AGRIBUSINESS MANAGEMENT

INDEX :7747719

YEBOAH ERIC

ABM 351 ASSIGNMENT 1

WHY DOES AN AGRIBUSINESS ENTREPRENEUR NEED INFORMATION ON

NATIONAL TRADE POLICIES?

National trade Policies

This Policy is set within the context of Ghana’s long term strategic vision of achieving
middle income status by 2012 and becoming a leading agro-industrial country in Africa. The
policy provides clear and transparent guidelines for the implementation of Government’s
domestic and international trade agenda. It is also designed to ensure a consistent and stable
policy environment within which the private sector and consumers can operate effectively
and with certainty.
The fundamental principle underlying the Trade Policy is that the private sector is the engine
of growth, with Government providing a trade enabling environment to actively stimulate
private sector initiatives.
This is to be achieved through the full spectrum of trade policy instruments across the
following thematic areas:
o Multilateral Trade
o Creating a fair and transparent import-export regime
o Facilitating Trade
o Enhancing Production Capacity for Domestic and Export Markets o Domestic Trade and
Distribution
o Consumer Protection and Fair Trade
o Protection of intellectual property rights
To ensure clarity of presentation, each policy component within the seven thematic areas, has
been analysed on the basis of the policy context, policy objective and policy prescriptions.
This will ensure that the specific policy prescriptions to be adhered to, are not only clearly
identified, but also properly understood within the relevant context.
The Trade Policy presented in this Document provides essentially, broad guidelines for
concrete action in the area of trade. The actual implementation will be effected through a
Trade Sector Support Programme whose annual Policy Action Statement will specify
activities to be undertaken annually. This Programme will be driven primarily by the Ministry
of Trade and Industry but will be coordinated through a cross Ministerial Trade Policy
Coordinating Committee, in recognition of its cross cutting nature.
v

Development Objectives
Trade policy is a key tool in achieving the Government’s development goals and objectives,
particularly as outlined in the Ghana Poverty Reduction Strategy. In view of Ghana’s
relatively small market, economic growth must necessarily come through increased
international trade. But this will also depend primarily on adding value to Ghana’s national
resources and enhancing the competitiveness of local production which in turn can only be
achieved through industrialisation. Hence, the Ministry of Trade and Industry has developed
two parallel strategies to contribute to the realization of Government’s development
objectives, namely:
o An Export-Led Industrialisation Strategy
o A Domestic Market-Led Industrialisation Strategy based on Import
Competition
Ghana’s Trade Policy will support these two strategies by first, promoting increased
competitiveness of local producers in domestic and international markets based on fair and
equal competition and secondly, by introducing an import and domestic trade regime which
promotes and protects consumer interests. This will enhance industrial and agricultural
production with increased employment and wealth for all Ghanaians and provide fair priced,
better quality and a broader range of products for all Ghanaian consumers.

The following are some of the national policies and it’s relevance for an agribusiness
entrepreneur;

Multilateral Trade Policies

The Government fully recognises that international trading rules have a direct impact on
Ghana’s development, especially in the context of globalisation. In this regard, the
Government will continue to fully participate in negotiations in multilateral trading fora to
ensure Ghana’s national interests are secured, and that the trading rules provide the best
opportunities for Ghana’s development.
This will improve market opportunities and support Ghana’s export development, whilst
applying disciplines in national regulations that support competitive production, and offer fair
priced products for all consumers.
1.1 Participation in the World Trade Organisation
Market Access in Industrial and Agricultural Products

Policy Context:
In the global trading environment, WTO negotiations progressively reduce tariffs of all
member countries and set the framework within which all member countries must trade. Such
commitments are made by all members including Ghana. Agricultural subsidies as well as
high tariffs and non-tariff barriers in other countries limit the potential for Ghana to produce
and trade in products of interest to Ghana.

Policy objectives ;
To obtain global reductions in tariffs and the elimination of non-tariff barriers on goods
produced in Ghana and improve export opportunities for Ghanaian producers.
To obtain reductions in subsidies on products which compete with Ghanaian exports.
To help develop Ghana’s agricultural and industrial sectors to compete in global markets.
Policy Objectives:
To obtain global reductions in tariffs and the elimination of non-tariff barriers on goods
produced in Ghana and improve export opportunities for Ghanaian producers.
To obtain reductions in subsidies on products which compete with Ghanaian exports.
To help develop Ghana’s agricultural and industrial sectors to compete in global markets.

Policy Prescriptions;
1. Government will seek improved access to key export markets whilst retaining sufficient
flexibility in its own tariff arrangements to allow development of competitive local industries.
2. In agriculture, the Government will support progressive elimination of export subsidies as
well as the substantial reduction of trade-distorting domestic support at WTO.
3. Government will ensure that it retains the right to support its own producers.

Bi-lateral Trade Agreement

Policy context
As a complement to multilateral efforts, there is scope to develop improved access to selected
markets on bilateral basis. This will lead to increased export opportunities and cheaper
imports of inputs for local production

Policy objectives
o To take advantage of opportunities offered in key strategic markets, foster business
cooperation and technology transfer and encourage Foreign Direct Investment (FDI).

Policy prescription
Government will seek improved access to key markets through bi-lateral trade and
investment arrangements, including preferential trade, economic, technical, social, cultural
and political agreements.

Measures and Duties

Import Duties;

RPolicy Context:
Restrictions in the import regime can lead to investment in “protected” sectors rather than
sectors for which Ghana can be competitive. This reduces export potential and results in
higher prices of both imports and local products.

Policy objectives
o To ensure fair prices to consumers especially for the poor and vulnerable sections of the
community.
o To encourage competitive production in Ghana.
o To level the playing field in international trade and counteract unfair trade practices such as
dumping and subsidies by foreign companies and governments.
o To ensure a predictable tariff regime this reduces business risk and encourages investment
in domestic production.

Policy prescriptions
1. Government will ensure that import tariffs and charges of equivalent effect, are applied in
a simple system of progressive tariff rates for inputs to production, intermediate products and
consumer products. These rates will be periodically reviewed.

Policy Prescriptions:
2. Government will ensure a reasonable level of protection to all domestic producers on a
sectoral basis, depending on their ability to compete with imports whilst encouraging
improvement in competitiveness and development of export potential over time.
3. Government will use tariffs to check unfair trade practices and provide local producers
with a reasonable level of protection.
4. Government will effectively use tariffs to encourage domestic production of strategic
commodities.
5. Exemptions from the applied tariffs will only be granted based on a clear and transparent
set of criteria such as imports for government, education, environment, health and charitable
purposes.

Export Duties and Taxes

Policy Context:
Export duties and taxes tend to increase costs and make Ghanaian exports uncompetitive in
global markets.

Policy objectives
o To ensure export duties and taxes do not increase the cost of exports and make them
uncompetitive in international markets.

Policy prescription
1. Government will only levy export taxes on selected products at a rate equivalent to the cost
of any services provided to that sector, exemption from taxes normally payable and any
social costs such as damage to the environment or utilisation of national resources.

Import Permits and Prohibitions

Policy Context:
Import controls are sometimes used as non-tariff barriers to trade, which can distort
investment decisions to favour uncompetitive sectors.

Policy objectives
o To prevent the control of imports distorting efficient allocation of domestic resources.

Policy Prescriptions
1. Government will ensure that both import prohibitions and import permits are applied on
the basis of clear and transparent criteria. These include environmental protection, national
security, health, public safety, moral and social welfare and cases of unfair trade practices
and dumping.

Rule of Origin

Ghana has plurilateral and bi-lateral trading arrangements, with differing margins of
preference, aimed at increased trade and industrialisation.

Policy objectives
o To ensure Ghanaian producers take advantage of preferences in partner markets.
o To ensure that the import regime is not distorted by abuse of the system of preferences
through misapplication.
o To build capacity for effective negotiation and administration of preferential arrangements.
o To ensure rules of origin are simple and transparent.
Policy Prescriptions:
1. Government will establish a framework for rules of origin to ensure that only those imports
which qualify, obtain preferential access to Ghana’s market.
2. Government will support producers to take advantage of the export opportunities provided
under such preferences.

Quotas and tariff quotas

Policy context
Quotas are a mechanism for stabilising prices and protecting domestic production and
consumers. However they are relatively inefficient policy instruments and are also difficult to
administer.

Policy objectives
o To stabilise import or export prices in the most efficient manner possible.

Policy Prescriptions
1. Quotas and tariff quotas will only be used temporarily when other policy instruments fail
to stabilise import or export prices.

Export Controls

Policy context
Excessive control of exports can limit export potential and distort domestic markets.

Policy objectives
Excessive control of exports can limit export potential and distort domestic markets.

Policy Prescription:
Government will ensure that both export prohibitions and regulations are based on clear and
transparent criteria such as maintaining the national reputation for products of a certain
standard and quality e.g. cocoa; and preserving the environment, natural resources, cultural
heritage, biodiversity and food security.

An agribusiness entrepreneur surely needs information in national trade policies in his

operations

Trade policy defines the laws related to the exchange of goods or services involved in trade
between different countries, including taxes, subsidies, and import/export regulations.
Trade policies benefits better performing firms and contributes to economic growth
Through national international trade policies
Households can benefit from international trade as it lowers the prices of consumer goods

Trade barriers such as tariffs raise prices and reduce available quantities of
goods and services for businesses and consumers, which results in lower income,
reduced employment, and lower economic output. Which means entrepreneur
needs information about trade policies.
Entrepreneurship is an activity that requires investment, consumption and
income generation to be successful. A sales tax reduces personal
consumption, higher personal income taxes reduce the incentive to work,
corporate income taxes reduce the incentive to start or expand a
business, and capital gains taxes reduce the incentive to invest. A recent
study provided estimates on the effect of taxes on economic growth

Four policies that have an impact on entrepreneurship are: tax policy,

regulation, start-up costs and access to capital markets, and legal
protection and property rights. Each policy is discussed through the lens
of economic analysis to which an entrepreneur needs information about it
to survive and maintain his ideas and innovations.
In conclusion National trade policies information will be need by
agribusiness entrepreneurs to survive and maintain their businesses.