Ghana’s delay in signing a substantive Economic Partnership Agreement (EPA) with the European Union (EU) has got exporters worried as a 20.5 percent tariff increment looms.
Government has until October 1, this year to sign unto the agreement even though its intentions are unclear, sending mixed signals to exporters who fear higher taxes would be slapped on their produce making it less competitive.
[contextly_sidebar id=”if6P9MLiEoigPXmBpcvd9EtpYBp4UotS”]Some of the producers and exporters who have expressed worry include; agro processing companies such as Golden Exotics, HPW Fresh and Dry, Blue Skies, Barry Callebaut and other cocoa processing companies producing for the EU market.
Also, canned tuna exporters such as Pioneer Food Carney will be affected.
Reports are already stating that the tuna export company has cut down on its investments to prevent excess production if the tariff in increased.
The parent company of the firm is said to have always invested between $4 million and $5 million every year to expand the company but the figure is already indicating a drop.
According to the General Manager of the company, Mr. Nichol Elizabeth , the future of the company looked uncertain as industry watchers are left to wonder on government’s decision.
He stated that since the company exports about 95 percent of its products to the EU region, it would be the hardest hit, affecting the over 2,000 workers employed by the company.
He expressed fears that Ghana may risk a ban as the EU parliament moves closely to rise in August, a situation that would make it difficult for ECOWAS or Ghana to get their ban withdrawn.
Interim Agreement in 2007
It would be recalled that in December 2007, Ghana initialed an interim EPA to avoid a similar tariff action after the preferential trade agreement enjoyed under a previous treaty , named the Cotonou Accord expired in the year 2000.
Since 2000, African, Caribbean and Pacific countries (ACP) had been working with the EU Commission to sign a non-preferential bilateral trade treaty in which either side would offer both tariffs and concession, but in a regime that favours the ACP countries more.
ECOWAS member states including Ghana have been working since 2000 to sign the pact as a sub-region with the EU.
Trade volume between EU and Ghana
Trade volume between the EU and Ghana as at 2013 was estimated at 11.2 billion euros from 1.9 billion euros in 2000.
Currently, the EU is Ghana’s biggest trading partner as trade volumes is further estimated to surge.
Trade analysts and financial experts have expressed worry over government’s lack of clear direction on the matter as income from EU is crucial for Ghana’s investment and economic expansion.
Introduction of the EPA
ECOWAS as regional bloc deliberated over the issue to sign on to the EPA to benefit the sub-region as a whole. As the regional bloc still deliberated, Cote d’Ivoire signed a substantive agreement with the EU in 2007 to secure its exports to benefit from ‘duty-free’ and ‘quota-free’ on some items such as agricultural and food items.
Under the EPA, some commodities have been selected for duty-taken off the zero tariff regime.
The consequences are that if a country of origin does not have an agreement, the EU under its market access regulation which conforms to World Trade Organization (WTO) rules, will ‘slap’ higher tariffs on the country.
The WTO rules do not allow developed economies to grant preferential market access to countries not categorized as ‘least developed’.
Ghana was unable to qualify as it was elevated to join a league of lower middle income countries.