Domestic and Foreign Market Access

Overview: Trade Policy and Business Environment

The Republic of Uganda is classified as a low-income country. The country was ranked 98th out of 132 countries in the World Economic Forum (WEF) Enabling Trade Index (2012), which measures institutions, policies and services to facilitate trade in countries. Despite having significant natural resources, including ample fertile land, regular rainfall, and mineral deposits, Uganda is still one of the world’s least developed countries mainly because of the chronic political instability and erratic economic management. Uganda has the world’s largest percentage of young people under the age of 30 – around 78 per cent according to the 2012 State of Uganda Population Report, but the youth unemployment is also the highest in Africa – around 83 per cent according to the African Development Bank.

WEF, 2012, Global Enabling Trade Report

Domestic Market Access The pillar assesses the level and complexity of a country’s tariff protection as a result of its trade policy. This component includes the effective trade-weighted average tariff applied by a country, the share of goods imported duty free and the complexity of the tariff regime, measured through tariff variance, the prevalence of tariff peaks and specific tariffs, and the number of distinct tariffs. 73 4.88
Foreign Market Access The pillar assesses tariff barriers faced by a country’s exporters in destination markets. It includes the average tariffs faced by the country as well as the margin of preference in destination markets negotiated through bilateral or regional trade agreements or granted in the form of trade preferences. 10 4.18
Tariff rate (%) This indicator is calculated as a trade-weighted average of all the applied tariff rates, including preferential rates that a country applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2012 data). An applied tariff is a customs duty that is levied on imports of merchandise goods. 97 9.05
Complexity of tariffs , index 1-7 (best) This indicator is calculated as the average of the following indicators: Tariff dispersion, Specific tariffs and Number of distinct tariffs. See description of each individual indicator for more details. Prior to averaging, values for each indicator were transformed to a 1–7 score, using the min-max method. 48 6.37
Tariffs dispersion (standard deviation) This indicator reflects differences in tariffs across product categories in a country’s tariff structure. The variance is calculated across all the tariffs on imported merchandise goods, at the 6-digit level of the Harmonized Schedule. 107 11.75
Tariffs peaks (%) This indicator is the ratio of the number of tariff lines exceeding three times the average domestic tariff (across all products) to the MFN (most-favoured nation) tariff schedule. The tariff schedule is equal to the total number of tariff lines for each country. These tariffs are revised on a yearly basis. 49 0.86
Specific tariffs (%) This indicator is the ratio of the number of Harmonized System (HS) tariff lines, with at least one specific tariff, to the total number of HS tariff lines. A specific tariff is a tariff rate charged on fixed amount per quantity (as opposed to ad valorem) 61 0.22
Number of distinct tariffs This indicator reflects the number of distinct tariff rates applied by a country to its imports across all sectors. 52 19.00
Share of duty-free imports (%) Share of trade, excluding petroleum, that is imported free of tariff duties, taking into account MFN tariffs and preferential agreements. Tariff data is from 2013 or most recent year available and imports data is from 2012 69 64.96
Tariffs faced (%) This indicator is calculated as the trade-weighted average of the applied tariff rates, including preferential rates that the rest of the world applies to each country. The weights are the trade patterns of the importing country’s reference group (2012 data). A tariff is a customs duty that is levied by the destination country on imports of merchandise goods 19 4.89
Index of margin of preference in destination markets, 0-100 (best) This indicator measures the percentage by which particular imports from one country are subject to lower tariffs than the MFN rate. It is calculated as the average of two components: 1) the trade-weighted average difference between the MFN tariff and the most advantageous preferential duty (advantage score), and 2) the ratio of the advantage score to the trade-weighted average MFN tariff level. This allows capturing both the absolute and the relative margin of preference. 13 60.80

Trade Policy and Market Access

Uganda has been a member of the WTO since January 1995. The government has shown commitment to trade liberalization over a long period. This is in line with the general orientation towards more liberalization in the two regional organizations, of which Uganda is a member, namely the Eastern African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). Since both communities set customs and foreign trade regulations for their member states respectively, conflicting obligations under each organization make the compliance with each organization difficult. For example, as a member of COMESA, Uganda applies a preferential tariff on imports from COMESA member states of 0 per cent for raw materials and plant and machinery, 4 per cent for intermediate goods, and 6 per cent for finished goods whereas the EAC common external tariff (CET) has been Uganda’s main trade policy instrument since 2005. Uganda’s average MFN applied tariff in 2012 was 12.8 per cent. On the one hand, agricultural products faced the high average tariff rates of 19.9 per cent. The tariffs were applied at ceiling rates of 80 per cent, which is the maximum bound rates of Uganda, on some products in sugars and confectionery groups. On the other hand, non-agricultural products faced low average tariff rate of 11.6 per cent and 40 per cent of tariff lines fell under duty-free applied rate. However, there exists high uncertainty in MFN applied rates as Uganda's tariff bindings cover 15.9 per cent of all its tariff lines, i.e. all tariff lines for agricultural products, and 2.9 per cent of total lines for non-agricultural products.

Bertelsmann Stiftung, 2014, Country Report (Uganda)

Standard Compliance and Other Relevant Import/Export Restrictions

The Ministry of Agriculture, Animal Industry, and Fisheries (MAAIF) is responsible for initiating the formulation and review of laws, regulations, standards, strategies, and plans related to sanitary and phytosanitary (SPS) measures. It is also in charge of the regulation of livestock and livestock products, fish and fish products, the registration and use of pesticides and other agri-chemicals. Various institutions share responsibility for the implementation of food safety controls. Uganda's agricultural exports have been rejected several times in foreign markets due to failure to meet SPS requirements. Despite the importance of SPS issues at hand, there is no formal structure for the application of SPS measures at the regional level. Moreover, under the Uganda National Bureau of Standards (UNBS) Act 1983, the UNBS is the sole statutory organization responsible for the formulation, promotion, and enforcement of standards and technical regulations. According to the 2012 WTO Trade Policy Review, a total of 1,429 technical regulations had been made as of July 2012, and 1,228 of them are based on international standards. Standards and technical regulation are also developed at the EAC level. For example, under the East African Standards Committee (EASC), some 1,200 voluntary standards have been harmonized for uniform application by EAC members.

WTO, 2012, Trade Policy Review (EAC: Uganda)