I have come to the firm conclusion that the EPAs which at the macro level which provides 100% duty free and quota free access to EU markets for ECOWAS/ACP countries and a reverse 75% market access for EU goods and services over an asymmetric 20 year period will be good for Ghana under the following conditions:
- Ghana needs to get its industrial and manufacturing policy right: Any good industrial policy will have at its core the active promotion of value addition for local consumption especially our agricultural produce, diversification of exports for both regional and international markets, and the protection of nascent industries in which the country has comparative and competitive advantages be it through subsidies or tax impositions. A lot of products from the agricultural and manufacturing sub-sectors are excluded from the iEPAs; thus, we can leverage on these in the medium term spanning 5-10 years if we are serious to develop a diversified exports base. Critical to the success of this, would the availability of reliable energy supplies (~5000MW) for both domestic and industrial consumption especially in the peri-urban areas where most of industrial activity will be concentrated. We should also importantly consider solar and other renewable options as part of an integrated off-grid package comprising not less than 20% of the energy mix for our rural areas.
- Promote local value addition and pay serious attention to capacity building: Key institutions such as the Ghana Standards Authority (GSA), Association of Ghana Industries (AGI), National Board for Small Scale Industries (NBSSI), The Food and Drugs Authority (FDA); BUSAC Fund; Ghana Export Promotion Authority, etc would need to up their ante by providing real grassroots support to entrepreneurs to ensure the integrity and safety of products emanating out of the value chain remain intact and at the lowest transaction cost so as to ensure positive returns for investors be they local or external.
- Some of the provisions under the iEPAs are inimical to Ghana’s economic interests and need to be reviewed: These are especially those bordering on the enactment of consultative processes before the elimination of export taxes; the standstill provisions which stipulate that no new tariffs can be introduced and once eliminated these tariffs may not be re-imposed or increased; the rules of origin clause which defines goods which qualify as Ghanaian products and therefore can access the EU market as those whose inputs originate from another country which has also signed an iEPA; and the most favoured nation (MFN) clause requiring parties to extend to each other the same treatment should one of them conclude a free trade agreement with any other developed or non-EU country or grouping which is a major trading economy. The question that immediately arises out of this is to what extent do these arrangements affect South-South trade given the growing dominance of Chinese and other Asian countries in Ghana and other countries on the continent at large?
- Our biggest worry at present shouldn’t be the Europeans. Instead we should be more concerned about the cheap substandard Chinese finished goods ranging from canned drinks to textiles and toothpick which are choking our markets and killing people en-masse with the ancillary health problems.
Some stylized facts:
- The majority of liberalized imports from the EU are mainly intermediate goods which serve as inputs to production by local industries, such as agricultural inputs, equipment and machinery.
- A lot of sectors especially agricultural and non-agricultural products, such as chicken, tomatoes, sugar, cereals and flour, frozen fish, tobacco, beer and industrial plastics are excluded from liberalization under the iEPAs.
- Ghana has already liberalized about 35% of its exports to the EU and it also remains true that the EPAs provide one the best access to the EU market than any other trade regime under the WTO’s generalized system of preferences of which Ghana is a signatory.
NB: I have created a Dropbox folder with files on the EPAs which can be freely accessed via the link below. The full assessment of the EPAs especially its trade and welfare impact is still ongoing and we hope to issue a mini-report for public education soon. Happy Easter to everyone! Cheers!