Date: June 1, 2012, 10:11 am


GHANA LOCAL CONTENT POLICY OFFENDS WTO RULES


It has been observed that the country's much -touted local content policy on oil and gas potentially violates two cardinal requirements, Trade Related Investment Measures agreements (TRIMs Agreement) and the General Agreements on Trade in Services (GATS), under the World Trade Organization (WTO) rules on local content.

TRIMs are rules that apply to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. The rules were agreed upon during the era of the GATT (General Agreement on Trade and Tariffs), the organisation that gave birth to the WTO, which came into being 1994-1995. These rules restrict preference of domestic firms and thereby enable international firms to operate more easily within foreign markets.

These came to light at a meeting organized in Accra on Wednesday by the Integrated Social Development Centre (ISODEC) to review Ghana's current local content policy document in the context of WTO provisions and agreement with Ghana, among other things.

The local content policy framework, which is to  give consideration to Ghanaian independent operators in the award of oil blocks, oil field licenses, oil licenses for which contract are to be awarded in the Ghanaian oil and gas industry, stipulates that all regulatory authorities, operators, contractors and other entities involved in any project, operations or transaction involving the Ghanaian oil and gas industry should consider local content as an important element in their project development.

In a presentation, Dr. Dominic Ayine, lecturer, Faculty of Law at the University of Ghana, explained that governments used local content policies to achieve a number of objectives some of which included creation of strong industrial base through increased domestic value addition, expansion of employment opportunities for citizens, enhanced export performance (through value-added exports) Trade balancing, Transfer of technology and also creation of linkages between economic subsectors.

Dr. Ayine observed that key characteristics of the local content policy require every operator to have a local content plan (mandatory requirement) and that included Ownership of oil and gas business Procurement of local goods and services Training and technology transfer employment and training Local capability development Plan must lead to measurable and continuous growth in local participation in all aspects.

On the issue of compatibility of the Ghana's local content policy with the WTO requirements, Dr Ayine indicated that more needed to be done in the case of TRIMs in order to satisfy those requirements.  He said the local content policy, which was trade-related was investment measured and favoured the use of local over foreign products. Ghana, he said, needed to have laws in place that would not provide an escape route for any company that violates the rules.

"Legislation to enact the measures into law must be crafted to take advantage of the development exceptions of the WTO to avoid legal challenges before WTO Panels."

Dr Steve Manteaw, Campaigns coordinator at ISODEC, stressed that it was time Ghana moved away from the manner of its engagement in the mining sector where the country reduced its role as a nation to just collecting rent, adding, "and even that we have not mastered the skills because there are so many revenue leaks in the system that allows us not to receive our due from the industry."

The fact that Ghana has a local content policy meant it was gearing towards changing the trend by moving away from that role of rent collection to maximizing benefits across the value chain in the oil and gas sector.  Local content, he added, did not come by chance in that there were international obligations that bound trade including supply of goods and services that a local content policy must respect. These were systems put in place to ensure compliance.

On her part, Afua Amissah, Project Co-ordinator of local content at Ministry of Energy disclosed that the issues regarding local content would be an oversight responsibility of the Petroleum Commission. She told participants that the Ministry had a local content implementation strategy which would ensure that technology and skills were transferred to Ghanaians.  According to her, Local Content is a process and the Ministry would work to ensure that Ghanaians benefited from the oil and gas industry.

Source:channel two citing allafrica.com as source



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