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Manufacturers bitter with govt over delay in Free Trade deal

Daily Monitor, Kampala

Manufacturers bitter with govt over delay in Free Trade deal

Robert Mukombozi, Kampala

29 March 2006

Manufacturers are bitter with the government over its delay to sign the Free Trade Agreement.

Although the Uganda Manufacturers Association, their umbrella body, has come up to give updates about the process, the manufacturers maintain that they are incurring unnecessary huge losses in exports, which fees they claim would not be levied on them if the government had signed the agreement.

Contrary to UMA and the government’s excuse that Uganda would benefit less from the agreement, companies like Mukwano Group and Southern Range Nyanza Limited (SRNL) among other exporters in the region, argue that the common understanding would widen Uganda’s market opportunities for her manufactured goods.

The Chief Executive Officer of Mukwano Group of Companies, Mr Ibnul Hassan Rizvi, insists that Ugandan exporters need to get the opportunity of entering Rwanda, Burundi and Sudan among other Comesa markets freely.

According to him, other countries that signed the FTA pact are out competing them in these markets because they incur huge expenses yet they have to operate at the same market levels.

"Uganda’s textile export competitiveness in the hitherto natural export markets within Comesa has been watered down since Kenya, the East African manufacturing giant can easily out compete Ugandan textile exports in the said markets due to her membership in the Comesa FTA," Richard Mubiru, the SRNL Legal Team leader said.

He said the early entry into the FTA arrangement in Comesa by neighbouring countries puts them ahead of Uganda in regional trade due to eligibility to zero percent reciprocal treatment.

Mubiru added: "This has naturally rendered Uganda’s proximity to Sudan, Rwanda and Burundi irrelevant as Kenya can conveniently off-set the distance disadvantage from the same market due to the 0 percent duty her exports enjoy under the FTA."

The manufacturers argue that Uganda may not even realise the benefits of the five-year zero-rated industrial transitional period for raw material importation under the principle of assymetry enshrined in the EAC Protocol.
This principle is meant to help the country catch-up with Tanzania and Kenya in terms of trade.

However, the UMA boss, Mr Abid Alam, explained that Uganda, as a country whose geographical location of landlockedness disadvantages her from competitive trade in the region, needs to weigh results of the post FTA agreement.

"We understand how the delay in signing the FTA agreements affects local exporters. However, we cannot endorse the agreement for the sake of it. We are still weighing the possible outcomes to ensure the consequences are not harsh to us," Alam told Daily Monitor in an interview on March 23. He added that they are still analysing the provisions of the agreement that may raise relative outstanding concerns in multilateral trading between Uganda, Rwanda and Burundi among other member countries under Comesa.

The Trade Minister, Mr Daudi Migereko, confirmed that the matter is still under review.
"After we have overcome the current problems of inconsistent production and supply affecting us in regional trade, we will be certain that the agreement will not help the neighbouring countries to over run us in the process," he said.