RegionsWatch was set up in February 2004 to "monitor work of regional organisations; raise awareness of other regionalisms; provide constructive & progressive critiques of global regional integration initiatives". This blog will seek to continue the work that was being done in RegionsWatch's Observatory
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GHANA CANNOT RIDE TWO HORSES - PETITION TO THE MINISTER OF TRADE AND INDUSTRY ON THE ECONOMIC PARTNERSHIP AGREEMENT (EU) WITH THE EUROPEAN COMMISSION ON 28TH NOVEMBER 2011 1.0 Preamble
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 in 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 future.
2.0 Issues in the EPA and Our Position:
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.
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.
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 positions.
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.
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: GHANA TRADE UNION CONGRESS, GHANA TRADE AND LIVELIHOODS COALITION, ISODEC, THIRD WORLD NETWORK-AFRICA, ABIBIMAN FOUNDATION, ACTION AID GHANA, GAWU, SEND FOUNDATION, FOODSPAN – all members of the ECONOMIC JUSTICE NETWORK OF GHANA (EJN)