Your World of Legal Intelligence
 United Kingdom | +44 (0) 20 7284 8080

RECENT DEVELOPMENTS–ACTUALITES BAN ON THE IMPORTATION OF TOMATO PASTE AND CONCENTRATE INTO GHANA

Document Cited authorities 2 Cited in Related
Vincent
Published date01 March 2008
DOI10.3366/E095488900800008X
Pages100-114
Date01 March 2008
AuthorKOFI OTENG KUFUOR
INTRODUCTION

In August 2007, Ghana's Ministry of Trade, Industry and Presidents Special Initiatives (MOTI) announced a ban on imported tomato paste and concentrate. The ban took effect from 1st November 2007. The consequence of the ban is that any tomato paste or concentrate imported into Ghana will be confiscated to the state.1

See ‘Tomato paste importation to be banned’, Daily Graphic, 3 August 2007, available at www.ghanaweb.com/GhanaHomePage/News/artikel, last visited 1 December 2007.

On its face, this decision is quite strange. Since the early 1980s and stemming from a crippling economic crisis at the time, Ghana has embraced the Bretton Woods neoliberal policy prescriptions as a panacea for its economic recovery. As part of its commitment to neoliberalism, Ghana has adhered to trade liberalization and evidence of this is carefully documented in its Trade Policy submissions to the World Trade Organization (WTO).2

Ghana has made two Trade Policy submissions to the WTO. Both indicate policy shifts towards the so-called Washington Consensus which is at the heart of the neo-liberal agenda. See J. Williamson, ‘What Should the World Bank Think About the Washington Consensus?’ 15 World Bank Research Observer (2000): 251–264; and W. K. Tabb, ‘After Neoliberalism?’ 55 Monthly Review (2003): 25–33.

 Thus, the import ban is a deviation from the commitment to trade liberalization and is one of the few instances where MOTI has moved to grant new levels of protection to domestic industry.3

In 2000 a Special Import Tax was imposed on certain imported goods to protect domestic industries from what was considered unfair trading practices by foreign traders. See Trade Policy Review – Ghana 2001, available at http://www.wto.org/english/tratop_e/tp157_e.htm, last visited 30 November 2007. For a discussion of their impact, see Private Enterprise Foundation, Study on the Impact of the Special Import Tax (2001), Private Enterprise Foundation, Accra: Ghana. Another instance of protection was in Act 641 (2003) which increased import taxes on poultry products from 20% ad valorem, to 40%. This Act was never fully implemented as 7 days after the Act was passed, national Customs and Excise was directed to ignore its provisions and was repealed in 2004.

In this Recent Development, we explore the motives for the import ban and the institutional and organisational4

I make a distinction between institutions and organisations as is the case with the New Institutional Economics Schools. Institutions are the formal and informal constraints on human behaviour and their enforcement powers whilst organisations are the players (the collective of individuals) that make institutions and are shaped by them. See D. C. North, Five Propositions about Institutional Change (1993), available at http://ideas.repec.org/wpawuwpeh, last visited 25 November 2007, p. 1.

issues the ban throws up. Part I of this Recent Development outlines the state of the tomato industry in Ghana, the pressures it has come under as a consequence of trade liberalization, and the lobbying for protection by industry participants. Part II sketches the contours of Ghana's Trade Policy. Part III examines the legal issues surrounding the ban. Part IV examines the decision-making process within MOTI. Part IV notes that consumers were excluded from this process and thus the import ban can be described as the sale of monopoly privileges to the local tomato processing industry. Part V examines the role the courts can play in foreign trade regulation and it also identifies an emerging trend towards judicialising Ghana's foreign trade. Part VI concludes THE STATE OF THETOMATOANDTOMATO PASTE INDUSTRY IN GHANA

Ghana's tomato industry has expressed concern about developments in the import of tomatoes and tomato paste. The National Tomato Traders Association (NTTA) has alleged tomato imports from neighbouring Burkina Faso in particular pose a threat to their livelihoods.5

Apart from liberalizing trade under the direction of the Bretton Woods institutions and also as a consequence of Ghana's membership of the World Trade Organization, cheap imports of tomatoes from Burkina Faso are probably also due to the Economic Community of West African States Trade Liberalization Scheme.

The essence of the allegation is that the prices of Ghanaian tomatoes tend to be depressed on account of the glut of excess tomatoes that are imported from Burkina Faso thus eroding the expected gains from their investments in this enterprise. Ghana's tomato farmers also allege harm being caused by tomato imports from Burkina Faso. The farmers’ claim is that there is a flood of cheap imports from this country because Burkina Faso's tomato farmers have certain advantages over them and thus there is the need for state intervention to address this. Ghana's tomato farmers argue that their tomatoes are grown mainly in the northern part of the country where the farming season conducive to growing tomatoes is for only six weeks whilst in Burkina Faso, the tomato farming season is for six months.6

See C. Lartey, ‘As Police, Farmers, Traders Engage in Tomato War’, Ghanaian Observer 2 March 2007, available at http://www.ghanaianobserver.com/news/newsarticle, last visited 19 November 2007. Ghanaian tomato farmers also allege that their government does not provide them with the sophisticated technology for tomato production that is available to Burkina Faso's farmers.

 This enables Burkina Faso to overproduce and export a large volume of its excess tomatoes to Ghana. Hence the Ghanaian tomato industry has lobbied for protection from low-priced foreign tomatoes through government intervention.7

See ‘Ghana Tomato Farmers, Traders Agree to End Bitter Stand-Off’, available at www.OTAL.Com/images/OTAL%services, last visited 1 December 2007.

 Another allegation against the Burkina Faso tomato industry is that their farmers are growing genetically modified tomatoes and this explains their ability to harvest tomatoes in such quantities as to make possible their capture of a sizeable share of the Ghanaian market. Furthermore, there is the allegation that Burkina Faso's farmers still receive huge government subsidies and this enhances their ability to overproduce and export their surplus to Ghana at low prices.8

See A. Koranteng ‘B-Faso Tomatoes Contained GM Seeds – Experts Say’, Ghanaian Statesman, 21 November 2007, available at http://www.statesmanonline.com/pages/, last visited 2 December 2007.

The Ghanaian government has responded to the tomato growers and traders lobby by facilitating a commercial relationship between the two that seeks to guarantee price stability and a ready supply of markets for their produce. The arrangements are that members of the NTTA are expected to purchase their tomatoes from growers in the Upper East Region of Ghana and Burkina Faso farm-gates simultaneously. Thus the low-cost of tomatoes should not be their sole consideration and this guarantees local farmers a ready market for their produce at decent prices.9

See Lartey, ‘As Police, Farmers, Traders Engage in Tomato War’, supra.

The re-activation of the former State-Owned Enterprise Northern Star Tomato Factory (NSTF) to convert fresh tomatoes into tomato paste, as a public-private initiative10

The NSTF is a joint enterprise between local communities, district assemblies and private operators. See N. Obeng-Danquah, ‘New Tomato Facilities bring Fresh Hope for U/E Farmers’, The New Statesman, 29 March 2007, available at http://www.thestatesmanonline.com last visited 5 December 2007. District Assemblies are units of local government in Ghana. See Constitution of the Republic of Ghana, 1992 Ghana Publishing Corporation: Accra, Ghana (1992), Article 241(3).

 was a further step in the direction of the state playing a role in the tomato industry through the creation of organisational structures. The NSTF is the revamping of a tomato processing factory that was established in 1968 and closed down in 1989.11

See, ‘New Tomato Factory at Pwalugu’, Ghana News Agency, 29 March 2007, available at http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel, last visited 7 November 2007.

 The role of the NSTF is that it will guarantee the purchase of locally grown tomatoes. Thus through a combination of protection from low-cost foreign imports and support for local industry, the tomato growers are guaranteed their survival in the face of low-priced competition

The tomato processing sector of the economy has also faced problems brought on by increased imports of tomato paste in Ghana. It is obvious that there has been a dramatic rise in the volume of tomato paste imported into Ghana. Available figures indicate that from 1991 to 2002 the quantity of imported tomato paste rose from 3,600 tonnes to 24,077 tonnes. In addition the value tomato paste imports also rose from US$5.3 million to US$17.5 million over the same period.12

See M. Khor and T. Hormeku, The Impact of Globalisation and Liberalisation on Agriculture on Agriculture and Small Farmers in Developing Countries: The Experience of Ghana (2006) available at http://www.twnside.org.sg/title2/par/Ghana_study_for_IFAD_project_FULL_PAPER_rev1apr06.doc, last visited 2 December 2007, p. 35.

In the early stages of this rise in imports, local processing of tomato paste also rose dramatically. In 1990, total production of locally processed tomato paste was 86,400 tonnes. By 1999 this had increased to 215,000 tonnes. However, the local industry's fortunes began to decline and from 2000 to 2003, local production decreased and remained stagnant at 200,000 tonnes13

Ibid. Table 3.3., p. 36.

 and it is this development that led to concerns about the ability of local industry participants to survive in what they allege, is an unfair market place

Lobbying for protection from imported tomato paste was premised on a number of arguments: First imports had reduced the demand for locally grown fresh tomatoes and this resulted in a loss on...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT