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 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