The Economic Partnership Agreements Debate

Ms. Hannah Tetteh, Minister of Trade and Industry, says Ghana wants an ECOWAS consensus on the contentious Economic Partnership Agreements (EPAs) with the European Union (EU). “We are actively engaged in the discussion on having an ECOWAS platform for the full EPA, but as a country we have the interim EPA as a fall-back should we not reach a consensus within the stipulated time-frame.” She told this to the Business and Financial Times in an interview, explaining Ghana’s position on the hotly debated EPA which has drawn interest both locally and internationally. The Minister said there is need for a wider discussion on the issue, taking into consideration the bigger national interest. “It is true that in signing the full EPA we shall gain in some areas and lose in others, but we need to measure the gains against the losses and decide on what is best for the nation.” The EU is by far Ghana’s largest export market, accounting for more than half of all exports. She explained, “We have to consider the fact that we virtually export the same commodities as Cote D’Ivoire to the European markets; and should we refuse to sign the EPAs, our exporters will simply move their operations to Cote D’Ivoire and we shall lose.” ECOWAS, supercharged by regional economic giant Nigeria, which obtains over 90 percent of its export revenues from crude oil, is apprehensive of signing the EPA out of concern that an influx of European products will hurt local industry. Currently, Ghana is seeking to diversify its export base -- and the supply direction of a greater proportion of its non-traditional exports is to the European market. Under the EPA, Ghana’s exports to the European market will be 100 percent exempt from customs and other duties, while exports from the EU to Ghana will enjoy 80 percent exemption from similar duties and levies. Critics of the EPA contend that under that trade arrangement Ghana will lose the bulk of its revenue from import duties on goods from the EU. Ms. Tetteh said that the loss of revenue from import duties should be weighed against a situation where there would be a considerable loss of export revenue in the event of Ghana’s exports being denied entry into European markets. Economic Partnership Agreements are a scheme to create a free trade area (FTA) between the European Union and the African, Caribbean and Pacific Group of States (ACP). They are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules. The EPAs are a key element of the Cotonou Agreement, the latest agreement in the history of ACP-EU Development Cooperation, and were supposed to take effect as of 2008 -- but the negotiations are not yet completed. They are expected to be completed before January 1, 2014. The precise structure of the EPAs is still under negotiation between ACP and EU states. However, as envisaged by the EU, EPAs will include the establishment of free trade areas with ACP regions. Liberalisation of 90% of the total value of trade between the EU and the ACP would mean the EU liberalises 100% of its trade while the ACP liberalise 80% of its trade. Ghana’s other major trading partners include the USA and China, which account for nearly 8% and 5% of total exports respectively. The share of Ghana’s exports to African countries stands at 8%. Both India and Japan each account for 4% of Ghana’s exports. These developed and developing country markets absorb the bulk of Ghanaian exports. Ghana and the EU had already initialled an Interim EPA (IEPA) in December 2007 to conform to World Trade Organisation (WTO) requirements for preferential trade deals between WTO members. Ghana has now to sign and ratify the interim agreement in order to seal the legal void, and on that basis the agreement would enter into force Per the EPA, Ghana should start gradually opening its market to European goods on reciprocal terms by January 2013. The European Commission has proposed a change to its Market Access Regulation 1528/2007, which allowed the 36 ACP countries like Ghana who initialled an EPA end-2007 in order to export to the EU quota-free and duty-free. The EU has maintained that its offer was made in good faith on the principle that benefitting countries would take the necessary steps for the ratification and final entry into force of the agreement. The regulation, which was supposed to be a temporary gap-bridge remedy to sustain trade and exports between the two regions, will under the European Commission's proposal in early 2014 remove those countries which fail to ratify and start implementing their EPA agreements. “So, Ghana can no longer linger on the question of signature and ratification: the country now has to ratify the IEPA quickly, otherwise it risks losing important trade preferences -- which could derail some economic sectors (in agro-industry and fishery) and lead to high unemployment. “The final objective for the EU remains to have a global EPA with West Africa in its entirety, and the EU is fully committed to concluding this negotiation. In the meantime, the IEPA is good for Ghana and is good for our bilateral partnership and the private sector on both sides which try to nurture more economic ties between the two continents,” said the EU on its official position regarding the matter.