the Uganda Investment Authority, the Uganda Export
Promotion Board, and the Uganda Tourism Board are being merged, with a view to promoting trade
and private investment.  The Uganda Development Bank has been restructured to boost long-termcredits.  For transparency purposes, discretionary powers given to the Finance Minister to remit
import duties have been abolished, and the Government is committed to reforming the Commercial
Justice System.
14. Areas earmarked as having potential for further processing (i.e. value addition) for exports
include:  coffee, cotton, textiles, tea, fish, beef, hides and skins, and horticultural products.  An
Information and Communications Technology (ICT) policy is being formulated to promote ICT
services.
10
15. The Government intends to improve Uganda's trade-related capacity.  As such, the
Government has worked within the Integrated Fr amework and with donor countries to benefit from
trade-related technical assistance.
(4) LAWS AND REGULATIONS
16. Ugandan legislation related to international trade is contained in various statutes (Table II.1).
Few changes in trade-related legislation have occurred since Uganda's last TPR in 1995.  There are
initial drafts in the following areas:  competition law, anti-dumping, trade licensing, sale of goods and
supply of services, consumer protection, special economic zones (e.g., export-promotion zones and
manufacturing under bond) and cooperatives.
17. Investment in Uganda is governed by a variet y of laws, including the Investment Code, the
Income Tax Act, and the Land Act.
                                                     
8 See World Bank (2001) for details.
9 Ministry of Tourism, Trade and Industry (2000a), pp. 10-11.
10 Ministry of Finance, Planning and Economic Development (2001a).WT/TPR/S/93 Trade Policy Review
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Table II.1
Basic trade-related legislation in Uganda
Area Legislation Date of issuance
Customs procedures Customs and Excise Management Act 1970
East African Customs Regulations 1970
Customs tariffs Finance Statute 1994 (Fourth Schedule) 1994
Customs Tariff Act 1970
Levies and charges Value-added Tax Act ..
Excise Tariff Act 1964
Income Tax .. 1997
Import and export controls External Trade Act 1964
Finance Statutes 1989, 1991, 1993
Exchange Control Act 1964
Standards and regulations Uganda National Bureau of Standards Act 1983
Food and Drugs Act 1964
Public Health Act 1964
Agricultural Chemicals Regulations 1993
Control of Agro-chemicals Statue 1989
Government procurement Public Finance (Tender Board) Regulations 1977
Government Central Purchasing Corporation Statute 1990
Rules of origin Common Market for Eastern and Southern Africa
(Implementation) Bill1995
Anti-dumping, countervailing and
safeguard measuresCustoms (dumping and subsidies rates) Act 1964
Customs (dumping and subsidies) Act 1970
Export Promotion Uganda Export Promotion Council Act 1983
Competition policy and privatization Public Enterprise Reform and Divestiture Statute 1993
Sectoral development Uganda Coffee Development Authority Statute 1991
National Agricultural Research Organization Statute 1992
Cotton Development Organization Statute 1994
Capital Markets Authority Statute No. 1 1996
Insurance Statute No. 6 1996
Communications Statute No. 8 1997
Financial Institutions Statute No. 4 1993
Financial Institutions Revised Statutory Instrument No. 48 1999
Bank of Uganda Statute No. 5 1993
Land Statute No. 6 1998
Research and development Uganda National Council for Science and Technology
Statute1990
Intellectual property Patents Statute 1991
Trade Marks Act 1964
Copyright Act 1964
Foreign Investment Investment Code 1991
.. Not available.
Source: Information provided by the Ugandan authorities.
18. Uganda has undertaken significant efforts to encourage foreign direct investment.  In 1987,
the Government began implementing economic reforms, which, coupled with political stability, havecontributed to increased economic growth and macroeconomic stability.  Most economic activitiesUganda WT/TPR/S/93
Page 19
have been liberalized and are open to foreign investment.  Apart from areas under state monopolies,
there are no restrictions on 100% foreign ownership of investments, and there are no barriers to
remittance of dividends.  The Constitution provides that land in Uganda belongs to the people of
Uganda.11  Nonetheless, the Land Act of 1998 provides for the availability of land to foreign investors
under leasehold.  In addition, investors can purchase and own land for commercial, industrial,
agricultural, and residential purposes.  Such land is described in three categories:  (a) land purchasedby Uganda Investment Authority (UIA) and allocated as leasehold or freehold tenure;  (b) land
belonging to ministries and town councils under freehold (for Ugandans only) and leasehold;  and
(c) government-held land.
19. In 1991, Parliament created the UIA to promote and facilitate investment in Uganda, market
Uganda's investment opportunities to targeted investors worldwide, coordinate the nationalinvestment-marketing programme, and monitor interna tional investment flows.  UIA also advises the
Government on investment policies.
20. The Investment Code and the Income Tax Act provide for certain investment incentives,
including:  a uniform corporate tax rate of 30%;  import duty exemptions/concessions for plant and
machinery;  duty drawback facility for exporters;  special investment allowance (accelerateddepreciation) of 50-75% on plant and machinery;  100% initial allowance for training, scientific
research, and mineral exploration expenditures;  and value-added tax (VAT) deferral facilities.
21. UIA is intended as a "one-stop-facilitator" for investors.  Depending on the project, a new
investor may be required to complete a series of steps before being eligible to operate in Uganda.
Table II.2 shows the most relevant steps.
Table II.2
Steps towards eligibility to operate in Uganda
Action Agency
Step 1 Registration of company Registrar General, Uganda Registration Services Bureau
Step 2 Investment licence Uganda Investment Authority
Step 3 Work permit Department of Immigration, Ministry of Internal Affairs
Step 4 Secondary licences, permits, and/or clearances where
necessary.  Required for investments in mining, air
transport, fisheries, banking, forestry, telecommunications,
and pharmaceutical activitiesRelevant agency
Step 5 Obtain land Land Development Division, UIA
Step 6 Building plan approval Local authorities
Step 7 Trading licence Local authorities
Step 8 Environmental clearance National Environmental Management Authority
Step 9 Health and safety clearance Department of Occupational Safety and Health
Step 10 Utilities:
      electricity
      water and sewer
      telecommunicationsUganda Electricity Board
National Water and Sewerage Corporation
Uganda Telecom Limited
Step 11 Register with Uganda Revenue Authority Uganda Revenue Authority;  Internal Revenue
Department
Step 12 Product certification Uganda National Bureau of Standards
Source : Uganda Investment Authority, November 2000.
                                                     
11 Article 237, Constitution of the Republic of Uganda.WT/TPR/S/93 Trade Policy Review
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22. UIA is responsible for issuing licences to investors;  the licensing system is under review.
The licence form is purchased from UIA for a fee of U Sh 1,500.  UIA evaluates each proposed
investment project, and issues the licence within three days at no cost.  Foreign investors are required
to submit investment proposals indicating their in tention to invest a minimum of US$100,000 in order
to obtain a licence;  for local investors (defined as a company in which the local partner holds more
than 50% of the shares), the minimum capital requirement is US$50,000.
23. An entity must be registered as a business in Uganda before it can apply for and obtain an
investment license.  To register a business (as a domestic company), the investor must submit an
application to reserve a name with the Office of the Registrar General together with the Articles and
Memorandum of Association.  After stamp duties and other fees are assessed by the Registrar General
and paid to the Ministry of Justice, a Certificate of Incorporation is issued.  The costs to register abusiness consist of:  (a) a stamp duty of 0.5% of the nominal capital of the company;  (b) a filing and
adjudication fee of U Sh 410;  and (c) a statutory stamp duty of U Sh 23,000.  An additional fee of
U Sh 2000 is payable for the Certificate of Registration.
24. The procedure for registering a foreign company in Uganda differs from the procedure
applicable to domestic companies.  In order to re gister a foreign company, the applicant must submit
an English-language certified copy of the document constituting the company;  a list of the directors
and the secretary;  and a "statement of subsisting charges", such as mortgages, and the name and
address of a person in Uganda authorized to receive service on behalf of the company.  The
registration fee is US$470.
25. Currently there are no free-trade zones or free ports in Uganda, but there is a temporary
Manufacturing Under Bond facility.  An industrial and business park, the Kampala Industrial and
Business Park (KIBP), at Namanve is scheduled to be ready for investors in January 2002.  Thefarmers' compensation, which delayed issuance of a land title to UIA has been resolved and UIA is in
the process of obtaining a freehold title.  A private developer has been selected by competitive
bidding, and a concession agreement is to be implemented so that Namanve Management and
Development Company can be formed.  Parliament has already approved formation of the company.
A draft Multi-facility Economic Zone Law has been written.
(5) T
RADE AND INVESTMENT AGREEMENTS AND ARRANGEMENTS
26. Uganda has been an active participant in the WTO and is a proponent of the multilateral
trading system.  It also participates in various economic groupings and regional agreements.  In
particular, it is a member of both the East African Community (EAC) and the Common Market for
Eastern and Southern Africa (COMESA).
27. Uganda is not currently involved, either as a complainant or as a defendant, in any trade
dispute, either at the WTO or any regional organization.
(i) Multilateral agreements
28. On 29 September 1994, Uganda ratified the Marrakesh Agreement to become an original
Member of the World Trade Organization (WTO).  Under the Single Undertaking, all WTOMultilateral Agreements became binding on Uganda .  Uganda is not a member of any plurilateral
trade agreement.  Uganda grants at least most-favoured-nation (MFN) treatment to all its trading
partners.Uganda WT/TPR/S/93
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29. As a least developed country, Uganda benefits from a transition period to implement a
number of its commitments under various WTO Agreements.  Table II.3 shows Uganda's status in
relation to notification requirements under  the WTO Agreements as of January 2001.
Table II.3
Status of selected notification requirements to the WTO, 1995 to January 2001
WTO Agreement Description of requirement Periodicity Most recent notification
Agreement on Agriculture
(Art. 18.2)Domestic support Annual G/AG/N/UGA/2
13 November 2000
Agreement on Agriculture
(Art. 10 and 18.2)Export subsidies Annual G/AG/N/UGA/1
13 November 2000
Agreement on Implementation
of Article VI of the GATT 1994
(Art. 18.5)Laws and regulations Once, then changes G/ADP/N/1/UGA/2
20 September 1996
Agreement on Implementation
of Article VI of the GATT 1994
(Art. 16.4)Anti-dumping actions taken Semi-annual G/ADP/N/53/Add.1/Rev.2
25 October 2000
Agreement on Implementation
of Article VI of the GATT 1994
(Art. 16.5)Competent authority Once, then changes G/ADP/N/14/Add.5
Agreement on Subsidies and
Countervailing Measures
(Art. 32.6)Laws and regulations Once, then changes G/SCM/N/1/UGA/2
20 September 1996
Agreement on Subsidies andCountervailing Measures
(Art. 25.11)Countervailing duty actions taken Semi-annual G/SCM/N/56/Add.1/Rev.1
26 October 2000
Agreement on Subsidies and
Countervailing Measures
(Art. 25.1) GATT 1994
(Art. XVI:1)Specific subsidies Annual G/SCM/N/38/UGA
13 November 2000
Agreement on Safeguard(Art. 12.6)Laws and regulations Once, then changes G/SG/N/1/UGA/1
20 September 1996
Agreement on Import Licensing(Art. 1.4(a) and 8.2(b))Laws and regulations Once, then changes G/LIC/N/1/UGA/1
3 October 1996
Agreement on Import Licensing
(Art. 7.3)Questionnaire on Import
LicensingAnnual G/LIC/N/3/UGA/1/Add.1
1 December 2000
Agreement on Preshipment
Inspection (Art. 5)Laws and regulations bringing the
agreement into forceOnce, then changes G/PSI/N/1/Add.4
9 October 1996
Agreement on Rules of Origin(Art. 5 and Annex II.4)Preferential and non-preferential
rules of originUpon entry into force G/RO/N/13
19 November 1996
Agreement on Sanitary and
Phytosanitary MeasuresMeasures taken Ad hoc G/SPS/N/UGA/1
8 January 1999 andG/SPS/N/UGA/1/Corr.1
20 April 1999
Agreement on Technical Barriers
to Trade (Art. 15.2)Laws and regulations Once upon entry into force G/TBT/2/Add.23
8 October 1996
Agreement on Technical Barriers
to Trade (Annex 3C)Acceptance of code Once, then changes G/TBT/CS/N/81
6 October 1997
Agreement on Technical Barriersto Trade (Art. 10.7)Technical regulations Ad hoc G/TBT/10.7/N/19
27 January 1999
Committee on Trade and
Development-1979 Decision on
Differential and More
Favourable Treatment,Reciprocity and Fuller
Participation of Developing
Countries (the Enabling Clause)Treaty for the Establishment of
the East African CommunityAd hoc WT/COMTD/N/14
11 October 2000
Table II.3 (cont'd)WT/TPR/S/93 Trade Policy Review
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WTO Agreement Description of requirement Periodicity Most recent notification
GATT 1994 (Art. 17(4)(a)) State trading activities Annual G/STR/N/4/UGA
13 November 2000
GATT 1994 (Art. VII) Delayed application under the
Customs Valuation AgreementOnce, then changes WT/Let/108
23 September 1996
GATT Council for Trade in
Goods (G/L/59)Non-tariff measures Every two years G/MA/NTM/QR/1/Add.7
16 June 2000
GATS (Art. III:4) Enquiry points Once, then changes S/ENQ/21/Rev.1
3 February 1998
TRIMs (Art. 5.1) Non-conformity of domestic
legislationUpon entry into force, then
changesG/TRIMs/N/1/UGA/1
7 July 1997
TRIMs (Art. 6.2) Publications in which TRIMs
may be foundOnce, then changes G/TRIMs/N/2/Rev.1
28 July 1997
TRIPS (Art. 63.2) Laws and regulations Once, then changes IP/N/1/UGA/2
27 November 2000
Source: WTO documents.
30. Ugandan officials continue the process of preparing legislation and regulations consistent
with various WTO obligations (Chapter III).  Technical assistance is viewed to be essential for
Uganda to come into full compliance with its WTO obligations.
(ii) Trade-related technical assistance
31. Uganda has benefited from regular WTO technical assistance, as well as from the Joint
Integrated Technical Assistance Programme (JITAP) which is delivered by ITC, UNCTAD and the
WTO.12  Activities have also taken place under the Integrated Framework for Trade-Related
Technical Assistance to Least-Developed Countries (IF), which is jointly managed by the six
multilateral institutions – IMF, IT C, UNCTAD, UNDP, World Bank, and WTO.  Technical assistance
activities that have been delivered by the WTO Secretariat, including those delivered under JITAP,
since 1998 are listed in Table AII.1.
(a) Needs for trade-related technical assistance
32. Uganda's needs for trade-related technical assistance were first assessed in 1996 in the context
of JITAP.13  Additional needs, that were more broadly defined, were identified in 1997 within the
context of the IF.14  At a Round Table Meeting, organized at  the time of the High-Level Meeting on
Integrated Initiative for Least-Developed Countries in October 1997, Uganda discussed its needs
assessment with the six core agencies responsible for the IF.15  On the basis of its needs assessment,
Uganda prepared a multi-year programme for trade-related technical assistance.16  The programme
was endorsed by the Government and donors at a World Bank sponsored Consultative Group (CG)
meeting in December 1998.  At the subsequent Consultative Group meeting in March 2000, the
Government presented a progress report on the implementation of the multi-year programme, together
with additional technical assistance needs.
                                                     
12 JITAP is currently implemented in eight African countries, including Uganda. A budget of
US$1.49 million has been allocated and used for JITAP activities in Uganda since 1998.
13 WTO document WT/COMTD/IF/10, 10 December 1997.
14 WT/LDC/HL/12/Add.10, 27 October 1997, and WT/COMTD/IF/10, 10 December 1997.
15 The note of the Round Table meeting is contained in WT/LDC/HL/M/1/Add.1, 18 December 1997.
16 The programme, entitled "Integrated Framework for Trade-Related Technical Assistance Paper",
October, is available online at:  http://www.ldcs.org/uganda/uganyear.htm.Uganda WT/TPR/S/93
Page 23
33. Uganda's needs can be classified into two categories.  The first category concerns the
adoption of laws and regulations relating to the WTO and regional trade agreements, and human and
institutional capacity-building for effective participation in these arrangements (A.1 to A.4 in
Table AII.1).  The JITAP should help Uganda achieve these objectives, through its Programme
Clusters 2 to 9.17  The JITAP has contributed to enhancing understanding of multilateral trading
system issues and to capacity development.18  In particular, assistance provided in areas such as
customs (Cluster 3), Reference Centres (Cluster 5) and training of trainers (Cluster 8) has had visible
results.  Furthermore, Uganda has benefited from participating in a number of regional seminars
organized by the WTO to increase understanding of the WTO Agreements.
34. The second category relates to Uganda's supply-side needs, identified as one of the major
obstacles to trade expansion.  Uganda's supply constraints include, inter alia , poor physical
infrastructure (e.g. roads, railways), unreliable public utilities (e.g. power, water,
telecommunications), low level of education and skills, poor technological research base, weak export
institutional framework, market access problems, limited access to trade finance and market
information, and cumbersome customs procedures (B .1 to B.3 in Table AII.1).  These obstacles have
hindered Uganda from expanding trade and from attracting foreign direct investment.19  JI TAP h as
provided assistance with a view to overcoming some of those constraints to the expansion of Uganda's
trade.  However, its achievement has been less significant, except in the area of quality management
and standards (Cluster 15).  This could be improved if the JITAP were further mainstreamed into
Uganda's trade-policy-making process.20  Furthermore, to address Uganda's infrastructure bottlenecks,
the Government, together with development partners, has undertaken projects, including the 10-Year
Road Sector Development Programme (R SDP) with a budget of US$1.5 billion.21  In addition, a
number of reform measures have been implemented in the transport sector (railways, air transport)and public utilities (power, water, telecommunications) through greater participation of the privatesector in management and operation (Chapter IV(3) and (5)).
(b) Mainstreaming trade into Uganda's development framework
35. The IF emphasizes the importance of mainstreaming a country's trade priorities into its
national development plan or poverty reduction strategy.  In order for trade to foster pro-poor
economic growth, mainstreaming needs to be achieved  at three levels:  policy, institutional, and
Government-donor partnership.  Generally, there is lack of a coordinated and integrated approach to
trade and development in the national policy framework in Uganda, although some steps have been
taken for improvement, including through the Integrated Framework.
Mainstreaming at the policy level
36. The Poverty Eradication Action Plan (PEAP) defines Uganda's national framework, which
has guided the Government's development efforts si nce 1997.  The PEAP recognizes the role of trade
in poverty reduction, stating that "economic growth requires structural transformation in the context
                                                     
17 JITAP Cluster 1 concerns the integrated progamme management and headquarters-based technical
inputs.
18 Haefliger, Hans, Mandeep Kaur Grewal, Henri-Bernard Solignac Lecomte and Leelananda De Silva
(2000).
19 See for instance, United Nations and International Chamber of Commerce (2001).
20 Haefliger et al (2000).
21 The Programme also includes institutional reforms and capacity-building activities, which are to be
implemented over the 1996/97-2005/06 period.WT/TPR/S/93 Trade Policy Review
Page 24
of economic openness".22  The implementation of the PEAP rests on the Medium-Term Expenditure
Framework (MTEF) and a number of sector-wide programmes, such as the RSDP, the Program for
Modernisation of Agriculture (PMA) and th e Medium-Term Strategy for Private Sector
Competitiveness (MTSC).  Short-term trade policy goals, such as the removal and rationalization of
trade barriers, and tariff reduction, are taken up in the context of the annual budgetary circle, led by
the MFPED, on the basis of the priorities identified in the MTEF.  Those medium- and long-termtrade policy objectives are reflected in the MTSC.
37. The MTSC focuses on the creation of an "enabling environment for the private sector
growth".  Trade policy objectives in the MTSC c ontext therefore relate to a number of supply-side
issues, which go beyond trade matters, and include infrastructure provision (electricity,
communication, roads);  the financial sector;  commercial justice sector;  and institutional reform.Trade-specific measures that have been proposed fo r action in the MTSC include: clarification of the
mandates of export promotion agencies;  review of the tax structure;  strengthening of the drawback
scheme;  enhancement of the Regional Trade Facilitation Scheme;  Reform of the Export Refinancing
Scheme;  and reform of the legislation governing the quality of exports.  Implementation of the
measures is led by the MFPED, in collaboration with the MTTI.
Mainstreaming at the institutional level
38. A study by the Economic Policy Research Centre (EPRC) has reported that none of Uganda's
various institutions dealing with trade policy, including the MTTI, has sufficient capacity to manage
trade arrangements effectively or to implement the necessary reforms.  As a result, trade policy in
Uganda is fragmented and, in most cases, uncoordinated.
23  The MFPED plays a key role in the
formulation and implementation of trade policies, through successive budgets in which tariffs have
been reduced, the customs valuation method was adopted, and preshipment inspection wasabolished.
24  The MTTI is often marginalized in the critical aspects of trade policy development.25
This is partly due to the lack of adequate qualified staff and resources at the MTTI to carry out itsfunction in trade strategy formulation and trade negotiations.  According to the Ministry, it has little
capacity to manage obligations and rights resulting from the bilateral, regional, and multilateral trade
agreements to which Uganda is a signatory.  Similarly, statutory institutions affiliated to the MTTI(i.e. UEPB, UNBS, Uganda Wildlife Authority,  UTB) are poorly equipped to carry out their
functions.
26  In this regard, the Government's recent decision to merge UIA, UEPB and UTB may be
regarded as a positive development in rationalizing and enhancing Uganda's trade-policy-making
process, although the Government is yet to deci de which Ministry has oversight over the newly
created agency.27
                                                     
22 The PEAP recognizes that poverty is a multi-dimensional problem.  Its four pillars are:  (i) creating
an enabling environment for rapid and sustainable economic growth and structural transformation;(ii) strengthening good governance and security;  (iii) actions which directly increase the ability of the poor to
raise their incomes;  and, (iv) actions which directly improve the quality of life of the poor.
23 MTTI (2000), "National Experience in Globalisation and Trade Policy", a paper presented at the
Regional Workshop "African and the World Trade Order: Strengthening Africa's Participation in the WTO",Nairobi, 6-7 December 2000.
24 It is also important to note that the MFPED, together with the Bank of Uganda, has the main
responsibility for dealing with the IMF and the World Bank, whose programmes essentially drive trade-policyreform in Uganda.
25 Haefliger et al (2000).
26 MTTI (1998).
27 The European Commission is currently undertaking an identification study of Uganda's capacity
needs to support the challenges of globalization, with a particular focus on the institutional framework for tradepolicy, within the MTCS framework.  The study is expected to be completed by December 2001.Uganda WT/TPR/S/93
Page 25
Mainstreaming at the Government-donor partnership level
39. The Government's policy priority setting and budget allocation, as well as donor's
assistance28, are guided by the PEAP, coordinated by the MFPED.  As donor assistance accounts for
some 48% of Uganda's public expenditure29, donors are involved in prioritizing expenditure across
sectors.30  The World Bank sponsored CG meetings pr ovide a forum for such dialogue between the
Government and donors.31  There are some 18 sectoral working groups, each comprising the
Government, civil society, and donors, which make recommendations on budget allocation to the
MFPED, based on their sectoral plans or strategies.  Currently, there is no sector-specific working
group on trade to discuss and coordinate trade activities, since no formal trade strategy exists.  The
MTCS Technical Working Group is the forum where trade matters and other economic issues are
discussed.  Moreover, the MTTI has made efforts to strengthen the Inter-Institutional Committee (IIC)on the WTO, established under the JITAP (Cluster 2), whose objective is to coordinate trade policy
matters.
32  However, the IIC has not been effective in meeting that objective (Table AII.1).
40. Due to the fragmented institutional structure dealing with trade matters, coordination among
development partners is yet to be achieved.  In addition to the JITAP partners, development partners
active in the trade area include: the Austrian De velopment Cooperation, the U.K. Department for
International Development (DFID);  the European Commission;  U.S. Agency for International
Development (USAID) through the Trade Capacity Building for the Private Sector Development
Project, the Competitive Private Enterprise and Trade Expansion (COMPETE), and the Investment in
Developing Export Agriculture (IDEA);  and the World Bank through the Private Sector
Competitiveness Programme (PSCP) (Table AII.1).  Donors' trade-related technical assistance is,
however, often channelled through different private and government agencies – and JITAP through
the MTTI (including UEPB and UNBS), and the other donors primarily through the MFPED,however, in collaboration with the Private Sector Foundation, the MTTI, and/or the Ministry of
Foreign Affairs in some cases.
33
                                                     
28 Volume 3 of the PEAP, entitled "Building partnerships to implement the PEAP", outlines a
Government plan for strengthening partnerships in the PEAP.
29 Public expenditure refers to the total of government and donor expenditures included in the Medium-
Term Expenditure Framework (MTEF).  The MTEF is a short-term plan for public expenditure, whichimplements the priorities of the PEAP.  The Government allocates resources through its budget on the basis ofthe MTEF.
30 For instance, Uganda's sectoral shares of budgeted expenditure, excluding donor projects, in 2001/02
are:  13.7% for security, 8.9% for road and works, 1.6% for agriculture, 26.3% for education, 8.4% for health,
6.1% for justice, law and order, 8.7% for economic function and social services, 19.1% public administration,and 7.2% for interest.  If donor's projects were included, these shares would be:  9.4%, 14.0%, 4.6%, 19.8%,9.1%, 4.4%, 20.2%, 13.6%, and 4.9%.
31 The CG meetings has taken place annually since 1998.  At the last Consultative Group meeting held
in May 2001, donors made pledges of US$900 million in assistance for the financial year 2001/2.
32 The IIC does not receive financing from national budgetary outlays, but largely depends on technical
cooperation resources.  Members of the IIC include:  seven officials from the MTTI;  two each from theMFPED, the Ministry of Agriculture and the Ministry of Justice;  one each from the Ministry of Foreign Affairs,the President Office – Economic Monitoring, URA, UIA, UEPB, UNBS, the Bank of Uganda, the Law ReformCommission, UTB, the National Agriculture Research Organisation, the Capital Market Authority, the NationalEnvironment MGT Authority, Makerere Business School, Makerere Law School, the Civil Aviation Authority,
the Law Development Centre, the Private Sector Foundation, the Uganda Manufacturers Association, the
Uganda Service Exporters Association, Deniva, the Uganda Law Society, Civil Society, and the Press.
33 According to the Mid-Term Review of the JITAP, its partnership with the MTTI has led to the
programme being outside of the current government initiatives on trade policy development, led by the MFPED(Haefliger et al, 2000).WT/TPR/S/93 Trade Policy Review
Page 26
(iii) Regional agreements
(a) Common Market for Eastern and Southern Africa (COMESA)
41. Uganda was a founding member of the Preferential Trade Area for Eastern and Southern
African States (PTA), which became COMESA in 1994.34  The COMESA Treaty superseded the
PTA.  Its agenda is to deepen and broaden the integration process among member States through:  the
adoption of more comprehensive trade liberalization measures, such as the complete elimination oftariff and non-tariff barriers to trade and the adoption of a Common External Tariff (CET);  the free
movement of capital, labour, goods, and right of establishment within COMESA;  the adoption of a
common set of standards and technical regulations, quality control procedures, certification schemes,
and sanitary and phytosanitary regulations;  the standardization of taxation rates (including value-
added tax and excise duties), and conditions regarding industrial cooperation, particularly on companylaws, intellectual property rights, and investment laws;  and the establishment of a Monetary Union.
35
42. COMESA is thus to be a customs and monetary union.  Its free-trade area (FTA) was
launched on 31 October 2000.  However, only nine of the twenty members, i.e. Djibouti, Egypt,
Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia, and Zimbabwe, met this deadline.  Other
members are to join the FTA by October 2001.  The Common External Tariff is to be implemented by2004;  the rates will be 0%, 5%, 15%, and 30%, on capital goods, raw materials, intermediate goods,
and final goods, respectively.
36
43. Under the COMESA Protocol on ru les of origin, goods are eligible for preferential treatment
if they are wholly produced in a member State;  contain imported materials of not more than 60% of
the c.i.f. value of the total cost of materials used in production;  contain not less than 35% ex-factory
value added37, or not less than 25% value added if the product is listed as being of "vital importance"
to the economic development of member States;  or are produced in member States and are/become
classified under a tariff heading other than the tariff heading under which they were imported.38  All
goods eligible for preferential tariff treatment must be accompanied by a COMESA Certificate of
Origin, completed, stamped, and authenticated by the authorized signatories in the country of origin.
44. In order to facilitate trade within the regi on, COMESA members have agreed to implement
the Automated System for Customs Data (ASYCUDA) and EUROTRACE.  The objective ofASYCUDA/EUROTRACE is to assist the business comm unity to clear goods faster through customs
areas, make available up-to-date and accurate international trade statistics, modernize customs
administrations and, through improved efficiencies, increase revenues.
39  Uganda uses
ASYCUDA/EUROTRACE.  In 1998, intra-COMESA trade amounted to some US$1.5 billion and
represented 7.7% of total exports by the member States, down from 9% in 1970.40
45. The Monetary Harmonization Programme is to be implemented in four phases, from 1992 to
2025.  The final phase should culminate in full monetary union, which will imply the use of
                                                     
34 The current COMESA members are Angola, Burundi, Comoros, Democratic Republic of Congo,
Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagas car, Malawi, Mauritius, Namibia, Rwanda, Seychelles,
Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.
35 COMESA online information.  Available at:  http://www.comesa.int/background.htm.
36 COMESA online information.  Available at:  http://www.comesa.int/finance.htm.
37 Egypt and Uganda still maintain (through a waiver) the 45% ex-factory value-added criterion, until
further notice.
38 COMESA online information.  Available at:  http://www.comesa.int/trade.htm.
39 COMESA online information.  Available at:  http://www.comesa.int/trade/tradaseu.htm.
40 Financial Times , 31 October 2000.Uganda WT/TPR/S/93
Page 27
irrevocable fixed exchange rates, a single currency, or parallel currencies;  full harmonization of
economic, fiscal, and monetary policies of member States;  full integration of the financial structure of
member States;  pooling of foreign resources;  and the establishment of a common monetary
authority.41
46. The COMESA Heads of State have established several institutions to assist members in
attaining their development objectives, including the Eastern and Southern African Trade andDevelopment Bank (PTA Bank);  the COMESA Clearing-House;  the PTA Reinsurance Company;
and the COMESA Bankers' Association.  The PTA Bank provides trade and project financing to
public and private investors domiciled in member States.  At present, the Bank has 15 members
including Uganda.
42
47. The COMESA Clearing-House was brought into existence when the countries of the region
had strict exchange control regimes in place and foreign exchange was scarce.  The importance of the
Clearing-House has diminished as most of the CO MESA countries have liberalized their foreign
exchange markets.43  The PTA Reinsurance Company (ZEP-RE), established in 1990, has
17 signatories and is aimed at fostering/assisting the development of the insurance and reinsurance
industry in the COMESA subregion, and promoting th e growth of national, subregional and regional
underwriting and retention capacity.44
48. The COMESA Treaty also provides for a Court of Justice.  The Court's primary function is to
uphold the rule of law in the operation of the Treaty by ensuring adherence to law in the interpretation
and application of the Treaty.  Its general jurisdiction is to adjudicate upon all matters that may be
referred to it under the Treaty.  The Court became operational in 1998.45
(b) East African Community
49. Kenya, Tanzania, and Uganda signed the Agreement establishing the Permanent Tripartite
Commission for East African Cooperation, currently  known as the East African Community (EAC),
on 30 November 1993.  The EAC Secretariat was established in March 1996 and has its headquarters
in Arusha, Tanzania.  The treaty establishing the EAC was signed on 30 November 1999, and came
into force on 30 November 2000.  The objectives of the EAC include harmonizing tariffs and customs
regimes, free movement of people, and improving regional infrastructure by the year 2000.Implementation of the free-trade area has been postponed;  implementation is now expected by
2004.
46  A preferential tariff is intended to prevail within the EAC and a common external tariff
(CET) is envisaged by 2004.
50. Since the cooperation agreement was signed, Kenya, Uganda, and Tanzania have attempted to
harmonize their fiscal and monetary policies;  they have signed a double taxation arrangement, whichalso provides for joint measures to prevent tax evasion.  Other achievements include pre- and
post-budget consultations among the Finance Ministers, synchronization of the budget day in the three
countries, regular consultations among the central banks, full convertibility of the three currencies,
cooperation in capital and securities regulation, and the creation of common internal passports.  In an
attempt to promote trade and investment, an East African Business Council has been established,drawing members from national private-sector organizations in the region.  Lawyers have also formed
                                                     
41 COMESA online information.  Available at:  http://www.comesa.int/finance.htm.
42 PTA Bank online information.  Available at:  http://www.ptabank.co.ke/mission.html.
43 COMESA online information.  Available at:  http://www.comesa.int/finance/econcch.htm.
44 PTA Reinsurance Co. online information.  Available at:  http://www.zep-re.com.
45 COMESA online information.  Available at:  http://www.comesa.int/court/courjuri.htm.
46 Financial Times  online, 19 March 2001.WT/TPR/S/93 Trade Policy Review
Page 28
their own forum, the East African Law Society.  A committee has been established to harmonize laws,
including trade laws of the three countries.  The EAC member countries are undertaking joint projects
in infrastructure.
51. In April 1998 a new draft treaty set out the steps to political federation, based on a report from
a meeting held in November 1997.  It will confer on the EAC recognition as a legal entity acting in
the common interest of member States.  Discussions on broadening the membership base, perhaps toinclude Rwanda, Burundi and, although less likely, the Democratic Republic of Congo, also will
continue, as will discussions among leaders about the relationship of the EA C with COMESA and the
Southern African Development Community (SADC).
(c) The Organization of African Unity
52. The Organization of African Unity (OAU) was founded in 1963 by 32 African nations to
promote unity and solidarity of member States.  An other 22 countries have since joined.  As an OAU
member, Uganda signed the Treaty establishing the African Economic Community (AEC) at Abuja,
Nigeria, in 1991.  The AEC Treaty came into force in May 1994 when the required number of
instruments of ratification were deposited with the Secretary General of the OAU/AEC.  The Treaty
provides the modalities for establishing the AEC, outlined in six stages, including the removal of tariffand non-tariff barriers to trade, and the creation of a pan-African free-trade area and customs union.
A commitment was also made to create an African Common Market (ACM), with a central bank and
a single currency over a period of 34 years.
47  The AEC has not, as yet, started to implement its
programme effectively.  In 2001, the OAU was replaced by the African Union.
(d) The Inter-governmental Authority for Development
53. The Inter-governmental Authority for Development (IGAD), formerly known as the
Inter-governmental Authority on Drought and Development, was formed in 1977.  Current memberStates are:  Djibouti, Eritrea, Ethiopia, Kenya, Sudan, and Uganda.  IGAD's initial aim was to combat
drought and desertification.  Its mandate has since been expanded to include new priority areas such
as economic cooperation, conflict prevention, resolution and management, and humanitarian affairs.
48
(iv) Bilateral agreements
54. The WTO Secretariat is not aware of any bilateral preferential trade agreements concluded by
Uganda.
(v) Other trade agreements or arrangements
55. Uganda is a signatory to the Cotonou Agreement (the successor agreement to the Lomé
Convention), which affords a group of 71 African, Caribbean, and Pacific (ACP) countries
preferential trade and aid links with the European Union (EU).  The current 20-year agreement wassigned in Cotonou, Benin, on 23 June 2000, and replaced the previous agreements signed in Lomé in
1975, 1979, 1984, and 1989.  The process of ratification of the Cotonou Agreement by Uganda is
under way.
56. Under the Cotonou Agreement, the EU grants n on-reciprocal trade preferences on imports of
products (other than those covered by the Comm on Agricultural Policy) originating from the ACP
countries, and provides special market access under "commodity protocols" for a few products
                                                     
47 OAU online information.  Available at:  http://www.oau-oua.org/document/documents/AEC.htm
48 OAU online information.  Available at: http://www.un.org/Depts/dpko/training/region5.htmUganda WT/TPR/S/93
Page 29
(bananas, beef and veal, and sugar).  The Cotonou Agreement abolishes Stabex, Sysmin, and the rum
protocol of the Lomé Conventions.  The curren t all-ACP non-reciprocal tariff preferences are
maintained until 31 December 2007;  they will be replaced with a set of Economic Partnership
Agreements (EPAs) starting in 2008.  These free-trad e agreements are expected to be reciprocal and
WTO-compatible;  they will be implemented over 10 to 12 years.49
57. Uganda also benefits from preferential tariff treatment granted by, inter alia , Australia,
Canada, the EU, Japan, New Zealand, Norway, Poland, the Slovak Republic, Switzerland, and the
United States, under the Generalized System of Preferences (GSP).  Uganda is not a signatory to the
Agreement on Global System of Trade Preferences (GSTP) concluded among developing countries.
58. Since January 2001, Uganda has been designat ed a beneficiary country under the African
Growth and Opportunity Act (AGOA) of the United States;  AGOA offers free access (withoutrestriction) to some 1,800 manufactured products originating from African countries.
59. On 26 February 2001, the EU General Affairs Council adopted the Everything-but-Arms
(EBA) amendment to its Generalized System of Preferences (GSP).  The new regulation is applicable
from 5 March 2001.  The EBA extends duty- and quota-free access to all products originating in the
least developed countries (LDCs), except for ar ms and ammunition.  The programme includes all
agricultural products, except fresh bananas, rice, and sugar.  Extension of the programme to these
three commodities will follow specific schedules:
- for fresh bananas, the EBA provides for full liberalization through reduction of the
EU 2001 tariff by 20% each year between 1 January 2002 and 1 January 2006;
- for rice, full liberalization will be phased in by gradually reducing the EU tariff to
zero between 1 September 2006 and 1 September 2009.  In the meantime, LDC rice
can enter duty free within the limits of a tariff quota.  The initial quantities of thequota shall be based on best LDC export levels to the EU in recent years, plus 15%.
The quota will grow by 15% every year;
- for sugar, full liberalization will be phased in between 1 July 2006 and 1 July 2009
through gradual reduction of the EU tariff to zero.  In the meantime, LDC raw sugar
can enter duty free within the limits of a tariff quota.  The quota will increase from74,185 tons (white-sugar equivalent) in  2001/02 to 197,355 tons in 2008/09.
50
60. In order to avoid unwarranted delays in the examination of possible disruptions to the EU
markets, whenever, in any given marketing year, imports into the EU from the LDCs of rice, sugar,
and bananas exceed, or are likely to exceed, imports in the previous marketing year by 25%, the EU
Commission will automatically examine whether conditions for application of safeguard measures inaccordance with the GSP regulations are met.
51
(vi) Investment agreements or arrangements
61. Uganda is a signatory to the Convention establishing the Multilateral Investment Guarantee
Agency (MIGA), and a member of the Internationa l Center for Settlement of Investment Disputes
(ICSID).
                                                     
49 Cotonou Agreement, Articles. 36 and 37.
50 Europa online information.  Available at:  http://europa.eu.int/comm/trade/miti/devel/eba4_sum.htm
51 Europa online information.  Available at:  http://europa.eu.int/comm/trade/miti/devel/eba4.htmWT/TPR/S/93 Trade Policy Review
Page 30
62. The principles that were embodied in the Lo mé Convention between the ACP States and the
European Union, and protected European investme nts in the ACP countries (Articles 260, 261, and
262 of the Convention), are continued in the Cotonou Agreement (Articles 75, 76, 77, and 78).
63. Uganda also has bilateral treaties for the promotion and protection of foreign investment with
Germany, Switzerland, the Netherlands, the Arab Re public of Egypt, Italy, the United Kingdom, and
South Africa.  Uganda also has bilateral investment  treaties for the avoidance of double taxation with
Denmark, Norway, Zambia, Italy, the Netherlands, Tanzania, Kenya, South Africa, and the United
Kingdom.