According to analysis published by the International Centre for Trade and Sustainable Development (ICTSD), if Côte d’Ivoire does not complete its EPA process by 1 October 2014 and thereby loses its duty-free, quota-free access to the EU market, this would impact on a number of its main export products, which collectively account for “one third of Côte d’Ivoire’s total exports to Europe and generate millions of jobs, especially in vulnerable rural communities”. Potentially affected agricultural products include cocoa and bananas – as well as tuna exports.
ICTSD reports that as a leading global producer in the cocoa sector, “Côte d’Ivoire is currently using its comparative advantage in cocoa to move up the value chain and start exporting value-added cocoa products.” The analysis continues, noting that while “this process is in its infancy, it is a promising sector which could create higher paying industrial jobs and contribute to the country’s development.” However, if Côte d’Ivoire finds itself exporting under the Generalised System of Preferences (GSP) regime the local value-added cocoa product industry would face a serious set-back. ICTSD states that “high tariffs in the form of mixed or specific duties on finished chocolate products, as well as the 9.6 percent ad valorem rate for cocoa paste, would drive Côte d’Ivoire back down the value chain to being a mere commodities exporter (with duty-free entry for cocoa beans).”
In terms the structural development of the Ivorian cocoa sector, the stakes are high. However, there remains optimism that a regional EPA will be concluded before 1 October 2014, when the transitional regulation (MAR 1528/2007) lapses. Despite this optimism, regional actors have started to contemplate “what might happen if the regional deal falls through and various ECOWAS [the Economic Community of West African States] countries, including Côte d’Ivoire, start to seriously consider bilateral deals with the EU”.
The ICTSD analysis maintains that this could make the “West African common market unworkable”, with Côte d’Ivoire losing “many of the benefits it currently enjoys under the ETLS” (ECOWAS trade liberalisation scheme). Currently Côte d’Ivoire accounts for almost a quarter of intra-regional trade in West Africa; West African rather than EU markets play a more significant role for some processed and industrial products. The regional trading of sectors that might be adversely affected includes milled flour, where some companies “harvest one fifth of their turnover from trade in West Africa”. Trade in flour in West Africa is considered highly sensitive with preferential access under the ETLS being vital to continued trade.
It is in this context that Côte d’Ivoire is seen as being “between a rock and a hard place”. The calculation for Côte d’Ivoire is different from that of other West African countries such as Nigeria. Nigeria’s exports to the EU are dominated by oil, which attracts zero tariffs under all trade regimes, while Côte d’Ivoire has three times the value (compared to Nigeria) of trade in products that rely on tariff preferences.
Although there are concerns that a conclusion of bilateral EPAs could fragment regional trade policy, the ICTSD analysis maintains that, in terms of access to the EU, the West African region is already fragmented; least developed countries (LDCs) enjoy duty-free, quota-free access under the ‘Everything But Arms’ (EBA) agreement, regardless of the outcome of the EPA process. Nigeria has been trading under the GSP regime since 2008, and Cabo Verde has been trading under GSP+ since December 2011.
Although Côte d’Ivoire may appear to be in a difficult position, the extent of the regional consequences of the conclusion of bilateral EPAs largely lies with the West African governments. Given the limited and product-specific coverage of the ETLS scheme, which is based on a complex system of product registration (see Agritrade article ‘ Barriers to intra-regional agricultural trade in West Africa reviewed’, 3 June 2013), there is no reason why the conclusion of bilateral EPAs should automatically lead to intra-regional trade disruptions. Decisions will need to be taken on a pragmatic case-by-case basis.
However, it could complicate efforts to simplify and increase the effectiveness of the existing ETLS. By establishing a common tariff for extra-regional imports, the final agreement on the ECOWAS CET offers opportunities for greatly simplifying regional trade arrangements for value-added agro-food products, with considerable scope for enhancing the intra-regional trade benefits of the ECOWAS trade liberalisation scheme. This in turn could create greater incentives for investment in local value-added food processing for regional markets.
By generating country-specific exceptions to the application of the ECOWAS CET for certain products imported from the EU, bilaterally concluded EPAs could make it more difficult to attain the intra-regional trade benefits potentially arising from the ECOWAS CET. However, this can be managed on a product-by-product basis, in line with current ETLS implementation arrangements.