PANA press reports that “the chairmen of the council of ministers and
the ECOWAS Commission say they are “very pleased” with the economic
Partnership Agreement (EPA) between West Africa and the European Union
(EU) after more than 11 years of intense negotiations, a statement
issued by the institution says.
Mr. Charles Koffi Diby, Ivorian minister of Foreign Affairs and
chairman of the ECOWAS Council of ministers is reported to have
highlighted the huge gains which the EPA offered particularly the offer
related to the access to West African markets of 75% of liberalisation,
the alignment of that offer on the ECOWAS common foreign tariff, which
comes into force in January 2015, the EU engagement to back the economic
partnership agreements projects (PAPED) and the adoption of the rules
of origin more favourable for exporters.”
From the above, I am not sure Ghana’s President could have the power
to change the course of the tide. Nigeria may have initially roared and
why not, they have the largest market and I guess many trade lawyers.
Not Ghana, with severely limited trade lawyers with skill attached to
the Trade Ministry.
So what was the likely scenario of a Ghana saying YES or NO to the
EPAs especially in the wake of the rather promising Bali Trade Package?
IMANI’s research earlier presented as part of the fall out from the Bali
Package explains below.
The WTO’s Bali Package is, of course, not the only trade agreement
deal available to Ghana. The European Union (EU) has put on the table
the Economic Partnership Agreement which can be signed individually by
West African states. The EPA is a free trade area scheme between the EU
and African, Caribbean and Pacific group of states (ACP). The EU is an
important trading partner for Ghana. It accounts for 40% of Ghana’s
agricultural-related exports. In the absence of the EPA, Ghana will
spend $52million annually in exporting goods to the EU.
According to
Haruna Iddrisu, Minister of Trade and Industry, Ghana’s involvement in
the EPA is dependent on the ECOWAS region’s collective decision to
accept or reject the agreement. The market liberalisation agenda, led by
the EU, would see the EPA granting signatories 100% duty-free access to
EU markets and 75% of goods would be imported into African states also
tariff-free. Ghana has initialed but not signed an Interim EPA. The
Interim EPA has enabled Ghana to benefit from duty-free, quota-free
style access into Europe, similar to what the Bali Package is offering
LDCs. Unlike the Bali Package, the EPA does not require universal
agreement.
Therefore, as much as ECOWAS states are to work together to
improve the terms of the EPA to benefit all the signatories, if there is
a sticking point for one or two countries it is possible that they are
excluded from the deal and their economy will suffer the consequences.
This is what the WTO’s Doha Round and Bali Package aimed to avoid and
the completion of the Bali Package offers ECOWAS’ LDCs a safety net of
assured preferential treatment in the wealthier states in Europe.
Ghana already imports a lot of the goods that it consumes. It has
been admitted by Haruna Iddrisu that our balance of trade is harming the
strength of the currency. Ghana stands to lose around $150-$374million
in tariff revenue if the EPA is signed. Additionally, it is a real
possibility that the European goods will out-perform locally produced
goods and the volume in which they are able to enter the market in
comparison to the struggle local start-ups go through to reach a
critical mass will harm Ghana’s manufacturing industries. The Bali
Package made provisions only for the safeguarding of food security.
The
threat of an influx of European goods, therefore, is the cause of the
delay to signing the EPA. This would be a well-judged delay if the
government was using this extra time to make the economy, the market and
the local companies more competitive with both the ECOWAS neighbours
and more ambitiously with EU members. However, with the signing of the
Bali Package, that aims to lower tariffs across the board and will
affect Ghana equally, the 75% % tariff-free will not be so impactful.
If the ECOWAS bloc is able to negotiate power relations, they could
secure the extra development support to deal with the shocks of the
agreement, similar to what the WTO members have agreed for developing
countries to deal with the economic shocks of the Bali Package.
Politically, the EU is driving the timing and terms of the EPA, they
have set a deadline of October 2014.
Therefore, the question of who is
setting the agenda crops up. The government’s analysis on Ghana’s
decision has been accurate. Ivory Coast possesses an export economy
resembling Ghana’s and Nigeria offers a larger market and superior
return on investment (one of the highest on the continent). If Ghana
chooses to opt-out of the EPA whilst the Ivorians and Nigerians sign it,
the country would have to battle to attract European investment and to
find favourable export markets and import partners. It is important to
note that the EPA enables Ghana to protect 20% of its domestic produce
including poultry, tomatoes, onions and sugar from a European-goods
influx.
Therefore, so long as the government accurately identifies the
industries that require ring-fencing the key contributors to the
domestic market should not cripple under the new agreement. But then
again, as before, the Europeans will have to increase budget support,
make financial commitments and payments to shore up budgets of ECOWAS
countries. This is the nemesis, the very reason we cannot eat our cake
and have it.
It is quite clear that we should have had leaders in the sub region
with gravitas to negotiate better terms, but we will have to wait much
longer for the promise. In the meantime, as they say charity begins at
home. We should have been trading amongst ourselves at least regionally.
But what do we see? Nigeria could afford to ban 92 goods from Ghana
entering its market from Ghana and then Ghana retaliates by pegging a
$1m capital by informal foreign business entrants from Nigeria and
others ECOWAS nations. Yet Ghana says it is the gate way to West Africa
and Nigeria the final destination, yet they belong to ECOWAS whose many
trade integration dreams haven’t materialised except perfected the art
of protecting their markets against competence. Whilst we are busy
banning other nationals from trading in our markets, my good friend
Tanko Adamu asks what we have achieved in Ghana for services that did
not have competition. Are we happy with the services being delivered by
state sponsored and state-owned monopolists such as VRA, ECG, Ghana
Water Company? What happened to the mobile telephones market when it was
opened up?
Franklin Cudjoe is Founding President & CEO, IMANI
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