WTO Trade Policy Review of Ghana
Statement by David P. Shark
Deputy Chief of the U.S. Mission to the World Trade Organization
Geneva, February 26, 2001

Thank you Mr. Chairman. The United States would like to offer a warm welcome to the delegation from Accra for Ghana's second Trade Policy Review. We commend the Secretariat for its report on Ghana's trade policies and practices and Ghana for its hard work in preparation for this review. We look forward to hearing more about the progress that Ghana is making towards economic and trade policy reform and to receiving responses to the written questions we have submitted.

Ghana plays a key role in promoting economic development in Africa, at times serving as a role model in West Africa in undertaking certain economic and other reforms. The United States encourages and supports these efforts. One area of particular note is that of trade and investment. In 1999, U.S. imports from Ghana rose 45% from the previous year to a level of $209 million. United States foreign investment in Ghana rose to $321 million in 1998, up 15 percent from1997. In short, Ghana is now one of our largest trading partners in sub-Saharan Africa.

Our commitment to further strengthening ties to Ghana was recently demonstrated in the signing of a 1999 Trade and Investment Framework Agreement - one of our first such agreements with a country in sub-Saharan Africa. Expanded trade with Ghana and other sub-Saharan African countries is also a goal of the African Growth and Opportunity Act (AGOA) of 2000, which will allow Ghana to export a wider range of products to the United States duty free.

We continue to support Ghana's economic development and reform efforts through our bilateral assistance program, which at nearly $50 million a year, is one of the largest in sub-Saharan Africa. A major part of this assistance has been directed towards the five-year Trade and Investment Reform Program (TIRP), designed to enhance Ghana's potential to earn critically needed foreign exchange and to compete more effectively in the global marketplace. The program supports key macro and sectoral policy reforms and provides technical assistance to help Ghana expand its export base beyond its traditional products.

Since the initiation of the Economic Recovery Program (ERP) in 1983, Ghana has undergone an economic transition from an administrative system of economic management to a market oriented system. As part of the ERP, Ghana has progressively reduced or eliminated its import quotas, tariffs and import licensing. The tariff system has been simplified having rates of 0, 5, 10, 20 (and now 40 with the special import tax) percent. Ghana has reduced its simple average tariff from 17 percent in 1992 to 13 percent in 2000.

These and other reforms have resulted in a concrete improvement in Ghana's economic situation. Ghana achieved real annual growth rates exceeding 4 percent during the 1990's. Ghana's exports have been rising steadily at an average annual growth rate of 11.3 percent, from approximately $1.46 billion in 1995 to $2.1 billion in 1999. Merchandise exports as a percentage of GDP increased from 18 percent in 1993 to 28 percent in 1998. During this period the debt service as a ratio of exports fell from 57 percent to 19 percent.

Ghana and the WTO

Mr. Chairman, the United States and Ghana share a commitment to the objectives of the WTO. In addition to being a founding member of the WTO, Ghana has actively participated and made commitments in both the Basic Telecommunications and Financial Services negotiations.

We recognize that trying to meet its WTO obligations has, at times, posed a challenge to Ghana and we agree that outside assistance can be of importance for participation in WTO activities. That is why we are committed to providing effective technical assistance to Ghana both bilaterally and multilaterally. We are providing a $650,000 direct grant to the WTO to support technical assistance for African countries, including Ghana, and for the development and production of computer-based training on WTO agreements. We hope such assistance will help Ghana take advantage of open markets and further liberalize trade.

The United States attaches great importance to the implementation of the WTO Agreement on Customs Valuation as a fundamental trade facilitation issue. For many developing countries implementation of the Agreement can be a simple, initial-- yet important-- concrete step towards meaningful customs reform. We were therefore pleased that Ghana converted to the transaction valuation of imports in accordance with the WTO Customs Valuation Agreement as of February 1, 2000 and replaced mandatory pre-shipment inspection with destination inspection in April 2000 as part of the implementation of its WTO commitments. We applaud Ghana's effort in this area.

The United States also attaches importance to the protection of intellectual property rights. A bill that would bring Ghana into compliance with its WTO TRIPS requirements was introduced in Parliament in 2000, but was never brought to a vote. We welcome the Ghanaian delegation's assurances that this legislation is high on the list of priorities for the new Parliament. Protection of intellectual property rights is important in attracting modern trade and investment.

The further development of the agricultural sector is crucial to Ghana's trade growth, employment creation, and social cohesion. As the Secretariat's report points out, Ghana's comparative advantage appears strongest in agricultural products. Continued reform and liberalization of international agriculture trade should lead to improved access to world markets for agricultural exports. We share a common hope for progress in the built-in agenda negotiations on agriculture.

On-Going Matters of Concern

While Ghana has made considerable economic progress, some structural and bureaucratic problems remain. The Secretariat's report notes that at the heart of Ghana's economic crisis have been expansionary fiscal policies, leading to unsustainable budget deficits and that fiscal discipline has been impaired by a lack of budgetary checks and controls. The economy remains weak and vulnerable to external commodity price movements and other shocks, such as weather conditions.

The Secretariat's report further notes that Ghana's external position and weak currency seem set to continue until urgent macroeconomic and structural reform are implemented and allowed time to work. While improvements in Ghana's terms of trade will help relieve the short-term economic situation, volatile movements in Ghana's terms of trade will continue to be a factor of its trading environment.

In the later half of 1999, Ghana suffered a shock with a fall in the price of its major exports - cocoa and gold - and an increase in the price of its major import - oil. In response to these severe trade imbalances and a rapidly depreciating currency, in March 2000 Ghana introduced a 20 percent tax on some selected imports, such as poultry, wheat, cosmetics, and used clothing. Unfortunately, such actions do not solve Ghana's structural problems. We, therefore, urge Ghana to abolish this tax.

The Secretariat's report notes that Ghana maintains several schemes providing tariff concessions and exemptions on certain imports administered under, often poorly specified authority. We urge Ghana to make the use of such exemptions more transparent and to remove many of the anomalies generated by the current system of exemptions. The Government also uses several guidelines to purchase equipment and supplies, which, in some cases, makes the process difficult to understand. We, therefore, call upon Ghana to make its procurement process more transparent.

We commend the Government's privatization program, which has resulted in the divestiture of more than 233 state-owned companies. We urge Ghana to privatize basic infrastructure services, such as electricity, ports and water, which improve the competitiveness of downstream industries and encourage more Foreign Direct Investment.

While Ghana made commitments under GATS, they are limited to banking and other financial services (excluding insurance) and basic telecommunications. This falls far short of its current level of openness in services. We encourage Ghana to expand its commitments, not only in services, but in tariffs on goods, believing that it can enhance its own competitiveness in the global economy by allowing its consumers ready access to better, cheaper, and more diversified services and goods. Such trade liberalization extending the coverage of its binding would increase predictability and encourage more trade and investment.

Conclusion

Mr. Chairman, Ghana has made some substantial progress towards trade liberalization and economic growth over the past several years. These have led to increased growth and development. GDP has increased and exports have become more diversified. However, serious economic difficulties remain which need to be addressed if Ghana is to obtain the level of growth it needs. Ghana needs to continue making progress towards structural economic reforms and trade liberalization, while resisting any backsliding or protectionist measures. We support and encourage Ghana and its new Government to continue to expand its liberalization efforts in order to increase the momentum towards economic development and we look forward to discussing Ghana's trade policies and practices during this review.