In recent years, Uganda has enhanced its trade potential by incorporating international and regional agreements into its legal and regulatory frameworks and by creating or strengthening a variety of institutions charged with implementing these agreements. The country is a founding member of the World Trade Organization (WTO) and a charter member of the East African Community (EAC). In 2005, Uganda took the significant step of establishing an EAC Customs Union along with Kenya and Tanzania (Rwanda and Burundi joined in June 2007). Uganda adopted the EAC Common External Tariff (CET), replacing a four-band tariff structure with a simplified three-band tariff structure of 0, 10, and 25%. Uganda has also undertaken significant and largely successful reform efforts within its Customs agency, efforts that, if sustained, could lead to tangible rewards in the future.
Notwithstanding recent developments, however, a great number of reforms have yet to take place. With respect to trade in goods, a number of bureaucratic delays and other regulatory constraints continue to limit the competitiveness of Ugandan exports. Trade in services is similarly not reaching its potential, due in significant part to continuing restrictions on the free movement of labor. In addition, Uganda has not committed to certain important international standards in trade facilitation. It has not signed the International Convention on the Simplification and Harmonization of Customs Procedures (the Revised Kyoto Convention) and does not yet engage critical international transit procedures.
This chapter is divided into two parts: trade policy and trade facilitation. Trade policy pertains to Uganda’s commitment to building formal trade relations with its immediate neighbors, with the African continent, and with international markets, through such mechanisms as mutual tariff reductions and streamlining of trade processes. Trade facilitation refers to simplifying and harmonizing a country’s international trade procedures in line with current best practices and globally accepted standards. Such an environment is required for a country to seize the opportunities offered by the global trading market and the economic benefits that full participation offers toward reducing poverty.
The BizCLIR scores for Trading Across Borders confirm persistent weaknesses in the implementing and supporting institutions, but very promising social dynamics.
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