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Title: Tanzania: Trade Policy Making


1
Tanzania Trade Policy Making
Fostering Equity and Accountability in the
Trading System (FEATS) Tanzania National
Dialogue 22 May 2009 Presentation by Clement
Onyango, Centre Manager, CUTS Africa Resource
Centre, Nairobi
2
Structure of Presentation
  • Economic background
  • Explanation of Tanzanian trade policy
  • Trade policy process
  • Key government institutions
  • Consultative mechanisms
  • Stakeholder views
  • MITM, other government institutions, private
    sector, CSOs
  • Inclusive Trade Policy Making (ITPM) index

3
Brief Economic Outlook
  • 2007 population of 40.454 million and nominal
    GDP of 15.148 billion US, 75.36 of population
    in rural areas for 2006
  • Consistent growth in real GDP per capita over the
    last 15 years with an average annual growth rate
    of 1.9 between 1990 and 2005
  • Particularly strong real GDP growth rate for
    2000-2005 at 4.2, levelled off at 3.3 in 2006
  • the nominal GDP per capita almost doubled between
    1990 and 2005, from US 189 to US 346
  • 35.6 of the population under the national
    poverty line in 2000/2001
  • 2000-01, international poverty rates report 88.5
    of the population living below 1.25 US dollars
    per day and 96.6 living below 2.00 US dollars
    per day
  • Agriculture provides bulk of the employment
    opportunities and is the major contributor to
    Tanzania's GDP
  • 2006, agricultural sector makes up 44.5 of total
    GDP
  • 2006, 73.1 of labor force employed in
    agricultural sector
  • 2000-2001, 16 of labor force employed in
    informal sector

4
Trade Profile
  • The balance of payments deficit has increased
  • In 1999 imports and exports were valued at 13.2
    and 6.2 of GDP respectively
  • Trade Deficit increased and in 2007 imports and
    exports were valued at 28.6 and 12.2 of GDP
    respectively
  • Recent Developments
  • Improved macroeconomic stability export
    diversification measures are having some success
  • shares of traditional exports have decreased from
    about 60 in 1998 to about 14 in 2007 and the
    share of non-traditional exports has increased
    from about 40 to 86 in the same period
  • Despite little progress in areas of export
    product and market diversification, integration
    in global economy is substantial and has been
    increasing
  • Trade as a percentage of GDP was 48.2 in 1995-99
    which has climbed to 70.4 in 2008
  • Trade Shares in regional agreements
  • 2007, 19.3 and 17.2 of total exports to COMESA
    and SADC member countries respectively
  • 2007, 3.7 and 19.3 of total imports from
    COMESA and SADC member countries respectively

5
Trading Partners
  • China is Tanzania's major trading partner in
    both imports and exports, contributing 10.8 of
    total imports and receiving 9.6 of total exports

Country Percentage Share in Total Imports
China 10.8
South Africa 9.4
Kenya 7.5
India 6.5
UAE 5.5
Country Percentage Share in Total Exports
China 9.6
India 9.2
Netherlands 6.1
Germany 6.0
UAE 4.6
6
Trade Relationships Agreements and Partners
  • Tanzania involved in several regional and
    international trade agreements, these help to
    inform trade policy measures
  • Tanzania signed an interim EPA with the EU and is
    part of negotiations with the EU to conclude
    final regional EPAs as part of the Eastern and
    Southern Africa (ESA) and EAC
  • Benefits from AGOA, EBA, Cotonou, Lomé, SADC FTA,
    and bilateral agreements
  • Tanzania is an active member of the AU and a
    founding member of the EAC
  • committed to the goal of continent-wide,
    comprehensive African integration
  • EAC Secretariat and Parliament are housed in
    Arusha, Tanzania, demonstrating Tanzanian
    commitment to the goals of EAC regional
    integration agenda.

7
History of Trade Policy Making
  • Post independence (1961-1971) fairly liberal
    trade policy encouraged commercial activities
    based on export of commodities but discouraged
    commercialization in production of food-crops
  • Policy of Confinement (1972-1983) increasing
    public sector control and direct government
    intervention (e.g. resource allocation, price
    controls, controls on movements of goods and
    services).
  • Initiation of liberalization policies
    (1984-1994)1986 Economic Reform Program (ERP) -
    gradual introduction of market economy based on
    free trade.
  • 1995 present Joined WTO. Efforts to build a
    more competitive market economy and more
    effective participation in international and
    regional trading agreements
  • World Bank TTRI data for Tanzania reveals a more
    restrictive trade regime than the average
    sub-Saharan Africa country
  • Overall Trade Restrictiveness Index (including
    applied tariffs, preferential tariffs and
    non-tariff barriers) was recorded at 52.2 for
    2008, 20 higher on average than other nations of
    the region
  • Tanzania participation in IF processes
  • While not directly related to the formulation of
    NTP 2003, the development and implementation of
    Tanzanian DTIS under the Integrated Framework
    (IF) has been a key influence on the evolution of
    Tanzanian trade policy since 2004
  • IF process for Tanzania started in July 2004 and
    the first DTIS draft was completed by mid-2005
  • Tanzania currently preparing a indicative
    five-year implementation plan for the (EIF)

8
Current Vision and Goals of Trade Policy
  • Tanzania developed a single, comprehensive trade
    policy in 2003, the National Trade Policy of 2003
  • The NTP states To enhance income generation and
    peoples earning power at the grass-roots level
    is the key to poverty reduction in fulfilment
    of the fundamental human right of equal
    opportunity as enshrined in the constitution of
    the United Republic of Tanzania.
  • The NTP works to achieve the goals of National
    Development Vision for 2025
  • General objective of NTP is to transform a
    supply-constrained economy into an export-led one
    with enhanced domestic integration and wider
    participation in the global economy
  • national trade liberalization programme of the
    NTP to be employed to achieve this
  • Tanzania Trade Integration Strategy (TTIS)
    2009-2013 Framework Programme was adopted in
    early 2008 to implement NTP 2003
  • TTIS component A focuses on strengthening the
    capacity of the by enhancing its capacity to
    manage Trade Policy, Trade Strategy, and
    Aid-for-Trade formulation and implementation
    processes.
  • TTIS component B focuses on developing the
    capacity of support institutions and assisting
    producers to meet international competitiveness
    standards to increase the competitive export
    supply of goods and services.

9
Trade Policy Making Process
  • MITM draft a Plan Of Work to start policy process
    to ensure that all stages in policy formulation
    are appropriately outlined
  • Steering Committee chaired by president of MITM
    is then created and includes all identified
    stakeholders
  • If funds are available, Steering Comm.
    Commissions background studies to consulting
    firms or national experts
  • MITM staff undertakes a literature review, field
    research and consultative meetings
  • Steering Committee often constitutes a team of
    experts that prepares the first draft based on
    various inputs and establishes a Technical
    Committee to examine the draft if needed
  • Once approved by the Technical Committee, the
    draft is presented to the Steering Committee
  • The Steering Committee may hold a National
    Workshop of more stakeholders if needed before
    finalizing the draft.
  • final draft policy is submitted to
    Inter-Ministerial Technical Committee (IMTC) for
    approval and then forwarded to the Cabinet
  • After Cabinet approval, the policy may be sent to
    the parliament if it requires a legislative
    action.
  • Once approved by the Cabinet or parliament,
    policy is implemented by MITM.

10
Governmental Trade Policy Making Institutions
  • Ministry of Industry, Trade and Marketing (MITM)
  • the official coordinator of all matters related
    to trade policy including trade policy
    formulation, international trade negotiations,
    and trade policy implementation
  • MITM has five core operational divisions, two of
    which are dealing with trade issues
  • Trade Promotion and Marketing Division
  • Trade Integration Division.
  • MITM activities include internal / external trade
    and marketing, market research, research in
    multilateral / bilateral integration, and
    bilateral cooperation.
  • Other Government Bodies
  • Lead role of MITM in all matters of trade policy
    formulation and implementation is now well
    recognized
  • Yet several other government ministries and
    agencies are also involved in trade policy
    formulation and implementation.
  • Key Actors Presidents Office, Planning, and
    Privatization (POPP), Ministry of Planning,
    Economy and Empowerment (MPEE), Ministry of
    Finance, Ministry of Foreign Affairs and
    International Cooperation (MFAIC), Ministry of
    Agriculture and Cooperatives, Ministry of
    Livestock Development, Ministry of Energy and
    Minerals, Ministry of Natural Resources and
    Tourism, Ministry of Infrastructure Development
  • other govt. bodies support MITM with additional
    research, policy guidance in specialized areas,
    financial analysis and support, etc.

11
Stakeholder Involvement
  • Civil Society Organisations (CSOs)
  • four broad categories of CSO activities social
    services delivery capacity building advocacy
    and lobbying and research and analysis
  • Unique to Tanzania, CSOs have come together to
    form networks to increase their reach and
    influence
  • networks try to advocate and lobby for specific
    actions and policies at the district and regional
    levels, sometimes coordinating with national
    advocacy CSOs to penetrate parliament /
    ministries with their concerns
  • Network example, Tanzania Association of NGOs
    (TANGO)
  • Capacity building CSOs in Tanzania work to
    strengthen the knowledge and skills of local CSOs
    to better contribute to policy processes (i.e.
    TRACE, EASUN, TANGO, Tanzania Gender Networking
    Programme)
  • Research and policy analysis CSOs have a mandate
    to undertake and produce analytical information
  • information is then used by capacity building,
    social services delivery, and advocacy CSOs, the
    government, and the private sector in trade
    policy processes

12
Stakeholder Involvement
  • Private sector
  • Still at in an early stage of development due to
    the history of earlier policies that centred on
    socialism and public sector development.
  • With the changes in policy direction in the 1980s
    and 1990s, several private sector organizations
    emerged
  • Tanzanian Chamber of Commerce, Industry, and
    Agriculture (TCCIA) and the Confederation of
    Tanzanian Industry (CIT)
  • TCCIA is apex private sector umbrella
    organization
  • Membership of about 17,000, most are SMEs
  • Govt. almost always invites TCCIA to provide
    inputs on trade policy issues
  • Private Sector Foundation (PSF)
  • Most important for institutional dialogue with
    the government
  • an umbrella organization of other private sector
    and business organizations
  • government encourages the PSF to be its
    interlocutor with the private sector

13
Consultation Mechanisms
  • NBC - National Business Council
  • need for regular dialogue between the public
    sector institutions and the private sector is
    crucial to policy processes, dialogue should
    include all policy-related issues
  • NBC established in 2001 as highest level body for
    this dialogue purpose
  • 40 members, twenty representing various
    government agencies and twenty representing the
    private sector
  • PSF coordinates the private sector representation
    in the NBC.
  • Consists of five Working Committees including one
    on investment and trade issues
  • work of these Committees is facilitated by the
    PSF who coordinates analysis of specific policy
    areas for discussion
  • has encouraged close dialogue between the
    government and the private sector on various
    issues including trade and investment.
  • IMTC - Inter-Ministerial Technical Committee
  • standing body that consists of all Permanent
    Ministry Secretaries
  • primary objective of this is to provide a forum
    for collaboration and coordination among all
    government ministries
  • all policy issues requiring inputs and feedback
    from more than one ministry are taken to the IMTC
  • Policy issues approved by IMTC can then be
    forwarded to Cabinet for final approval

14
Consultation Mechanisms (contd)
  • NETT - National EPA Technical Team
  • MITM formed NETT to provide a forum to
    coordinate the development of Tanzanian
    participation in EPA negotiations with the EU
  • includes representatives from all the key
    stakeholders other related government ministries
    and departments, the civil society, research
    institutions and academics, and the private
    sector
  • sets up Technical Working Groups to prepare
    position papers on key issues of interest to
    Tanzania in EPA negotiations, such as agriculture
    and services.
  • Establishment of NETT has been welcomed by the
    private sector and the CSOs as the only regular
    consultative mechanism on trade issues that
    brings together representatives of all key
    stakeholders. However, its mandate is limited to
    EPA negotiations.

15
Policy Direction
Ministry of Planning, Economy Employment
Presidents Office Planning and Privatization
Ministry of Foreign Affairs International
Cooperation
Policy Preparation
MITM
Ministry of Finance
Board of External Trade
Ministry of Agriculture Cooperatives
Policy Implementation
Tanzania Revenue Authority
Other Specialized Government Agencies
Other Line Ministries
16
Trade Policy Making Map Consultative Mechanisms
Involvement
17
Stakeholder Views MITM
  • MITM is at the centre of three sets of demands
    and expectations EAC integration process, WTO
    agreements and negotiations, and domestic trade
    issues
  • MITM focuses mainly on the implementation of
    Tanzania Trade Integration Strategy (TTIS) that
    will ensure that objectives of NTP 2003 are
    achieved
  • To ensure effective implementation of TTIS, a
    Coordination Unit is being established in MITM
  • coordination unit to include representatives of
    all the relevant government ministries/departments
    as well as of TCI and TCCIA, but there is no
    representation of consumers and civil society.
  • MITM has improved but still lacks adequate human
    and financial resources to undertake all
    activities expected of it in relation to all
    trade issues
  • specific concern is the capacity of MITM to
    establish and manage formal mechanisms for
    stakeholder consultations.
  • Challenges
  • Institutionalizing consultation and coordination
    mechanisms with all stakeholders both in the
    government, the private sector and civil society
  • Publicizing trade policy extensively to raise
    public awareness
  • Completing a capacity needs assessment of itself
    and other stakeholders to design and implement
    capacity building programs accordingly
  • Ensuring implementation of trade policy in a
    coordinated manner through regular reviewing and
    monitoring.

18
Stakeholder Views Other Relevant Government
Bodies
  • Three broad categories for other government
    ministries involved in trade related issues
  • providing policy directions to MITM, providing
    inputs and feedback to MITM, and undertaking
    implementation of trade policy measures
  • With regular interaction with MITM, three
    categories of other govt. Ministries
  • Those providing policy guidance to MITM (Ministry
    of Planning, Economy and Empowerment Ministry of
    Finance and Ministry of Foreign Affairs and
    International Cooperation) have good interaction
    with MITM, interaction is not limited to
    coordination through the IMTC
  • Those that should provide inputs and feedback to
    MITM. They interact mainly through the IMTC,
    which may not be sufficient.
  • Those ministries and agencies that are mainly
    concerned with implementation of trade measures,
    interaction with MITM is the weakest
  • the Ministry of Agriculture and Cooperatives
    should be more closely involved given the
    importance of agriculture in Tanzanian economy
    and trade
  • Recommendations for Improving other relevant
    Govt. Ministries
  • Establish consultative mechanisms on trade that
    include all governmental stakeholders
  • Build the capacity of relevant ministries and
    agencies on trade issues within their respective
    mandates
  • Ensure a more regular interaction at the level of
    technical staff of MITM on the one hand and the
    technical staff of other relevant ministries on
    the other.

19
Stakeholder Views Private Sector
  • Main umbrella private sector and businesses
    organization, TCCIA, has a good relationship with
    the government
  • The normal procedure for consultation is for the
    government to request inputs from TCCIA through
    its Federal office
  • At time, the government did not take into account
    the concerns of the private sector while making a
    major decision.
  • Example, both the TCCIA and CTI had strongly
    opposed the decision by Tanzania to leave COMESA
  • Suggestions to improve Private Sector involvement
    in trade policy
  • Further capacity development of umbrella
    organizations like TCCIA and TCI on trade policy
    issues
  • Transforming NETT into a Standing Consultative
    Committee on Trade and broadening its remit from
    just EPA to trade policy in general.

20
Stakeholder Views - CSOs
  • Tanzania Association of NGOs (TANGO) has been
    quite active on trade issues, undertaking
    lobbying and capacity building activities,
    particularly on EPAs
  • Unlike their counterparts in the private sector,
    CSOs were not invited to participate in regional
    or global EPA negotiations as part of the
    official Tanzanian delegation within NETT.
  • This experience of NETT indicates serious
    problems that CSOs face in participating in
    stakeholder consultations on trade policy issues
    in Tanzania

21
Stakeholder Views CSOs cont.
  • Challenges
  • Limited understanding of trade issues among CSOs,
  • Inadequate funding for advocacy and research
    activities,
  • Fear among most CSOs of the consequences of
    engaging aggressively in policy advocacy which
    may not sit well with governmental authorities,
  • Lack of CSO focus on trade issues (e.g., most of
    them are working on multiple issues at the same
    time),
  • Inadequate advocacy skills,
  • Failure of CSOs to provide alternatives, e.g.,
    their Stop EPA campaign could have been more
    effective had they provided ideas regarding
    viable alternatives to the form of EPA they were
    criticising,
  • Lack of engagement between private sector
    organizations and CSOs,
  • Poor coordination between advocacy CSOs and
    research institutions,
  • Lack of legal framework for NSAs
    engagement/participation in decision making
    processes, and
  • Lack of government interest and sustained
    commitment to involve CSOs in policy making
    processes as watchdogs

22
Additional Feedback
  • Tanzania needs to bring its National Trade Policy
    in line with its National Strategy for Growth and
    Reduction of Poverty (NSGRP)
  • Trade policy dimensions of the five year national
    development strategy should be addressed (NSGRP)
    and the NTP should be adapted to the new national
    development paradigm where needed.
  • A standing mechanism for stakeholder consultation
    on all trade issues should be established to
    engage civil society, farmers, and consumers, and
    private sector representatives
  • The EPA process had initiated the process for
    establishing systematic and regular mechanisms
    for consultations on trade policy issues with the
    private sector and civil society
  • There is a need for thorough feedback and
    evaluation, from the inception of a trade policy
    making measure till its final implementation

23
Good Trade Policy?
  • No one-size-fits-all policy
  • Economists generally agree that open trade policy
    is good for development
  • features of good policy include
  • Coherence with national development policy
  • Supportive of and be supported by other
    government policies
  • Balance the interests of all key stakeholders
  • Conform with the commitments of the country under
    the WTO and other regional and bilateral
    agreements
  • Accompanied by an appropriate implementation plan

24
Process is Important
  • Determines whether the key features of good
    policy are attained which in turn determines the
    contents of policy.
  • May not result in best policy
  • but context and country specific
  • But widest possible buy-in and support from all
    key stakeholders
  • Support and ownership ensure policys relevance
    and proper implementation.
  • Outlining the key elements of the process also
    leads to the identification of the relevant
    stakeholders.
  • Important assumption key stakeholders are an
    active part of the process with opportunities for
    equal participation and proportionate influence.

25
Analytical Tool Linking Stakeholders with
Essential Features of a Good Trade Policy through
Trade Policy Making Process
Features of a Good Trade Policy Key Elements of Good Trade Policy Making Process Relevant Stakeholders
Based on national development policy Clear guidance/directions from national development policy makers National development policy makers (e.g., Ministry for Planning and Development, Presidents Office, parliament, etc)
Linked with other governmental policies Inputs and feedback from other government ministries/departments Other relevant government ministries/departments (e.g., those dealing with agriculture, employment and labour, finance, competition and consumer protection, education and health, etc.)
Linked with international commitments (to implement the commitments as well as to guide the positions regarding future possible commitments) Inputs and feedback from relevant ministries and negotiators Relevant ministries (e.g., Ministry of Foreign Affairs, etc.) and negotiators (e.g., dealing with the WTO agreements and negotiations)
Balancing the interests of all key stakeholders Inputs and feedback from key non-state stakeholders Key non-state actors (e.g., representatives of the private sector, farmers, consumers, and the civil society)
Clear implementation plan with adequate resources Commitment of required resources Relevant government ministries (e.g., Ministry of Finance) and donors (multilateral and bilateral)
26
Constructing ITPM
  • all the key stakeholders have been identified
  • they have equal opportunity to participate in
    the process
  • none of them is allowed to disproportionately
    influence the process nor the outcome in favor of
    its own interests.
  • Seven action variables, applied in two different
    groups
  • Variables 1-4 require action of primary
    government ministry in trade policy
  • Variables 5-7 require action of all other
    stakeholders
  • Three distinct indices are calculated for other
    relevant government agencies, private sector, and
    CSO categories of stakeholders respectively
  • maximum value of 1 (when the appropriate action
    has been taken by the concerned actor)
  • intermediate value of .5 (when some action has
    been taken by the actor concerned but such is not
    sufficient).
  • minimum value of zero (when the action has not
    been taken at all by the concerned actor)
  • Overall ITPM rating out of 13, index includes 4
    distinct parts

27
Purpose Tanzania ITPM
  • Increase the awareness regarding the political
    economy aspects of trade policy making in
    Tanzania
  • Assess in qualitatively terms the inclusiveness
    of trade policy making process in Tanzania in
    terms of the capacities, actions, and
    participation of main groups of stakeholders
  • Illustrate the areas where further efforts and
    action is required to facilitate capacity
    building initiatives for all those concerned
  • Facilitate the development of a more inclusive
    trade policy making process in Tanzania that will
    create local buy-in for the resulting policy.
  • Only such a buy-in can ensure a successful and
    sustained implementation of the trade policy to
    achieve the objectives of Vision 2025, NSGRP, and
    the TTIS.

28
Tanzania ITPM Index Parts I and II
Action Variable Action by Action Value
A. Identification of all key stakeholders MITM Some identified 0.5
B. Creating awareness about the need for trade policy MITM Some efforts made 0.5
C. Establishment and functioning of formal consultative mechanisms MITM Several established but irregular functioning 0.5
D. Regular information flow to the stakeholders including on the content of trade policy MITM Ad hoc and/or irregular 0.5
Part I Score MCTI 2.0/4.0
E. Regular participation in the process and feedback to the relevant authorities Other relevant government ministries/agencies Some 0.5
F. Faithful representation of and regular feedback to the represented constituencies Other relevant government ministries/agencies Some 0.5
G. Acquiring relevant knowledge and expertise Other relevant government ministries/agencies Some knowledge and expertise 0.5
Part II Score Other relevant government ministries/agencies 1.5/3.0
29
Tanzania IPTM Parts III and IV
Action Variable Action by Action Value
H. Regular participation in the process and feedback to the relevant authorities Private sector and business umbrella organizations Yes 1.0
I. Faithful representation of and regular feedback to the represented constituencies Private sector and business umbrella organizations Yes 1.0
J. Acquiring relevant knowledge and expertise Private sector and business umbrella organizations Some knowledge and expertise 0.5
Part III Score Private sector and business umbrella organizations 2.5/3.0
K. Regular participation in the process and feedback to the relevant authorities Civil society organizations Irregular participation 0.5
L. Faithful representation of and regular feedback to the represented constituencies Civil society organizations Occasional representation and/or irregular feedback 0.5
M. Acquiring relevant knowledge and expertise Civil society organizations Some knowledge and expertise 0.5
Part IV Score Civil society organizations 1.5/3.0
ITPM Index Score All stakeholders 7.5/13.0
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