RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/93
21 November 2001
(01-5836)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
UGANDA
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Uganda is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Uganda.Uganda WT/TPR/G/93
Page 3
CONTENTS
Page
I. INTRODUCTION 5
II. ECONOMIC OUTLOOK 5
(i) Ugandan Economic Performance 5
(ii) Overall GDP Growth 6(iii) Foreign Investment 6
III. PUBLIC FINANCE 6
(i) Public Expenditure 6
(ii) Domestic Revenue Performance 6(iii) Expenditure Performance 6(iv) External Debt Issues 7
IV. SECTORAL PERFORMANCE 7
(i) Agriculture 7
(ii) Fisheries 7
(iii) Forestry 7
(iv) Manufacturing and Industry 7(v) Construction and Mining 8(vi) Services 8
V. UGANDA'S TRADE POLICIES 8
(i) Trade Policy Formulation and Implementation 9
(ii) Multilateral, Regional or Preferential Trading Agreements 9(iii) Bilateral Agreements 9
VI. UGANDA'S EXTERNAL TRADE RELATIONS 9
(i) Exports 9
(ii) Imports 10
(iii) Balance of Trade 10(iv) Uganda's Problems in the External Markets 10
VII. INVESTMENT POLICY 10VIII. UGANDA AND THE MULTILATERAL TRADING SYSTEM 10IX. IMPLEMENTATION OF THE WTO AGREEMENTS 11
(i) Schedule of Commitments 11
(ii) Notifications 11(iii) Implementation Process 11(iv) Law Reform Process 11(v) Uganda's Position in the Multilateral Trade Negotiations 11(vi) Technical Assistance 13
X. CONCLUSION 14Uganda WT/TPR/G/93
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I. INTRODUCTION
1. Since the last Trade Policy Review 1995 the Government of the Republic of Uganda has
continued with liberalization policy within the overall strategic framework of enhancing economic
growth and structural transformation with the private sector playing an important role as an engine of
growth while government provides an enabling environment.
2. The strengthening of economic growth and transformation are a prerequisite for poverty
eradication and have to be through identified strategic areas with high growth potential in which the
Government could have a comparative advantage and significantly increasing value added and market
share by increasing and diversifying agriculture and agro-industrial products.
3. For Uganda to continue to register higher growth rates and achieve economic transformation,
a number of existing weaknesses must be addressed.  Many of these have been identified under theMedium Term Competitiveness Strategy for Private Sector (MTCS) approved in August 2000 as a
government policy for five-year reform Agenda for Private Sector Development.  The MTCS outlines
strategies aimed at creating a favourable environment for increased private investment and savings,
and removing constraints that prevent the Ugandan private sector from being competitive globally.
4. The priority actions under the MTCS include:  (i) expansion of infrastructure and utilities,
thereby reducing costs of production, and access to markets as well as improving the quality of
services;  (ii) strengthening the financial sector and improving access to financial services;
(iii) reforming commercial justice;  (iv) improvement of:  efficiency and effectiveness of government
institutions in service delivery;  business environment for small and medium enterprises and
environment management;  (v) addressing human capital development;  and (vi) removing
impediments to export sector growth.
5. Despite the achievement Uganda has so far registered from its initial unfavourable position of
decline in investment and growth, by the end of th e 1990s, signs of slow down in the rate of growth
have set in.  The slowdown in real GDP growth ha s been partly due to drought and partly due to
deterioration in terms of trade, which demonstrates the high level of vulnerability of the economy to
both internal and external shocks.  It is estimated that in order to meet the poverty reduction target of
10% of the population by 2017, the economy must grow at an average of 7% or above.  Higher ratesof private investment both domestic and foreign will be needed to sustain rapid economic growth.
II. ECONOMIC OUTLOOK
1
(i) Ugandan Economic Performance
6. Uganda, like a number of Sub-Saharan African countries, has been adversely affected by the
decline in its terms of trade.  Uganda's terms of trade have fallen by 30% over the past two years as oilprices had risen by as much as 81% on an annual basis and the prices paid to coffee (the leading
foreign exchange earners) farmers have declined by more than 50%.  The impact of the terms of trade
shock has been to reduce growth in private inco mes, and thus reduced domestic consumption and
private investment growth both directly and throug h depreciation in the exchange rate, which in turn
makes imports more expensive in shillings terms. Uganda's coffee export earnings have fallen byUS$194 million over the past two years as a result of the fall in world prices since 1998/99, whilst the
exchange rate has depreciated by 22%.  In spite of these shocks, Uganda has achieved a creditable
level of GDP growth.  GDP grew by 4.7% in 1999/2000  in real terms and is projected to grow by 5%
in 2000/2001.
                                                     
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(ii) Overall GDP Growth
7. Although Uganda's terms of trade deteriorated in the last financial year 2000/2001 by 15%,
monetary GDP is projected to grow by 5.1% in real terms, while non-monetary GDP is projected to
grow by 4.9%, giving rise to an overall GDP growth rate of 5%.  The growth is expected to be higher
than that recorded in 1999/2000 because some non-coffee export sectors have displayed strong growth
as have some of the services sectors, notably electricity, telecommunications and construction andthere has been a rebound in food crop production.
(iii) Foreign Investment
8. Uganda has attracted increasing amounts of foreign direct investment (FDI) since the
beginning of the 1990s.  Between 1957 and 1993, Ug anda attracted an average of US$9 million of
FDI.  These flows have increased steadily since 1994 and peaked at US$210 million in 1998, andUS$222.1 million in 1999.  Uganda attracts more FDI than most other countries in the region,
although FDI is still small in relation to the ec onomy needs.  FDI is mainly in the manufacturing
sector about 52% over the period 1991-1998.
III. PUBLIC FINANCE
2
(i) Public Expenditure
9. Uganda, like in many other developing countries fiscal policy is a crucial tool of
macroeconomic management. Uganda uses this tool to limit the level of its borrowing from the
banking system to avoid the expansion of money supply and increase in inflation.  The scope for non-
bank financing Government deficit is very limited because the money and capital markets are not well
developed.
(ii) Domestic Revenue Performance
10. In the fiscal year 2000/001 the overall revenue performance was below target.  The ratio of
Uganda Revenue Authority (URA) revenue/GDP stag nated at 11.3%, the same level as 1999/2000.
Over all revenue, which includes non-URA revenue, were 11.5% of GDP down from 11.7%
(1999/2000).  This poor performance is largely attributed to the terms of trade shock and weakness in
some areas of tax administration.
(iii) Expenditure Performance
11. While Government is committed to demand management policies that exert firm control over
inflation through sound fiscal and monetary policies, the external shocks arising from the
deteriorating terms of trade have constrained real GDP growth that contributed to the poor domestic
revenue performance.
12. Within the overall macroeconomic framework, the total central government expenditure
increased by 11.7% in 2000/01 over 1999/00 in terms of GDP, spending increased from 21.6% to
22.4%.  Recurrent expenditure was U Sh 1,143.5 billion compared to U Sh 957.4 billion the previous
year, reflecting an increase of 19.4%.  Externally funded development expenditure was
U Sh 663.4 billion compared to U Sh 551.4 billion in 1999/00 while domestically funded
development expenditure was U Sh 338 billion compared to U Sh 262.9 billion the previous year.
                                                     
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(iv) External Debt Issues
13. Uganda's debt stock is currently estimated  at US$3.574 billion as of June 2001 while debt
service was US$145.5 million in 2000/2001.  However, debt services actually paid was much less
than this because of debt relief provided under HIPC and Enhanced HIPC Initiatives.  Uganda's HIPC
relief has more than doubled over the last three years, from US$45 million in 1998/99, the first year in
which Uganda was eligible for HIPC, to US$91 million in 2000/01.  As a result, Uganda's ratio ofdebt service to exports once relief is taken into account is less than half what it would be without
relief.
IV. SECTORAL PERFORMANCE
3
(i) Agriculture
14. Agriculture is a backbone of Uganda's economy accounting to approximately 40% of GDP
and 85% of export earnings.  80% of Uganda's population live in rural areas and depend heavily on
agricultural sector for their livelihood.  During the financial year 1999/2000 the agricultural sector
performed well and is expected to achieve real growth of 4.9%.  All its subsectors except the cash
crop subsector experienced positive growth.  Impressive performance was observed in monetary food
crop that registered real growth rates of 7.8%.  Cash crop production experienced a decline of 9.7%
due to poor performance of coffee and tobacco subsectors.
(ii) Fisheries
15. For the past two years, the fisheries subsector suffered setbacks as a result of the ban on
export to the European Union that lasted 18 months beginning March 1999.  This ban resulted in an
estimated loss of US$30 million of exports.  Following the lifting of the ban and coming to an end of
worries about fish poisoning, exports have recovered and are projected to reach US$27.83 million this
year.
(iii) Forestry
16. The demand for forestry products (timber, poles, fuel wood and charcoal) increased during
last financial year.  This is in line with the economy especially in construction and expansion of the
supply of electricity as well as growth in population.  Growth in the subsector is estimated at 7.8%
during this year.
(iv) Manufacturing and Industry
17. Growth in the manufacturing sector has remained low due to worsening terms of trade.
Uganda's manufacturing sector provides goods for the domestic market but relies heavily on imported
inputs and real exchange rate depreciation squeezes profitability in the sector.  This makes the sector
uncompetitive internationally.
18. There has been a downward trend in industrial growth for the last three years.  The biggest
sub-group that includes manufacturing of beer and spirits, saw milling, iron and steel production and
soap grew by 6% compared to an average of 9.5% recorded in previous five years.  The strongest
contribution to growth in 2000/01 came from suga r production.  Food manufacture, which includes
mainly fish, meat, tea processing, vegetable and oil production, grew by 4.3%, slightly lower than the
previous year.
                                                     
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(v) Construction and Mining
19. Growth in construction continues to be robust, with growth of 5.8% recorded in 2000/01.  The
growth has been registered in public road construc tion and private building construction.  Growth in
construction has been fuelled in part by increase in government spending financed by increasing
inflows of aid.  The expansion in construction created demand for sand and clay thereby expanding
the mining and quarrying sector.
(vi) Services
20. Services constitute a promising sector for Uganda with their contribution of approximately
40% to GDP.  Growth in the services sector has lagged behind but is performing better than the
agricultural sector.  In 1999/2000 services  grew by 62% and agriculture by 1.6%.
21. Growth is projected to be the highest in transport and communications (9%) followed by
construction (8.5%) and electricity and water supply (7%).  The growth in transport and
telecommunications had mainly come from increased access to telecommunication services, which
expanded by 35%.  There has been a fast expansion in mobile cellular, internet and fixed telephone
services.
22. Uganda has a history of being one of the best providers of high quality social services,
especially tertiary education.  Under the "Big Pu sh Strategy", development of a center for Technology
Training Education in East Africa and the creation of a productivity center have been suggested.
Potentials are in tourism, air transport and information communication technology (ICT).  There has
been local focus in ICT but focus will be in the direction of exports growth.
V. UGANDA'S TRADE POLICIES
23. Uganda's trade policy aim to contribute to  poverty reduction, promotion of employment,
economic growth, and export diversification and promotion (particularly non-traditional exports) andvertical diversification is to be achieved through further processing of primary export products.
24. Uganda is striving to promote trade through regional integration especially Common Market
for Eastern and Southern Africa (COMESA), Ea st African Community (EAC) and multilateral
arrangements such as the World Trade Organization (WTO).  Government is putting in place means
to fully exploit non-reciprocal preferential treatment available to developing countries under U.S.African Growth Opportunity Act (AGOA)  and the EU-ACP Cotonou Agreement.
25. A deregulation programme was launched to dismantle 'unnecessary' and regulatory
procedures that may impede trade.  Government is undertaking a commercial law reform to bring all
trade related laws, regulations and procedures in conformity with WTO requirements.
26. Efforts are being made to improve government's trade related capacity by mainstreaming
trade issues in the overall National Planning Strategy.  As such, Government is working through the
Integrated Framework and with donor community to benefit from trade-related technical assistance.
27. Since 1987, the Government has been implementing trade and structural policy reforms,
embracing liberalized systems for input and output  markets, trade, investments and tax regimes.
These reforms included liberalization of domestic and export produce marketing and processing,removal of restrictive tariff and non-tariff barriers and abolition of taxes on exports.Uganda WT/TPR/G/93
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28. In August 2000, Government released a plan for modernization of agriculture (PMA)
(agriculture is a backbone of Uganda's economy) with the main objectives of:  increasing incomes and
improving the quality of life for poor subsistence farmers and household food security, providing
gainful employment, and promoting sustainable use and management of natural resources.
(i) Trade Policy Formulation and Implementation
29. In Uganda, trade policy is primarily aimed at economic growth and development through
diversification of the export sector, attracting investment, improving productivity, enhancing export
and local trade and is designed within the context of the overall national economic policy objective.
30. Trade policy formulation is achieved through a consultative process between Government and
the private sector.  The lead agency for trade policy formulation is the Ministry mandated, the
Ministry of Tourism, Trade and Industry.
31. The implementation of trade policy is the preserve of public bodies depending on the nature
of the measure or policy to be implemented.
(ii) Multilateral, Regional or Preferential Trading Agreements
32. Uganda's external trade policies are designed to create an enabling environment for
international economic integration in order to ensu re a sufficiently large market for her commodities
as well as the development of her industries.  In pursuit of that objective, Uganda has entered into
multilateral, regional and preferential trade arrangements i.e. WTO, Common Market for Eastern and
Southern Africa (COMESA) East African Comm unity (EAC), Intergovernmental Authority on
Development (IGAD), U.S. African Growth Opportunity Act (AGOA) and EU-ACP Cotonou
Agreement.
(iii) Bilateral Agreements
33. Uganda has bilateral trading agreements with many countries.  Under these agreements,
Uganda and the Partners accord each other most favoured nation treatment in all matters relating to
their mutual trade relations.
VI. UGANDA'S EXTERNAL TRADE RELATIONS4
34. External trade plays an important role in the economic development of Uganda but the terms
of trade shocks have led to a widening trade deficit. Although the depreciation of the exchange ratereduced import demand, this was more than offset by a reduction in export earnings.  Coffee exports,
the main foreign exchange earner, have been estim ated to contribute only about 27% of total export
this year, down from 43% last year.  This reduction is on account of 4.0% fall in volumes exported
and more importantly a 37% fall in international coffee prices compared to the previous year.  The
value of non-coffee exports on the other hand, increased 18% to an estimated annual total ofUS$296 million.
(i) Exports
35. Uganda's exports mainly include coffee, cotton, tea, tobacco, electricity, fish and fish
products, hides and skins, maize, fruits and flowers and cobalt.  There is a remarkable growth in hides
and skins.  The total value of exports more than tripled compared to the year 1999/2000
                                                     
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US$6.2 million and US$20.8 million 2000/2001.  Fish exports also recovered from US$16.7 million
to US$28.7 million although this is still far less than the level that prevailed before the fish ban
(US$47.6 million).  Electricity exports have al so grown strongly from US$13.8 million 1999/2000 to
US$17 million 2000/2001.
36. Government continues to focus its attention to the development and promotion of exports
through diversification of products and markets and attraction of foreign direct investments.
(ii) Imports
37. Government put in place measures that directly affect imports, which included foreign
exchange liberalization and abolition of import licensing.  However total imports are estimated tohave declined just over half a per cent from US$1.51 billion in 1999/2000 to 1.5 million in
2000/2001.  The growth in private sector imports in the same period, estimated at 2.3% is more than
offset by the decline in government imports estimated at 13%.
(iii) Balance of Trade
38. Imports were expected to fall in 2000/2001 reflecting the impact of terms of trade shock on
domestic demand.  However, excluding official grants, the current account deficit is expected to
widen from US$837 million (14% GDP) in 1999/2000 to US$880 million (16.5% of GDP) in
2000/2001, reflecting a larger fall in exports than  imports and a widening deficit on the non-factor
services account.
(iv) Uganda's Problems in the External Markets
39. Uganda continues to face instability of international commodity prices and tariffs and tariff
escalations.  Non-tariff barriers that include standards requirements and sanitary and phytosanitarymeasures that saw our fish exports banned on the EU markets worsen the situation.
VII. INVESTMENT POLICY
40. Since 1991 Uganda has pursued an open policy towards inward foreign direct investment.
The Investment Code 1991, the basic law governing investments in Uganda, does not discriminate
against foreigners.  The policy has not changed, although the law is in the process of being amendedto make it more investment friendly.  Uganda's economy is fully liberalized and it is acceptable for
foreigners to invest without any local equity.
VIII.  UGANDA AND THE MULTILATERAL TRADING SYSTEM
41. Uganda is a founder Member of WTO that was established on 1
st January 1995 following the
Uruguay Round of Trade Negotiations.  Uganda cont inues to support WTO efforts that are intended to
keep the international economy safe from the economic disasters of unilateralism, protectionism and
regression, and promote multilateralism, free trade and economic development through its framework
for progressive trade liberalization and the development of rules that govern international trade.
42. Uganda views participation in WTO and integration to the multilateral trading system an
opportunity to afford least developed countries an effective role in creating a fair and progressiveinternational economic order in general and assist the economic development of these countries.
43. Uganda is fully committed to implementation of the WTO Agreements despite the difficulties
involved in order to take advantages and opportunities that arise from these agreements.Uganda WT/TPR/G/93
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IX. IMPLEMENTATION OF THE WTO AGREEMENTS
44. Uganda signed the Marrakesh Protocol establishing the WTO in April 1994 and deposited the
Instrument of Ratification in October 1994 and thus becoming a founder Member of WTO on
1st January 1995.
(i) Schedule of Commitments
45. Uganda offered the first schedules of commitments in both trade in goods and services that
include binding agricultural products at 80%, industrial products at 70% and on trade in services
offers were made in tourism and travel related sectors.  Later in 1996 further commitments were made
in Basic Telecommunications.  More offers are to be made once the Law Reform Program that will
put in place a new national legal frame is complete.
(ii) Notifications
46. Uganda has made all the basic notifications as required by various agreements of the WTO.
Despite the difficulties involved in drafting and making notifications, Uganda continues to attempt to
fulfill all the notification requirements on the basis of their frequency.
(iii) Implementation Process
47. Uganda has formed an Inter-Institutional Committee together with five Sub-Committees on
Agriculture, Services, Implementation and New Issu es, Business Mal-practices and Legal Framework,
TRIPS and TRIMs as a mechanism for consultation and continuous compliance with the WTO
obligations.
48. Uganda started implementing the WTO Customs Valuation Agreement on 1st July 2000 by
changing from Brussels's Definition of Value (BDV) to WTO Customs Valuation Code.
(iv) Law Reform Process
49. Uganda is currently undergoing a Law Reform to bring all trade and trade related laws,
legislation, administrative procedures and pro cesses including the institutional framework in
conformity with WTO obligations.
(v) Uganda's Position in the Multilateral Trade Negotiations
(a) Agriculture
50. Agriculture is backbone of Uganda's economy and is a livelihood for many of her population
and the biggest contributor to GDP.  It is therefor e important that the ongoing trade negotiations on
the Agreement on Agriculture do not undermine the viability of the agricultural sector in the
multilateral trading system.
51. Uganda supports various views of many developing countries and least developed countries
and more especially the views expressed by the African group in Geneva.  The emphasis still remainson reviewing the implementation issues before undertaking new commitments.  However, Uganda's
major concerns are on:
- Market access:   Uganda wants an improved market access through elimination of
tariff peaks and tariff escalations; continued initiatives like the EBA and AGOA andWT/TPR/G/93 Trade Policy Review
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ensuring that special and differential treatment continues to be an integral part of the
Agreement on Agriculture but structured in such a way to respond to our
development needs other than just " best endeavour".
- Tariff rate quotas:  Negotiate for expansion and reform.
- Domestic support measures:   This provision is unbalanced in favour of the
developed countries.  It should therefore be simplified and made easier as well as putin place a monitoring mechanism for phased withdrawal of this support by developed
countries.
- Export subsidies:   Export subsidies have in many cases displaced exports from
developing countries especially LDCs even in their domestic as well as regional
markets, Uganda therefore advocates for the total elimination of these subsidies.
- Non-trade concern:   The non-trade concern on agriculture is food security and the
role of agriculture in development of our economy.  Uganda also advocates for the
formation of interest free fund where developed countries and international financial
institutions would contribute to assist in times of natural hazards like drought, famine
and population growth that usually affect the agricultural sector in LDCs.
(b) Services
52. Trade in services is important to Uganda's national economy because of the significant role it
plays in facilitating numerous other areas of the economic activities.  At the same time it has of recent
become one of the biggest contributors to GDP.  In view of the growing importance of the services
trade, it is imperative that during the on going GATS trade negotiations, results must turn out to be
pro-development and in favour of our economy.
53. In view of the above, Uganda advocates that during the negotiations:
- the GATS architecture be maintained most especially the provisions of the most
favoured nation and flexibility for LDCs to liberalize in fewer sector;
- Mode 4 of supply should be revisited with a view for further liberalization;
- members adopt emergency safeguard measures and GATS future negotiations be
guided by article IX;
- Uganda also welcomes E-Commerce but would need a clear understanding of its
impact on our economies.
(c) Trade Related Intellectual Property Rights (TRIPS)
54. There is a huge gap between LDCs and developed economies in technology advancement in
production, transfer and legal expertize to draft the necessary legislation.   Uganda is of the view thatarticles 7, 8 and 66.2 be made operational and mandatory.
55. Uganda also proposes that during negotiations:
- Article 27.3(b) be revisited with a view to ensure that:  life forms that are naturally
occurring should not be patented (food security purposes);  generic resources beUganda WT/TPR/G/93
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accessed on mutually agreed terms and the sui generis  system envisaged therein be
made consistent with the Convention on Biodiversity;
- the TRIPS Agreement should provide flexibility for use of compulsory licenses in
cases of measures related to public health and essential drugs;
- transitional periods be extended based on the development needs on individual LDCs;
- geographical indications are extended to include other products that are indigenous
and identifiable with a specific region.
(d) New Issues
56. Uganda agrees with the view that New Issues should be subject to further study, and those not
found to be of trade concern be kept out altogether.  However their inclusion and possibility of a New
Round of Trade Negotiations may not only be cons idered subject to the implementation concerns
being comprehensively addressed.
(e) Positive Agenda
57. Uganda recognizes that trade and technology transfer, trade and debt and trade and finance
have a strong bearing on our development concerns and therefore should be included in future
negotiations.
(vi) Technical Assistance
58. Uganda has benefited from the WTO technical assistance, Joint Integrated Technical
Assistance Program (JITAP) and the Integrated Framework for Trade Related Technical Assistance to
Least Developed Countries (IF).  The JITAP offer has been aiming at helping Uganda integrate into
the multilateral trading system with the objectives of:
- building national capacity to understand the WTO Agreements and their implications;
- assist Uganda to make its policy and regulatory framework conform to the WTO
Agreements;
- enhance Uganda's capacity to take advantage of the Agreements by improved export
readiness.
59. The IF is emphasizing the importance of mainstreaming trade priorities into the national
development plan.
(a) Technical Assistance Gaps
60. Although JITAP and IF have made remarkable achievements in helping Uganda to integrate
into the MTS, at end of the programs there will be however gaps left in terms capacities to address the
supply side constraints, both institutional and human capacities to analyse the effects and
contributions of the MTS on Uganda's economy and capacities to negotiate and participate effectivelyin trade negotiations.WT/TPR/G/93 Trade Policy Review
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X. CONCLUSION
61. Uganda will continue with liberalization policy within the overall strategic framework of
enhancing economic growth and structural transformation with the private sector playing an important
role as an engine of growth while government provides an enabling environment.
62. The strengthening of economic growth and transformation is seen as a prerequisite for
poverty eradication and has to be through identified strategic areas with high growth potential inwhich the government could have a comparative advantage and significantly increasing value added
and market share by increasing and diversifying agriculture and agro-industrial products.
63. Uganda will continue to support WTO efforts that are intended to keep the international
economy safe from the economic disasters of unilateralism, protectionism and regression, and to
promote multilateralism, free trade and economic development through the framework for progressivetrade liberalization and the development of the rules-based system that govern international trade.
64. Uganda will continue endeavour to particip ate in the WTO activities while struggling to
integrate into the multilateral trading system that may afford least developed countries an effective
role in creating a fair and progressive international economic order in general and assist the economic
development of these countries.  Uganda is therefore fully committed to implementation of the WTOAgreements despite the difficulties involved in order to take the advantages and opportunities that
arise from these agreements.
__________