Ghana to lose $378m if country signs EPAs with EU – Group

Ghana will lose $378 million if the country goes ahead to sign the Economic Partnership Agreements (EPAs) with the European Union, a trade activist has said citing a United Nations Economic Commission for Africa study.

According to Mr. Sylvester Bagooro of the Third World Network, the study which has been updated by the South Centre in Geneva, Ghana would lose that amount in tariff revenue and companies exporting to the EU would pay $58 million as duty to the EU if Ghana does not sign the EPAs.

However, he said, “The companies would gain the $58 million, if the country signs the EPAs.”

At a press conference Thursday May 24, 2012 in Accra, the coalition of civil society organisations, the Economic Justice Network (EJN) warned that Ghana should not sign the EPAs as that would lead to disastrous consequences for the country’s economy. The group urged the Minister of Trade and Industry, Hannah Tetteh not to sign the EPAs.

“It will be disastrous if the minister succeeds in this effort.  As they stand now, the terms of the Interim EPA will have devastating consequences for domestic industry, especially in the manufacturing and agricultural sectors, and therefore destroy the jobs and livelihoods of millions of people,” the group said in a statement read by Rev. Dr. Fred Deegbe of the Christian Council of Ghana, and a member of the EJN.

“The IEPAs will destroy the domestic and regional markets for the most of job-creating and dynamic manufacturing industries like furniture, plastics, pharmaceutical, wire-weaving, etc, whose main market is not Europe, but Ghana and the ECOWAS region,” he said.

Citing contradictions in the trade minister’s position on the EPA, the group noted that “recent utterances by the Minister of Trade and Industry, confirm intelligence we have gathered from various sources that the Minister is pushing the Ghana government to sign the Interim Economic Partnership Agreement, IEPA, that was initialled in 2007.”

According to the EJN, at a recent public meeting of Ghana-EU Partnership, the minister stated categorically that the benefits of signing the EPAs far outweigh the negatives, adding, this comes on the heels of an interview granted a local newspaper not too long ago where she declared that Ghana will have no alternative than proceed with signature of the IEPA in the light of the lack of progress at the ECOWAS level.

“The minister’s claims are not only incorrect.  They also contradict her own publicly stated positions,” the group said.

It also said, “just last month at the Doha conference of the UNCTAD, she argued publicly that the EPAs will only benefit European companies in Africa.  On many occasions since she took over the job of minister in 2009, she had argued that serious changes will have to be made to the IEPA as initialled before Ghana can consider signing.  As far as we are aware, none of these contentious issues in the IEPA has been resolved.  Certainly, nothing has happened in terms of changes to the IEPA since her statement in Doha to make her adopt such a dramatic u-turn.”

According to the EJN, the minister has also suggested that signing the IEPAs is the only option to protect Ghanaian exporters.  “This is not correct.  So far only a tiny handful of exporters stand to be affected if the IEPA is not signed,” it said.

The group noted that there is a mechanism to meet the need of this few companies. It indicated that the ECOWAS trade ministers meeting last year in Accra, adopted a regional mechanism (Solidarity Fund), put forward by Ghana’s Ministry of Trade and Industry based on experts’ advice, to compensate the few exporters in Ghana and Ivory Coast who could be affected if there is no timely progress on the EPAs.

“The minister seems to have done very little since the decision was taken to ensure the operationalisation of the Fund,” the group said.

Accusing the minister of being inconsistent, the group said her inconsistencies and omissions only serve to confirm information it has to the effect that she has been pushing a reluctant cabinet to sign the IEPAs.

Meanwhile, in a paper titled ‘ ECOWAS – Fiscal Revenue Implications of the Prospective Economic Partnership Agreement with the EU’ written by Simplice G. Zouhon-Bi and Lynge Nielsen in connection with the IMF Trade Policy Division’s and the World Bank Africa region’s work programmes in the Africa Region Working Paper Series No. 103 in April 2007, the authors found that under standard import price and substitution elasticity assumptions, eliminating tariffs on all imports from the EU would increase ECOWAS’ imports from the EU by 10.5–11.5 percent for selected ECOWAS countries, namely Cape Verde, Ghana, Nigeria and Senegal.

This increase in imports from the EU, the authors said would be accompanied by a 2.4–5.6 percent decrease in total government revenues, owing mainly to lower fiscal revenues. “Tariff revenue losses should represent 1.0 percent of GDP in Nigeria, 1.7 percent in Ghana, 2.0 percent in Senegal and 3.6 percent in Cape Verde,” they said.

But the authors indicated some mitigating factors. They wrote, “However, the revenue losses may be manageable because of several mitigating factors, in particular the likelihood of product exclusions, the length of the EPA implementation period and the scope for reform of exemptions regimes. The large country-by-country differences in fiscal revenue loss suggest that domestic tax reforms and fiscal transfers within ECOWAS could be important complements to EPA implementation.”

By Emmanuel K. Dogbevi