Summary
The ratification of the 2007 EU-Ghana IEPA means this agreement can now be provisionally applied. This will start the clock on the 5 year grace period on preferential tariff reductions for EU suppliers. It could also lead to demands for the Ghanaian government to remove all prohibitions and restrictions on imports from the EU. This latter dimension could have direct and immediate effects on the Ghanaian agro-food sector and could carry important implications for other West African EPA process countries, depending on how the Ghanaian IEPA is interpreted and applied in practice. This will require careful monitoring.
On December 1st 2016 the plenary of the European Parliament approved the 2007 interim EPA with Ghana by 375 votes to 220, with 46 abstentions. Over 1/3 of MEPs (including 2/3 of the Socialist Group) voted against the agreement, hardly the ringing endorsement of the agreement which Trade Commissioner Malmstrom had called for. (1) Concerns expressed highlighted the ‘incomplete and outdated’ nature of the 2007 agreement, (2) since it referred to national tariffs in place in 2007 when the negotiations were concluded and ignored the entry into force of the ECOWAS common external tariff on January 1st 2015. (4)
The creation of a common regional external tariff makes it illegal for individual ECOWAS governments to alter external tariffs unilaterally in contravention of the commonly agreed tariff. These kinds of concerns led some MEPs to question whether such an agreement was consistent with the EU’s commitment to regional trade integration in West Africa. (1)
Concerns were also expressed about the impact of BREXIT on the value of the EU-Ghana IEPA for Ghanaian exporters, with it being noted that currently 32% of Ghanaian exports to the EU were destined for the UK market. A much higher market dependency that the size of the UK’s share of EU GDP (17%) would warrant. (1)
Nevertheless, Commissioner Malmstrom described the interim bilateral EPA as ‘the best option available at the moment’ while the EC continues with its efforts to conclude a region wide EPA. This region wide EPA once concluded, will replace the interim bilateral EPAs concluded with Ghana and Cote d’Ivoire. While a third of MEPs contested the view that ratification of the 2007 interim bilateral EPA with Ghana was ‘the best option available’, the rapporteur on the Ghanaian-EU IEPA Christofer Fjellner maintained ratification of the agreement was essential to prevent Ghana facing ‘a wall of EU tariffs’, once the current market access regulation lapsed at the end of 2016. (1)
While on average tariffs would increase 8.13%, in important export commodities such as bananas and prepared tuna these increases would be 19.7% and 20.7% respectively. The rapporteur further argued the EPA was a ‘good agreement’, since it:
- liberalised tariffs on products which were not produced locally and which are inputs into other manufacturing activities;
- protected sensitive agricultural products (poultry meat, tomatoes, onions, sugar, wheat frozen fish etc.), by excluding them from tariff liberalisation processes;
- made provision for safeguards which could be used to protect Ghanaian producers if imports threatened to disrupt markets. (1)
Trade Commissioner Malmstrom endorsed this view, noting in addition the agreement included provisions to help Ghanaian producers meet EU standards, a component of the agreement which would be ‘good for farmers’. (1)
She acknowledged that the key challenge under all EPAs now entering into force was ‘to fully use trade as a tool for growth, sustainable development and employment’. In this context she argued the agreement provided ‘a solid environment for local and foreign investors’, with this making a contribution to increasing formal sector employment. (1)
Commissioner Malmstrom strongly implied the EU had little commercial interest in the bilateral agreement with Ghana, since it would ‘have marginal effects on the European economy’. She maintained the agreement was primarily about supporting democracy and development in Ghana. (1)
With the approval of the agreement by the European Parliament the EU-Ghana IEPA can now be provisionally applied. Indeed, the EC officially announced the agreement had entered into force on the 15th December 2016 (7). The IEPA will replace the current market access regulations as the basis for Ghana’s continue duty free-quota free access to the EU market. However it also starts the clock on the 5 year grace period after which Ghana will need to start reducing tariffs in line with the commitments entered into under the agreement.
Source:
(1) Text of debate in the European Parliament on EU-Ghana Stepping Stone Economic Partnership Agreement (debate), 1 December 2016
http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20161130&secondRef=ITEM-013&language=EN&ring=A8-2016-0328
(2) Video of the speeches in the debate in the European Parliament on the EU-Ghana Stepping Stone Economic Partnership Agreement (debate), 1 December 2016
http://www.europarl.europa.eu/sides/getVod.do?mode=chapter&language=EN&vodDateId=20161130-17:59:21-325
(3) Council of the European Union, ‘Council decision on the signature and provisional application of the stepping stone Economic Partnership Agreement between Ghana, of the one part, and the European Community and its Member States, of the other part’, 10 November 2008
http://data.consilium.europa.eu/doc/document/ST-12130-2008-INIT/en/pdf
(4) euractive.com, ‘Incomplete and outdated’: Why I reject the EU-Ghana deal’, Jude Kirton-Darling (MEP) 31st October 2016
https://www.euractiv.com/section/trade-society/opinion/incomplete-and-outdated-why-i-reject-the-eu-ghana-deal/
(5) Ministry of Trade and Industry, ‘Ghana’s Exports into EU market will be protected” – Spio assures exporters’, 20 April 2016
http://moti.gov.gh/news/1461141250/%E2%80%9Cghana%E2%80%99s-exports-into-eu-market-will-be-protected%E2%80%9D-%E2%80%93-spio-assures-exporters
(6) Agritrade, ‘ACP agro-food exports: The growing importance of NTMs & SPS dispute settlement mechanisms’, 25 May 2014
http://agritrade.cta.int/Agriculture/Topics/SPS-Food-safety/ACP-agro-food-exports-The-growing-importance-of-NTMs-SPS-dispute-settlement-mechanisms
(7) EC, West Africa’
http://ec.europa.eu/trade/policy/countries-and-regions/regions/west-africa/
| Comment and Analysis
Despite the EC’s longstanding commitment to supporting regional trade integration, the Ghanaian and Ivorian IEPAs are not the first time the European Commission has concluded bilateral agreements which undermine a regionally agreed common external tariff arrangement. In 1999 the EC concluded a bilateral trade agreement with South Africa, despite the existence of a common external tariff agreed jointly by South Africa, Botswana, Lesotho, Namibian and Swaziland under the Southern African Customs Union Agreement. The important point to note about the 1999 bilateral EU-South Africa free trade area agreement is that the tariff reduction commitments entered into provided the basis for the subsequent region wide liberalisation of tariffs on imports from the EU agreed under the SADC Group-EU EPA. This agreement entered into force in October 2016, having finally been signed in June 2016. Against this background the question arises: will the bilateral tariff reduction commitments entered into by Ghana and Cote d’Ivoire become the baseline for tariff reduction commitments to be undertaken by the wider West Africa regional, including in regard to the start date for the countdown for the commencement of the preferential reduction of tariffs on imports from the EU? While Trade Commissioner Malmstrom has in the past highlighted how in the West African context agro-food products have largely been excluded from tariff elimination commitments under the IEPAs and proposed regional EPA, this is unfortunately not the real issue in the agro-food sector. As EU agro-food sector exporters have long acknowledged, non-tariff measurers rather than tariffs constitute the main obstacle to the continued expansion of EU agro-food sector exports. Since 2007 the EC’s Agriculture Directorate has been elaborating and implementing a pro-active policy for the systematic removal of non-tariff barriers to EU agro-food exports. In an EPA context this gave rise to the inclusion of provisions which committed sub-Saharan African governments to the systematic elimination of non-tariff barriers to EU exports. In the 2007 EU-Ghana bilateral EPA this included a commitment to dismantling the use of non-tariff trade policy measures from the date of entry into force of the economic partnership agreement (see box). (3) It is through the invocation of this provision that the current Ghanaian IEPA could potentially first impact on the agro-food sector. This is important in the case of Ghana since non-tariff trade policy measure have in recent years been used in both the poultry meat and rice sectors, with the use of such tools in the poultry sector briefly curbing the expansion of EU poultry meat imports in 2014.
Close attention will need to be paid to how this and other related IEPA provisions on the use of non-tariff trade policy measures are interpreted and applied in the coming months and years. This is particularly important since non-tariff trade policy measures are used across a variety of agro-food sector in West Africa. Illustrative List of West Africa Countries and Sectors Potentially Effected by Provisions on the Prohibition of Quantitative Restrictions
The failure of the EC to date to effectively use negotiated trade agreements to secure the systematic removal of non-tariff barriers to EU agro-food exports was an important focus of criticism of the EU’s trade policy by EU agro-food exporters associations during the EU’s 2015 trade policy review. The EC is thus likely to come under increasing pressure to effectively enforce trade agreement commitments requiring the systematic dismantling of non-tariff barriers to EU agro-food exports. Given the growing demand for imported agro-food products in sub-Saharan Africa and the close proximity of West African markets to EU suppliers, West Africa could well become an important focus for EC initiatives in this regard. While the Trade Commissioner highlighted the inclusion of provisions in the EPA to assist local Ghanaian producers in meeting EU standards, an important related issue is how these standards are designed and applied in practice. This can have a major impact on the commercial viability of developing new non-traditional exports. Improving the design and application of EU standards in trade with developing countries, while ensuring underlying food safety and SPS objectives are respected constitutes an important area for enhanced dialogue with the appropriate EU institutions. The EC needs to pay far more attention to fostering these dialogues in order to remove the systematic biases which arise in trade with developing countries as a result of how such standards are designed and applied. While the EC Trade Commissioner and the EU business lobby in Ghana have highlighted the potential of the IEPA to promote both foreign and national investment, it is essential that such investment is responsible and supports the structural development of the Ghanaian agro-food sector. This is not always the case in West Africa, where patterns of EU investment are emerging in some sectors which delink agro-processing to meet rising consumer demand from local agricultural production (see companion article ‘Arla’s Senegalese milk powder repackaging plant begins operations’). This issue of the promotion of responsible investment in support of the structural development of local agro-food sectors in ACP countries is something which will need to be fully examined in the context of EC proposals for the future of EU-ACP cooperation post-Cotonou. Commissioner Malmstrom’s suggestion that the EU has little commercial interest in the Ghana agreement ignores the fact that Ghana is the world’s second largest cocoa producer, while the EU hosts the world largest industrial chocolate manufacturer Barry Callebaut. The reality is EU interests are so structurally engrained in the agro-food sector as to be scarcely noticeable. Until of course their interests are threatened when they become vocal in lobbying in both the EU and Ghana for the protection of their interests. It is these entrenched EU interests which will need to take a hard look at how they operate if the new trade agreement is to deliver in terms of supporting the structural development of Ghana’s agro-food sector, so that more employment and more value is created and retained locally. |
| Key words: Ghana, West Africa EPA Tags: West Africa EPA |