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Business News of Thursday, 21 July 2016


Special forum on Tuesday to discuss politics of EPA negotiations

Economic Partnership Agreements (EPAs) are enshrined in the Cotonou Partnership Agreement, signed in 2000 between the European Union (EU) and states from Africa, the Caribbean and the Pacific (ACP).

They are meant to be an answer to arguably, an ineffective non-reciprocal trade preferences the EU granted to the ACP over the past 30 years, and to conform the EU trade relations with ACP countries in line with World Trade Organisation rules.

The EPA is required to change trade preferences that have existed for 30 years which, in the words of both sides, have not helped to achieve the desired economic development in West Africa.

But a new trade agreement being offered by the European Union has proved controversial and few countries have agreed to sign up.

The EPAs have been dogged by controversies because there are fears that local industries in Ghana for instance, would struggle to compete if the government signed the agreement.

This is because African signatories will continue to get their products into Europe duty-free under the agreement which also meant that the EU countries will also mean allowing most goods from their side into countries such as Ghana duty-free.

But while the debate was ongoing, some West African countries including Ghana and Cote d’Ivoire had signed bilateral interim agreements with the EU. Ghana signed what is known as “stepping-stone” or interim EPA in 2007 and Cote d’Ivoire in 2008.

Divide and rule strategy

Some analysts suggest that, by negotiating agreements with separate countries, European leaders have adopted a divide and rule strategy aimed at weakening any possible regional clout.

With the threat of: "Accept this EPA deal now or pay tariffs," it is not surprising that the likes of the fruit exporters are getting nervous and are pushing the government here to sign.

In Ghana, civil society groups have also protested against signing of the EPA. Their complaint was that the Ghanaian economy would lose millions of dollars of revenue if the agreement was not renegotiated.

Conversely, the EU side has been optimistic about the progress made in negotiations.

"What the Europeans are putting in place is aimed more or less at undermining the attempt by African economies to move away from the dependence on exporting raw materials towards industrial processing," says Tetteh Homeku of the research and advocacy group Third World Network, in an earlier in interview with the Daily Graphic.

Tetteh Homeku says the Europeans are also interfering with the Ghanaian government's attempts to nurture its industry, and sidelining other trade agreements which would serve poor countries such as Ghana better.

He points to the Generalised System of Preferences, or GSP Plus, which is a European trade deal for countries whose economies are poorly diversified and therefore dependent and vulnerable.

European Union disagrees

But an EU source maintained that, “The general philosophy is to gradually transform the relationship between ECOWAS and EU from one of dependence to one of mutual trading partners.”

The envisaged EPA offers ECOWAS countries the right to protect infant industries and products from competition from abroad.

The EU is expected to support West African countries under the EPA’s Development Programme (EPADP).

“Once signed, the EPA will be applied asymmetrically with the EU fully opening up its market and ECOWAS only over time while retaining the right to protect a share of its sensitive industries from European competition,” the EU source added.

But the Ghanaian government is struggling to appease both exporters such as Blue Skies and those who fear the impact of the EPA on local industry.

The challenges of exporting perishable goods, especially in Ghana's climate, are great - the European supermarkets are unbelievably fussy customers, Ghana's electricity supply is far from guaranteed, the road to Accra is currently appalling.

But once these challenges have been overcome, at least Blue Skies has been able to sell to Europe tariff-free, officials say.

The current preferential trade agreement between the European Union and almost 80 countries has been declared illegal by the World Trade Organisation, so a new deal has to be found or else companies such as Blue Skies will suddenly be faced with tariffs.

Benefits for ECOWAS

In the relationship with the EU, all West African countries, except Ghana, Nigeria and Cote d’Ivoire, are classified as Least Developed Countries (LDCs).

The LDCs of West Africa are expected to have unfettered access to the European market for all commodities except guns under the Everything But Arms (EBA) agreement.

Sierra Leone, an LDC, is already benefiting from such an agreement. Another benefit is that the EPA is framed in a way to give West African producers, businesses and banks, the opportunity to do business with the EU from an advantageous position.

That is seen as an advantage which is not available to other developing countries. Reduction in tariffs and cost of imports is expected to benefit West African industries and businesses because it will reduce cost of production.

According to an EU source, “these will boost growth, create new employment opportunities and contribute to poverty reduction”.

The source believes that the EPA will help ECOWAS countries to move away from a tax-collecting system that is excessively reliant on high import duties to a system that depends on domestic taxation.

The shift will facilitate and improve revenue generation and stimulate better budget planning and execution.

Graphic Business Forum

On Tuesday, July 26, the Graphic Business in collaboration with Stanbic Bank, Ghana, will host a breakfast meeting on the theme “The Economic Partnership Agreement and its implications for business growth”.

The forum will assemble experts from various sources who, together with selected members of the general public will digest the agreement. The outcome of the forum will help inform the government’s decision on the way forward as a closure is brought to this very important issue.