Opinions divided over EPA
Opinions are sharply divided over whether Ghana should sign a substantive trade pact with the European Union (EU), more than 12 years after discussions began on the Economic Partnership Agreement (EPA).
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During a public forum to discuss the vexatious issue at the Graphic Business/Stanbic Bank Breakfast Meeting in Accra last Tuesday, July 25, the three-member panel took divergent views, cutting across the need for Ghana to take a critical and second look at the content of the agreement to the need to empower the private sector to make it competitive before any such agreement was signed.
Whereas the Private Enterprise Foundation and the Third World Network called for a second look at the EPA, the Ministry of Trade and Industry (MoTI), stressed the need for Ghana to ratify the EPA to forestall losses in revenue.
The Chief Executive Officer of the Private Enterprise Federation, Nana Osei-Bonsu, called on the government to take a second look at the contents of the agreement to ensure that Ghana benefited more from it, rather than lose, as its current form portends.
“The private sector is not against Ghana signing the EPA. It will prefer a better negotiation at the table to bring about the various constraints and challenges that the private sector is facing, that can be compounded if the EPA is signed as it is today,” Nana Osei-Bonsu said when he articulated the views of a section of the private sector.
IEPA
Ghana signed an Interim Economic Partnership Agreement (IEPA) with the EU to replace an old one, known as the Cotonou Agreement signed in 2000. That agreement allowed the EU’s trading partners, mostly its former colonies in Africa, Caribbean and Pacific (ACP) countries, to export to their market without slapping any trade tariffs. The ACP countries were not obliged to remove tariffs on imports from the EU until 2007.
However, after the year 2000, rules of the World Trade Organisation rendered it intolerable for such non-reciprocity to happen in trade relations and agreements among parties, unless one country could be said to be a least developed country.
Therefore, Ghana, with the rest of ACP countries which were signatories to the Cotonou Agreement, had to negotiate a new trade pact amenable to WTO rules. This is known as the EPAs which discussions have gone on for more than 12 years.
The EPA will give unbridled access of 75 per cent of the EU market to Ghana over a 20-year timeframe, in return for which Ghana would export everything but arms into the EU market, quota-and duty-free.
Private sector
For Nana Osei-Bonsu and the PEF, the refrain that not signing the agreement would lead to loss of jobs was not tenable because the companies to be affected were mostly the same European businesses which had established factories in the country.
He emphasised that local businesses constituted about 98 per cent of the jobs in Ghana, while European businesses provided only a few thousands, adding that the country should, therefore, not be cowed into signing the agreement because it might lose those jobs.
But Nana Osei-Bonsu believes the ability of local businesses to compete in the EU market, let alone welcome such a competition on the local market area, stressing that “having access doesn’t mean you have a market; it doesn’t mean you can sell or compete.”
Collapse of local manufacturing
His views were closely shared by the Co-ordinator of the Third World Network, Dr Yao Graham, that the terms of the EPAs are not beneficial for Ghana or West Africa.
“The EPA will lead to loss of jobs and other livelihoods in manufacturing and other industrial sectors, saying it would lead to about 40,000 jobs in the country,” he said.
Essentially, that would be as a result of products from the EU which would lead to a collapse of local industries.
Dr Graham was emphatic that trade policies should always fit coherently into the development strategy since it is meant to solve the development challenges facing the country.
In the case of the EPA, the international trade specialist said the terms of the agreement emanated from the European Union which wanted to use the trade arrangement to address their own challenges.
“We are a primary commodity dependent export economy which is reflected in the pattern of trade with Europe – the historic colonial site which structured the evolution of trade. So oil, gold and cocoa dominate our exports to the EU.”
The country’s industrial base has been very small, with the growing services sector represented by small petty trading without much of the high-end, high paying services.
Dr Graham, therefore, disagreed with the position that a trade policy and agreement should, therefore, not be skewed only to suit where the country’s bulk of export went, as that would amount to being backward looking.
A more forward looking approach to trade policy was the only way to address challenges, a long-term view of the way the wider economic environment was evolving and not how it had been in times past, stressing “the EPA is basically stuck in the past, around our raw material export.”
The TWN co-ordinator believed the EPA in its current form was an attempt for Europe to lock in a competitive advantage in their ex-colonies in the face of challenges from other places.
That was the reason why, he contended, the EPA had gone beyond its scope of making it compatible with WTO, to include other extraneous issues such as agreements over trade in services, investments, public procurement, liberalisation of current accounts and other issues captured under the so-called Rendezvous Clauses.
“Unfortunately, these are areas that we need to retain policy space going forward,” he said.
Dire consequences
However, the Director of Multilateral Trade at the Ministry of Trade and Industry, Mr Anthony Nyame-Baafi, said the country needed to ratify the interim Economic Partnership Agreement (IEPA) it initialled in 2007 to forestall losses in revenue should the EU which is Ghana’s biggest trading partner impose a ban on exports from Ghana.
He said by initialling the interim agreement in 2007, Ghana prevented the loss of 400 million euros a year that a ban would have occasioned. Currently, Ghana’s exports enter the EU market without duties.
A ban on cocoa paste alone could resulted in 120 million euros losses, with tuna, cocoa butter, banana, dried pineapples, vegetable oils and cashew, orange juices could all have been affected.
Open forum
During an open forum, opinions were still divided.
While some participants thought Ghana had no choice than to sign the agreement to forestall direct job losses from the ban, others believed the country’s private sector which would carry the competition was fragile and should be strengthened.
The chief executive of a pharmaceutical company, Mr Gopal Vasu, said the EPAs had the potential to frustrate intra Africa trade. Particularly for Ghana’s promising pharmaceutical industry, which had enjoyed investments from the government in recent times, could collapse at competition from European pharmaceutical industries.
