Business News of 2013-12-10

Gov’t moves to make imports unattractive

The government has began taking pragmatic steps to actualise its intentions to boost the industrial sector of the country.

Consequently, it is to implement policies that will make it difficult for importers of aluminum, cement, textiles, chicken among others to continue with their trade.

The initiatives involve the setting up of an International Trade Commission (ITC) and the subsequent promulgation of a legislation that will restrict the importation of these substitutes into the country.

The move, which is being initiated by the Ministry of Trade and Industry, is part of efforts to reduce the country's over-reliance on imported products, while helping check the capital flight that the phenomenon fuels in the economy.

The Minister of Trade and Industry, Mr Haruna Iddrisu, dropped the hint on November 29 in a discussion on the incentives that the government had for the private sector in the 2014 financial year.

"I do agree that we have bad terms of trade and a bad balance of trade because of the higher import volumes in our country and all that is putting stress on our foreign exchange and we need to change it. That is why the government wants to set up the ITC so that it will have the powers to initiate some of these measures, including the possible imposition of countervailing measures on items that we have evidence to prove that they have been under-priced," Mr Iddrisu, who is also the Member of Parliament for Tamale South, said.

He added that the commission, which is to replace the existing Tariff Advisory Board (TAB), would be empowered through the legislation to be able to implement countervailing measures that will help discourage the various importers from bringing such goods, most of which are often under-priced and/or completely ban their importation into the country.

Countervailing

Countervailing measures include the imposition of import duties under World Trade Organisation (WTO) rules to help neutralise the negative effects of subsidies on imported items.

They also include measures that can be undertaken whenever an investigation, by the investigating authority of the importing country, has led to the determination that the imported goods are benefiting from subsidies, and that they result in an injury.

Cabinet requests better particulars

In a separate interview, a member of the TAB, Dr Larbi Siaw, said the process to convert the board into a commission had being ongoing for some time and was confident it would be concluded early next year.

"A first proposal (on the establishment of the commission) had gone to Cabinet but Cabinet requested for better particulars and more information. That is what we are working at and once that is completed, we will send it back to them for a final decision and we will take it from there," Dr Larbi-Siaw, who is also a Tax Policy Advisor at the Ministry of Finance and Economic Planning, added.

Dumping verses

For years, stakeholders in the country's industrial sector, led by members of the Association of Ghana Industries (AGI), have consistently cited the influx of foreign goods into the country as a growing threat to the survival of the local manufacturing sector.

The situation became eminent in the last three years when the sub-sector's share of, and contribution to the Gross Domestic Product (GDP), total value of goods and services produced in the country, nosedived in favour of imports.

Its annual growth declined to 2.5 per cent from the five per cent growth rate posted in 2012.

But while that happened, imports of consumables such as chicken and related products, rice and textiles, among others continued on the increase and that led to the clarion call by industry for tougher actions to be taken against imports.

"We can't develop our manufacturing sector if we allow all manner of goods to be sent into the country in the name of imports”, the President of AGI, Nana Owusu Afari, said on November 23.

“If you want to operate a liberal economy, then you will do that to the disadvantage of your private sector and that is what we are seeing here," he added.

“What we are saying is, let’s protect local industries by limiting what we import as a way of encouraging indigenous businesses to grow,” he added.

Of great concern, he said, was the under-pricing of such products, an action Nana Afari said smacked of dumping.

He mentioned aluminum, textiles and chicken as some of the imports that ended-up selling lower in the country than their locally produced substitutes.

“If you are importing something into the country, the import duties and traveling cost alone should cause the final price to rise but that is not what we are seeing. What you rather see is that these products end up selling at lower prices and that is strange. It’s a typical case of dumping in our market and we shouldn’t allow it to continue,” he added.

Industry not convinced

Mr Idrrisu admitted the possibilities of dumping in the country, especially in the areas of aluminum, cement and textiles, but added that the current position of the TAB made it legally impossible to deal with such matters.

"Currently, I'm investigating imported cement against cement manufactured in Ghana. I'm told that what is imported is cheaper than what is produced here”, he said.

The minister added that “It means there is something wrong; if you look at the cost of production and the kind of taxes slapped on it, naturally, it should be more expensive with the imports than what is produced."

He indicated that his outfit had requested the TAB "to give me an informed decision on that."

"But that is where you need to have countervailing measures and that is what the ITC will be empowered to do," Mr Iddrisu said.

Some sources within the industry, however, doubted the country's ability to implement countervailing measures, especially given that the World Trade Organisation (WTO) had sanctioned the implementation of such measures against some imports a couple of years ago.

"As for the ITC, yes, it will be established but the countervailing measures are what I doubt. Should it even happen, it will take about four to five years and that is a long way to go," one of the sources said.