Economic Partnership Agreement - What Ghana stands to benefit
Last year, Ghana ratified the interim Economic Partnership Agreement (EPA) which subsequently entered into force on December 15, 2016 following its ratification by the European Union (EU) Parliament.
Advertisement
This represented an important milestone in the partnership between Ghana and the European Union (EU) as it provided the needed legal backing. With the avowed commitment from both parties, what remains is how to implement the EPA for mutual benefit.
Opportunities offered by the agreement
The EPA is about protecting Ghana's exports and jobs. It is also about creating new jobs through new investments and new opportunities for business and trade.
The EPA provides duty-free and quota-free access to the EU market for an unlimited period for imports originating from Ghana.
For example, a textile product can enter the EU duty-free if at least, one stage in its production value chain such as weaving or knitting took place in Ghana.
In return, Ghana will partially and gradually liberalise imports from the EU over a period of 20 years.
In designing the arrangement, due cognisance was given to the different level of socio-economic development in Ghana.
More importantly, Ghana has the right to protect sensitive sectors of its economy from any adverse effects of the EPA, as well as to preserve fiscal revenues.
In this regard, imports from the EU that will be allowed into Ghana under the agreement consist mainly of goods which are not produced locally. Notably, they will include inputs used by local producers such as agricultural inputs – fertilisers and seeds, as well as equipment and machinery needed for manufacturing.
Agricultural and non-agricultural products such as chicken, goat and swine meat, tomatoes, fresh and prepared, sugar, palm oil, cocoa powder, flour, frozen fish and beer have been excluded from liberalisation in order to protect these sectors.
Additionally, potential investors whether local or foreign get the long-term stability they yearn for as they will have a reliable market for their products under the EPA. The country can ,therefore, attract businesses and give them good prospects to expand their businesses.
Ghana is already outperforming most African countries in attracting foreign investors and this trend will be reinforced under the EPA. Foreign Direct Investment (FDI) in Africa ended 2015 three per cent lower but the FDI in Ghana went up by nine per cent for the same period.
Aid for trade
With the aid for trade package that comes with the EPA, Ghana’s customs procedures will be reviewed to make it less of a hassle for exporters and importers. This has the potential to tackle the perceived corruption in this area.
Significantly,the EPA comes with EU development aid. This will help Ghana make the most out of the agreement.
The objectives of the EPA are ,therefore, to increase investments and job creation in the country and intensify and facilitate trade between Ghana and the EU towards a sustainable economic partnership.
Safeguards
The EPA also has separate chapters on trade defence instruments which provide for safeguard measures in case of disruption or risk of disruption of an economic sector, technical barriers to trade, sanitary and phytosanitary measures to help Ghanaian exporters to comply with international standards, trade facilitation and a dispute settlement mechanism.
Further negotiations are also possible on services, investment and other trade related issues.
Justification for Dr Bawumia’s optimism
The Vice-President, Dr Mahamud Bawumia is optimistic about the benefits the country stands to gain from the EPA with the EU.
Dr Bawumia did not hide his optimism and the government’s desire to leverage the opportunities offered by the EPA when he met some ambassadors of EU-member states and members of the European business community in Ghana recently during a cocktail reception to mark the second anniversary of the European Business Organisation in Ghana (EBO-Ghana).
EBO-Ghana started operations in May 2015 after receiving endorsement of all European embassies and the delegation of the EU in Ghana. It was established among other things to facilitate dialogue between EU private sector and authorities of the host country.
The cocktail reception was organised by EBO-Ghana and the EU Delegation to Ghana to interact with business related Ministers and newly appointed chief executive officers (CEOs) of business and trade related public institutions.
Private sector organisations such as the Association of Ghana Industries (AGI), the Federation of Associations of Ghanaian Exporters (FAGE), the Private Enterprise Federation (PEF) and the Ghana National Chamber of Commerce (GNCC) also participated in the event.
Opportunities offered by EPA
Speaking as a guest speaker at the reception, the Vice-President said with the coming into force of the interim EPA, Ghana expected to have access to EU markets with a more diversified portfolio of products.
According to him, the government wants to move beyond just agricultural products and oil to products from the light manufacturing industries, non-traditional exports, and human talents to shape outsourced Business Process Services (BPOs).
When this is done, the government expects FDI flows from the EU into Ghana which amounted to $2.7 billion between 2010 and 2016 to increase significantly.
It is also expected that exports from Ghana to the EU will diversify from commodities into transformed products. This is already happening in the agri-business under the EPA regime where more processing takes place in the country (e.g. canned tuna, processed cocoa etc.). But it should also extend to industrial and consumer goods (cosmetics, textiles, etc).
The EPA, therefore, gives the country competitive advantage over other countries supplying to the EU market.
Three “big ideas
These will be achieved through what Dr Bawumia describes as the three “big ideas” that will drive Ghana’s future relationship with the EU.
First, the private sector will be provided the needed support to lead in creating jobs. Second, the government intends to build a “Ghana Beyond Aid”.
In this regard, the government will engage more in trade and investments that will help create wealth, keep citizens gainfully employed in meaningful jobs that enable them live dignified lives.
The objective is to add value to the natural resources and human talents, to engage the rest of the world in exchange for premium returns.
Third, as a pro-business government that believes that “Ghana is Open For Business”, the private sector will be treated as a powerful ally in creating economic value and jobs for the people.
An increase in job opportunities resulting from the FDIs in key sectors of the economy is a sure way to redirect the energies of the youthful human resource of the country.
