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Business News of Tuesday, 19 February 2008

Source: GNA

ACP countries to receive €23bn to implement EPA

Accra, Feb. 19, GNA - African, Caribbean and Pacific (ACP) countries will receive 23 billion Euros in development assistance over the next seven years as part of measures that would help implement the Economic Partnership Agreements (EPA).

The ACP countries would also be major beneficiaries of the decision to increase Europe's spending on aid for trade to two billion Euros a year, Dr. John Asafu-Adjaye, a Senior Fellow of the Institute of Economic Affairs (IEA) said on Tuesday.

Presenting a paper on the "European Union's Economic Partnership Agreement: Impacts and Implications for sub-saharan Africa", Dr. Asafu-Adjaye said the monies would be available to help the countries prepare new structural reforms and trade policies as well as enhance infrastructure and competitiveness to seize trade opportunity. The study sought to address some of the issues concerning uncompleted EPA negations and to inform trade and economic development policy in Ghana

The European Union (EU) and the ACP countries have been working to put in place new EPAs by the end of 2007. However, the deadline was not met and January 2008 was set for the completion of all negotiations. Ghana and Cote d'Ivoire signed the Interim EPA in December last year. Dr. Asafu-Adjaye said the EPAs had at least two basic trade effects which were trade creation and trade diversion. Trade creation involves the substitution of domestic products with imports of lower cost goods produced by a country's partner while trade diversion is a shift in imports from the least-cost exporter to more expensive imports from the country's partner. He said the EPA process could be an opportunity for Ghana to complete its structural adjustment reform agenda and access to the EU market and increased coverage of products and local capacity building. He said eventual removal of barriers of entry into EU services market could open opportunities for Ghanaian services providers in areas such as tourism, construction and transportation. On the negative side, there would be losses in tariff revenues which have to be made up elsewhere with some local industries contracting tariff revenue losses in Sub-Saharan African countries, in general and Ghana in particular.

Dr. Asafu-Adjaye urged government to expand the tax base and reduce budget deficit to take full advantage of the EPA. Mr. Kweku Agyeman-Manu, Deputy Minister of Trade said Ghana must begin to strategise in order to reap the maximum benefits from the EPA in order not to be exploited by the developed world. He said over dependence on imports and indirect taxes with over 60 per cent of tax levied on consumables was not good for the country and that this should change to direct taxes on people's income to generate a lot of revenue. Mr. Agyeman-Manu said there was no other option for Ghana but had to sign the agreement to Professor Nicholas Nsowah-Nuamah, Deputy Government Statistician, who chaired the function said the study had served as a good source of awareness on the implications of EPA on trade and how Ghana could benefit from it.