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Opinions of Wednesday, 30 November 2011

Columnist: Bensah Jr., Emmanuel K.

Ghana Cannot Ride Two Horses

- Petition To The Minister Of Trade And Industry On The Economic Partnership Agreement

The economy, total global trade and the livelihoods of the overwhelming
majority of 25 million Ghanaians cannot be sacrificed for a paltry tax bill
of 37 million euro. West Africa’s development and its future cannot be sold
for 132 million euro. ECOWAS must immediately create a REGIONAL SOLIDARITY
FUND to absorb these losses. Ghana must signal her complete commitment to
promoting this Regional Solidarity Fund rather than its ‘national interest’
in the IEPA. It must also reject the attacks the EU is making on the ECOWAS
levy in the EPA negotiations, as this is the kind of mechanism needed to
create the solidarity fund"


As Ghana hosts the ECOWAS Ministerial Monitoring Committee Meeting (MMC)
from the 28 -30th November 2011, the preservation of the coherence of our
Economic Community and the future of West Africa’s Regional Integration
hangs in the balance. The so-called Economic Partnership Agreement (EPA)
West Africa is currently negotiating with the European Union (EU) has
already caused costly divisions in ECOWAS.

The EPA has created at least 3 contradictory trade regimes in a region that
is supposed to have a single unified trade regime. LDCs in West Africa
currently trade with the EU under the non-reciprocal Everything But Arms
regime; as a non-LDC, Nigeria trades under what is known under the EU GSP;
and Cote d’Ivoire has a bilateral EPA with the EU under which it is exempt
on a small range of taxes imposed on Nigerian exports to the EU, BUT in
exchange for exempting 81% of all imports from EU into Cote d’Ivoire from
any tariff whatsoever.

The EU is our biggest trading partner and impacts our economies for better
or for worse. Goods coming into West Africa from the EU will come in at 3
different tariff regimes and costs. What then will happen to the flow of
these goods from each of these three sets of countries into each other as
well as all other goods trade that exists between them? It is not difficult
to imagine the trade bans, blockades and wars that will escalate within the
region. This is the state of affairs that exists in West Africa as the MMC
convenes in Accra today. The implications for ECOWAS are simply staggering.

But it can get much worse. In addition to these three trade regimes Ghana
is on the brink of finalising and making PERMANENT its own INTERIM EPA
which it undertook as a temporary measure three years ago. The Ghana IEPA
has only slightly better terms in the scope of free entry it allows imports
from Europe. Thus, Ghana will join Cote d’Ivoire in offering EU imports the
most liberal, widest and therefore potentially most damaging market access.
Meanwhile Ghana’s terms are not identical to that offered by Cote d’Ivoire.
In effect, the Government of Ghana would have created a FOURTH trade regime
in West Africa. How can anyone seriously claim that this is and will remain
in the national interest of Ghana? If taken any further, Ghana’s unilateral
stance will be a disaster for herself and for the region she is permanently
tied to!

However this need not happen if Ghana and sister West African governments
show vision and leadership and put the defence of ECOWAS’ integrity today
and its progressive development tomorrow as the central common priority and
shared destiny.

The current MMC which gets underway in Accra this morning and the outcomes
it produces will accelerate ECOWAS fracture or consolidate and enhance its
2.0 Issues in the EPA and Our Position:

1. The threats by Ghana Government to sign and ratify the interim EPA
initialed in 2007 will destroy efforts over the years to integrate as one
region. Ghana’s Interim EPAs eliminates tariffs on above 80% of EU trade
goods but the collective ECOWAS EPA is currently offering much less than
that. ECOWAS is now considering 70% offer, we think this is already too
high and too dangerous for our economies! But the EU still rejects the
(excessive) 70% offer. The EU is intransigent to the ECOWAS position
because once it has the 80%-plus benchmark from Ghana (and Cote d’Ivoire)
it knows West Africa’s common stance has been greatly weakened. The EU’s
ruthlessness, divisive and bullying stance in the EPAs has been officially
acknowledged and condemned by African governments, including Ghana. But the
example and fact of Ghana’s IEPA gives the EU clear evidence and encourages
its confidence that if it remains just as ruthless for long enough other
West African governments will crack. Today, it is Ghana’s position that is
in the balance. The Ghana IEPA is a Trojan horse. We demand the Ghana IEPA
be suspended immediately and Government commits fully and unconditionally
to the collective ECOWAS EPA process, including the immediate issue of the
collective position on the scope of Market Access.
2. ECOWAS must take a collective stance which, among others, compensates
non-LDC members like Ghana for the costs in extra tariffs that their
exports to the EU market will attract if they abandon the IEPA. Credible
estimates indicate that the three non-LDCs in West Africa will incur
additional tariffs on their exports into EU of about €132million if they
trade without an EPA. Ghana’s direct share of these losses will be about
€37 million euro. The economy, total global trade and the livelihoods of
the overwhelming majority of 25 million Ghanaians cannot be sacrificed for
a paltry tax bill of 37 million euro. West Africa’s development and its
future cannot be sold for 132 million euro. ECOWAS must immediately create
a *REGIONAL SOLIDARITY FUND* to absorb these losses. Ghana must signal
her complete commitment to promoting this Regional Solidarity Fund rather
than its ‘national interest’ in the IEPA. It must also reject the attacks
the EU is making on the ECOWAS levy in the EPA negotiations, as this is the
kind of mechanism needed to create the solidarity fund.
3. Beyond the immediate threat of extra tariffs on exports to Europe
from Cote d’Ivoire, Ghana and Nigeria (the non-LDC countries in ECOWAS), it
must be made clear that ALL West African countries will incur massive
fiscal losses from the EPAs. It is worth reminder that the 13 West African
LDCs currently export everything but arms duty-free, quota-free to the EU
market. But they are currently entitled to impose tariffs on all EU
imports. Revenue from trade tariffs are the lifeblood for these and other
least developed as well as vulnerable lower income developing countries.
*Ghana alone stands to lose $194 million (UNECA, 2005).* Under the EPA
even the LDCs have to grant EU imports free entry and lose the associated
revenues from tariffs. This will be ‘in exchange’ for something they
ALREADY HAVE (and have for free), i.e. duty-free quota-free access to EU
markets for all exports apart from arms.

Further, the EU’s position on various aspects of the EPAs, e.g. standstill
on introduction of new tariffs and taxes or increase in existing ones;
restrictions on the use of export taxes and quantitative restrictions; the
MFN, non-execution clause and others, collectively termed ‘contentious
issues’ in the negotiations, will divert trade within West Africa as well
as West African trade with other, non-EU countries and regions to their
gain but to our loss. They will also undermine the Region’s efforts to
industrialize and its ability to move up the industrial value chain. As a
result, the region will remain a perpetual supplier of raw materials, with
all the adverse implications that this entails. Any regional EPA must
remove these EU impositions and narrow the scope of threat or damage to
ECOWAS. Suspending Ghana’s IEPA and the provisions it contains on these
issues will enhance ECOWAS ability to review and strengthen its collective

1. The EU’s demands and pressure in areas that go beyond tariffs and
World Trade Organization (WTO) commitments – such as Financial Services,
Public Procurement, Investment, Health, Raw Materials, Natural Resources
and Intellectual Property - pose even greater threats and are of more
strategic importance to Ghana’s (as well as West Africa’s) economic
transformation, industrialization and overall development. In the case
of Services, internal trade within West Africa is even bigger and more
dynamic than trade in goods within the region. But West Africa is hardly in
a position to export services to the EU. Officials claim that negotiating
and including services (as well as the other WTO-plus, Trade-Related Issues
like Procurement. Investment and Intellectual Property) will create a
predictable environment for EU trade and investment in West Africa. We have
already had increasingly free trade in goods with the EU and others for
more than 30 years. There is one predictable outcome we already know – EU
companies will dominate in these areas, our already low existing capacity
will be weakened even further, including our foothold in the growth areas
of trade in services and in manufactures within West Africa. Any EPA must
be a goods-only agreement and must exclude Services and the so-called Trade
related Issues.

5. While ECOWAS has bent over backwards to accommodate EU demands,
her ‘partner’ remains inflexible, unyielding or worse. In fact the EU has
consistently flouted and retracted on commitments it has previously made. A
most telling example is in the area of EU responsibility to finance fiscal
losses West African countries will incur as a result of entering into EPAs.
Another is the subterfuge the EU has shown in respect of providing
ADDITIONAL funding for the EPA Development Programme (or ‘PAPED’). The EU
has watered down and reversed commitments and has engaged in patent
falsehoods, recycling existing European Development Fund commitments as
‘new and additional funding’. By foul and other means the EU continues to
show beyond all reasonable doubt that its interests in the EPAs have little
or nothing to do with ECOWAS development or regional integration
aspirations, but everything to do with securing preferential advantages in
West African economies and markets against all comers – including our own
domestic and regional producers and our development needs. ECOWAS must
insist and secure binding and unequivocal EU compensation, adjustment and
development commitments as a pre-condition for any EPA.

6. But Ghana and West Africa must also prioritize the diversification
of their trade away from the EU, as well as our own developmental
regionally integrated production capacities, investments and markets. The
EU’s current economic crisis is partly due to the same unbridled
liberalisation policies it is trying to impose on us through the EPAs. In
Europe today, the corporate monopolies in the financial services sector in
particular are holding all working people in Europe and whole economies to
ransom. Meanwhile as current trends show, many more prospects exits for
production partnerships, trade, investment and economic development with
emerging regions in the global South. Locking in our entire trade,
investment and development finance policies by giving EU privileges no one
else has, not even our own companies and citizens, is not a forward looking
policy. Today we are unable to share in windfall profits of mining
companies because we locked ourselves into agreements that predictably
provided all the guarantees and benefits for our ‘partners’. We are left
with dwindling shares, missed opportunities, the destruction of livelihoods
and of the very environment we live in! Our national and regional
development plans and their integration must come first and determine the
scope and content of any EPAs. The world is very different at the end of
2011 than it was at the beginning of 2002 when EPA negotiations began. The
speed of change, including negative change is the key feature of economic
fortunes. The entire ECOWAS leadership and the Government of Ghana must
begin to lay down concrete alternatives to the EPA as they meet in Accra
this week.
3.0 Conclusion

As Ghanaian organisations and citizens we call on the Government of Ghana
to live up to the nation’s role and responsibility to ECOWAS and Africa’s
unity and to our self-determination in charting and realising our
developmental transformation. Thirty or so years of trade liberalisation
has not brought us any closer to this. Rather it has brought collapse of
industries, paralysis of agriculture and unprecedented mass unemployment
and youth discontent in our societies.

Ghana must pull back from the brink of a unilateralism that will put
another nail in the coffin of development in our country and in our region.
It must suspend its bilateral EPA and fully and unconditionally return to
the fold of the collective regional EPA process. Ghana cannot ride two
horses at once. Two horses going in different and opposite direction will
tear the rider apart and trample her underfoot.

Sister ECOWAS Trade Ministers and Governments must also play their part
that we ride together towards the same destination and destiny for our
collective mutual protection and benefit. The ECOWAS MMC must define a
collective solution that addresses any losses that Ghana, Cote d’Ivoire and
other countries will face in the absence of their interim EPAs. This is the
most immediate means to consolidate ECOWAS in the EPA process and in our
deep common interests that go way beyond extra taxes that we will have to
pay on a very small proportion of our exports to Europe.

*Accra, 28th November 2011*. Signed by the ff Organizations: