By Ama Achiaa Amankwah
A number of Free Trade Agreements, (FTAs) are currently being negotiated between the European Union, (EU) and several regional groupings including ECOWAS. These negotiations, among other things are aimed at establishing a Free Trade Zone, (FTZ) between EU and ECOWAS for a period of twelve years, beginning January 2008.
But the EPAs have not gone down well with civil society organizations and some economic analysts. Prof. Cletus Dordunoo, an economist reckons that it has been difficult to estimate the costs and benefits of Economic Partnership Agreements, (EPAs) for developing countries.
This, he explained, is due to the fact that developing economies are afraid of losing more than gaining since successful trade liberalization requires substantial adjustments to existing economic structures.
Prof. Dordunoo was speaking at a public forum in Accra as part of activities to mark the EPA Week. It was organised by the Ghana Trade and Livelihoods Coalition, (GTLC), made up of over fifty non-governmental organisations, farmer groups and other civil society organisations.
He spoke on the topic “Outlook of the Ghanaian Economy in Full EPA and its Impact on Agricultural Sector/livelihoods,” a study conducted by Claydord Consult, which he heads.
He cited reciprocity and the move towards free trade, removal of markets segmentation, (promotion of regional integration) and trade related issues as among the five pillars of EPA being negotiated between Africa Caribbean, Pacific, (ACP) countries and the EU. The rest include free market services and development issues including policy dialogue and involvement of CSOs.
He explained that ACP countries must be sure to understand the EPAs in order to be effective negotiators, adding that a well prepared negotiator is the one who has all the facts and information on hand during negotiation.
“Now we have very little choice because ECOWAS is fronting the negotiations for us. But we should be able to make something good out of the seemingly bad situation.”
It has often been argued that trade between ACP countries and EU under conventions such as the Lome Convention has been too limited, hence the need for a new approach.
However, Prof. Dordunoo argues that among the critical issues to consider in the implementation of EPAs is whether the investment provisions of EPAs will adequately reflect the aspirations of the ACP countries involved.
He said although EPA would reduce revenue of ACP countries drastically, it could be avoided with massive support from EU, stressing that there are some benefits to be derived from EPAs if they are done correctly.
“Industries would become more competitive and there would be price stability in the declaration of prices due to lower import prices.” He added that investors would be wooed into Ghana if there is macroeconomic stability and good infrastructure.
Prof. Dordunoo noted that although market access would not be a problem, there are sanitary and phytosanitary issues to consider. He noted that in order to expand our markets we need to keep up to the requirements of international standard boards, thus our standard board must be at peak.
Empirical evidence on the outlook of Ghana’s imports under EPA are closely related to agriculture in the areas of value of imports, customs duty revenue and effects on welfare.
Thus, if the EPAs are implemented in their current form, Ghana and many Ecowas countries would suffer. One study estimates that Ghana will lose customs duty revenue amounting to ¢152.58 billion under EPA. The fall in customs duty revenue opens a significant resource gap with serious implications for the country’s public expenditures.
For the agricultural sector, an average net loss of ¢9.39 billion is estimated owing largely to welfare losses due to the displacement of efficiently produced imports of agriculture from the rest of the world.
Speaking on the likely “Effects of EPA on (West Africa) Ghanaian Industries,” Mr. Lawrence Sae-Brawusi, of the Ministry of Trade, Industry, Private Sector Development and Presidents Special Initiative, stated that studies have shown that removal of tariffs on substantial amount of imports from the EU would lead to a decline in tariff receipts and substantial loss of government revenues for development, since governments depends more on customs duties as a source of revenue.
He said the shortfall in revenue would however; depend on the kind of products and the percentage or the number of tariff lines excluded from the tariff elimination.
Besides, cheap European goods could flood the local market given the penchant of the average Ghanaian for foreign goods. This will no doubt have adverse effects on the local industries, as is already happening.
Mr. Sae-Brawusi however noted that effects of imported consumer goods for which there are no substitutes such as motor vehicles and electrical machinery cannot be discounted.
Under the EPA, ACP countries are expected to bear heavy adjustment costs and will be asking the EU for additional resources additional to meet the anticipated adjustment costs.
The Co-ordinator of the GTLC, Mr. Ibrahim Akalbila, emphasized that EPAs must be a partnership and not agreements. He said ACP countries must ensure that they are competitive enough to open up their economies for free trade.
He regretted that after about thirty years its existence, Ecowas members are yet to implement the most basic principle of Free Movement of Goods and People, therefore making the cost of doing business high.
“We must look out for barriers that hider effective trade liberalization before we move to access any different agreement such as the EPAs.”
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