By Simon Madjie, Executive Secretary, American Chamber of Commerce in Ghana and Dode Seidu, International Trade Consultant & Founder of Frontier Market Advisors.
Introduction
This article provides a preview of Ghana’s attempt at regulating its international trading environment through the establishment of the Ghana International Trade Commission.
International trade, though largely an economic activity, is governed by rules. The World Trade Organization (WTO) provides the forum for a multilateral rule-based global trading system that ensures that the trading system is fair. Yet not all international trade is rule-based-some countries support their domestic industries to produce and be competitive in international markets. Support provided through subsidies may make the exported products cheaper, however, such products hurt domestic industries producing similar products. Within the framework of the WTO countries have the policy and legal space to protect their domestic industries from unfair trade practices. However determining whether, a country’s domestic industries are being hurt by other countries imports into that country is not an easy task.
In many countries, organizations have been established with the view to provide impartial investigations, adjudication and imposition of measures to protect domestic industries from the harmful effects of international trade.
The United States of America has the U.S International Trade Commission (USITC) set up in September 1916, which is an independent, bipartisan, quasi-judicial federal agency that determines the impact of imports on U.S industries and directs action against unfair trade practices such as subsidies, dumping, and infringement of patent, trademark and copyright.
The Canadian International Trade Tribunal (CITT) provides Canadian and International businesses with access to fair, transparent and timely processes for the investigation of trade remedy cases and complaints concerning federal government procurement and for the adjudication of appeals on customs and excise matters. At the request of the Canadian Government, the Trade Tribunal provides advice on tariff, trade, commercial and economic matters.
Similarly, the International Trade Commission of South Africa (ITAC) established in 2003, but existed in many different forms since 1924, has the mandate to foster economic growth within South Africa and the Common Customs Union Area for Southern African countries by establishing an efficient and effective system for the administration of international trade through customs tariff investigations, trade remedies, import and export controls.
Ghana’s Industrial Sector
The industrial sector in Ghana is described to comprise: manufacturing, construction, mining and quarrying, electricity, water and sewage sub-sectors. In manufacturing, you have firms that are involved in the food processing, beverages, tobacco, textiles, petroleum refinery, cement production etc. Within the construction sub-sector, major activities include the construction, repair, demolition of buildings, highways, sewers, bridges, streets, roads, railways and communications systems. Within the mining and quarrying sub-sector are activities that involve the extraction of gold, diamond, bauxite, salt, stones and sand. Electricity, water and sewage sub-sector involves the production and distribution of electricity and water.
Post Ghana’s independence, successive governments have focused on the transformation of the country’s industrial base. Governments have implemented a number of policies including import substitution industrialization drives to an over-liberalized economy.
However, Ghana’s industrial sector has significantly reduced its contribution to the country’s Gross Domestic Product over the years. From an average of 25% contribution to GDP from 1996-2000, the sector reduced to less than 20% in 2012 and thereafter. Currently, the industrial sector is largely driven by the Mining and Petroleum subsectors and manufacturing is at an all-time low.
Besides issues of cost of credit, relatively high cost and unreliable electricity supply to the manufacturing sector, one of the major reasons cited for the collapse of the manufacturing sector has been Ghana’s over liberalization policies since the mid-1980’s which opened the country’s market to large volumes of imported goods.
Ghana’s manufacturing sector, very nascent has suffered severely from fair and unfair competition from imports.
Unfair Trade Practices Affecting Ghana’s Industry
Unfair trade practices is a term that can be used to describe all forms of international trade relations that contravenes the principle of non-discrimination. The principle of non-discrimination comprises two key principles: most-favoured nation and national treatment. The most-favour nation principle in international trade indicates that whatever favours a country offers to a trading partner/country, that favour must be available to other trading partners/countries. The national treatment principle does not permit countries to treat goods originating from that country better than imports. These principles notwithstanding, countries, companies and traders often make and are involved in trade related rules that negatively affect trade.
Ghanaian firms have indicated a number of unfair trade practices that have affected their ability to compete domestically and internationally. Ghanaian firms cite dumping-a situation where the price of a good is lower in the foreign market, than it is in the country of manufacture. Another often cited unfair practice is intellectual property infringements-such as piracy, abuse of trademarks and counterfeiting. Also, there has been instances where manufacturers have claimed that importers of similar goods they manufacture declare and pay lesser imports tariffs thereby undercutting prices on the market in the domestic market.
Unfair trade practices do not only refer to imports, it also includes unfair competition on the domestic market, where companies collude, connive and involve themselves in anti-competitive practices to gain market share and market dominance.
Whereas these complaints have been made by the private sector, the biggest challenges have been the lack of legal and regulatory regime receive complaints, investigate and adjudicate where the trading public think they are experiencing unfair trade. Until independently investigated, many of these claims will remain allegations.
The Ghana International Trade Commission will provide the legal space to receive petitions, undertake independent investigations and adjudicate on unfair trade practices that affect the domestic industry.
Ghana International Trade Commission (GITC)
The Ghana International Trade Commission was established by an Act of Parliament in September 2016 to regulate Ghana’s international trade architecture in conformity with the rules and regulations of the World Trade Organization (WTO) and other International Trading Systems and Rules. Prior to the GITC’s establishment, the Tariff Advisory Board an administrative body under the Ministry of Trade and Industry, provided investigative and policy advice to the Ministry in respect of tariff adjustment and safeguard measures. The transition from the Tariff Advisory Board to Ghana International Trade Commission has taken many years.
Objectives and Functions of the Commission
According to the GITC Act, the objectives of the Commission include ensuring fair competition for persons engaged in domestic production and international trade; overseeing Ghana’s compliance with international trade rules and regulations; protecting the domestic industry or market from the impact of unfair trade practices and ensuring transparency, fairness, efficiency and objectivity in the application of measures affecting international trade and the use of world trade measures.
Some of the notable functions of the Commission shall include the following:
- Advise, recommend and provide analytical support to the Minister of Trade & Industry on: proposals for trade-related legislation; preparation of documentation and negotiating position of Government during international trade negotiations; Ghana’s compliance with its bilateral and multilateral trade treaties and obligations; tariff levels for specific sectors of the economy and on matters affecting trade and industry after monitoring and reviewing the Country’s international trade.
- For Manufacturers, the Commission will determine complaints before it in areas of Safeguard Measures; Subsidisation of Imported Products by Foreign Governments; the Dumping of imported products into our domestic market; tariff adjustments and actions which are deemed to affect fair trade.
- For Importers and Traders, the Commission will settle disputes arising from classification and valuation of imported products between them and the Customs Division of the Ghana Revenue Authority.
- For Exporters, the Commission will conduct studies and publish reports on the competitiveness of Ghana’s tariff structure and its impact on the domestic industry, market access opportunities and challenges with exports from Ghana.
Ghana International Trade Commission
In Ghana activities towards the setting up of the International Trade Commission commenced with the inauguration of the Tariff Advisory Board under the auspices of the Ministry of Trade & Industry in September 2009. The Parliament of Ghana passed the Ghana International Trade Commission Act which was accented to by the President on September 14, 2016 and gazetted on September 22, 2016, however processes towards the operationalization of the GITC has been unduly slow.
Industry players have on numerous occasions called on Government as a matter of urgency to announce the commissioners and inaugurate the Board, one such strong advocate has been Dr. Dawson Amoah of Ghacem and the Association of Ghana Industries who was quoted in a Daily Graphic publication on June 26, 2017 as saying “justice delayed is justice denied.” To wit ‘delay in the implementation of GITC meant delayed justice for local manufacturers. In a publication on March 26, this year, the Managing Director of Aluworks- a local aluminium manufacturing company reiterated the urgent need for the operationalization of the GITC when he said “Ghana is currently in a position where a lot of unfair trade is upon our doorsteps to the detriment of local industry and local trade, and it has decimated our manufacturing sector and need urgent redress…We now await the inauguration of the Commission so that it will be able to begin work towards righting the wrongs that have been foisted on Ghana industry for so long, and it has indeed reduced some sections of industry to close extinction”
The President, H.E Nana Addo Dankwa Akufo-Addo at the Ghana Expatiate Awards announced that the Government has appointed a five Member governing board of the GITC. This announcement by the Government sets into motion activities to operationalize the Commission. Industry watchers are waiting keenly for the official swearing in of the Commissioners. It is anticipated that the establishment and effective functioning of the GITC will accrue some form of protection for local industries, generatee revenue for Government through levies and duties and it will ultimately promote and attract foreign direct investment, especially into the manufacturing sector.
Governing and Composition of GITC Board
The GITC Act indicate, that the Commission is governed by a five member board-all appointed by the President. The chairperson must be a retired Justice of the Superior Court of Judicature or a person qualified to be appointed as such and at least one Member of the Board must be a woman. Board Members of the GITC are expected to have expertise in economics, accounting, international marketing, distribution of goods and services, international trade law or be persons with experience in industry. The GITC will also have a secretariat, headed by an Executive Secretary, appointed by the President to administer the day-to-day activities of the commission. The Commission is expected to be well resourced in terms of the number and quality of required staff and resources-both financial and logistical.
Activities of the Commission
The GITC will have investigative and adjudicative function-just like the USITC.
- Investigations: Investigations by the Commission may be initiated by a corporate or individual petitioner or on the Commission’s own initiative.The Commission is expected to conduct its proceedings in public and in private by request of the parties. Proceedings are to be conducted expeditiously and at the conclusion of hearings, record its decision in writing providing reasons for that decision. The Commission may also make an application to the High Court to compel a person to comply with its decision, order or ruling.
- Adjudicative: the GITC can impose trade remedies-through the Minister of Trade and Industry, if it believes that there is a material injury to Ghana’s domestic industry. The GITC may impose:
- Safeguard Measures: these are measures imposed when increasing imports materially affect domestic producers. The Commission will consider the rate and amount of the increase in imported products absolute and relative terms; the share of the domestic market ceded to imported products and changes in the levels of sales, production, productivity, capacity utilization, profits & losses and employment of the domestic industry in determining the imposition of safeguard measures. Such measures are not expected to exceed ten years according to the GITC Act. Anytime a safeguard measure is imposed, Ghana shall notify the Committee on Safeguards of the World Trade Organization.
- Countervailing Duties: through its investigations, when the GITC finds that subsidized imports are likely to cause injury whether imminent or foreseeable to the domestic industry and there is evidence to establish a causal link between the subsidized imports and the injury to domestic industry, Countervailing duties will be imposed. Countervailing duties may be specific to a company, industry, regional depending on how the subsidies are applied by the imposing country. Countervailing duties will be not be imposed for more than five years according to the GITC Act.
- Anti-Dumping Duties: shall be imposed by GITC following investigations that establish dumping. Anti-dumping duties shall be imposed on dumped products likely to retard the establishment of a domestic industry. The anti-dumping duty shall be imposed for a period to counteract the effects of dumping and the duty shall not exceed five years from the date of imposition.
- Review of Tariff and Settlement of Customs Valuation Dispute: The GITC will play a critical role in addressing customs disputes and tariff adjudication. GITC, when petitioned and satisfied with the available evidence can grant a customs duty rebate or drawback to enhance the competitiveness of a producer. Furthermore, on the request of an importer, the Commission has the power to settle disputes emanating as a result of classification, valuation or origin determination by the Customs Division of the Ghana Revenue Authority (GRA).
Conclusion
The need to deal with unfair trade practices cannot be over emphasized, if Ghana is committed to its manufacturing sector and also committed to resolving –the- daily disputes between Ghana Revenue Authority and importers over classification and valuation of goods, then a fully functional GITC is the only viable solution. An operationalized GITC will also give investors the needed confidence and assurances that, their investment in the manufacturing sector is secured and will not get wiped out by unfair trade practices. Finally, GITC will send a strong signal of Government’s commitment to level the playing field for actors within the manufacturing and importing sectors and albeit somewhat remotely, it will also improve the ease of doing business in the Country.
Dode Seidu, International Trade Consultant & Founder of Frontier Market Advisors
Simon Madjie, Executive Secretary, American Chamber of Commerce in Ghana.