agritrade

ECOWAS CET finally adopted while producer organisations raise concerns

22 April 2013

ECOWAS, six years after its decision to implement a common external tariff (CET), formally adopted its CET at the WAEMU-ECOWAS joint technical committee on 11–15 December 2012. This was followed by adoption by the ECOWAS ministers of finance on 20 March 2013, as a final step in the process.

According to ECOWAS, under the new CET, “five per cent duty is applicable for 2,146 tariff lines under the basic raw materials and capital goods category, 10 per cent for the 1,373 tariff lines that qualify as intermediate products category, while 20 per cent duty is reserved for the 2,165 lines that fall into the category of final consumer products.” Finally, specific goods that contribute to the promotion of the region’s economic development (130 tariff lines) will be protected with a 35% duty. Additionally, it was agreed that a 1.5 per cent ‘Community Integration Levy’ should be created to replace the ECOWAS Community levy and the WAEMU counterpart Community Solidarity levy. “Further regional reflection” on the new levy will take place “to enable the region [to] cope with the challenges of implementation of the new tariff regime”.

No further details on the CET are yet available, but concerns have already been expressed by the West African Network of Agricultural Producers Organisations (ROPPA). In an interview, the president of the network, Ibrahima Coulibaly, denounced the levels of tariff protection decided for strategic products as too low for items such as rice, dairy, poultry, fish and locally processed products. Tariffs for rice and dairy products in particular, at 10 and 5 % respectively, are seen as affording little protection for the development of local rice and milk production. ROPPA was also concerned about the exclusion of civil society from the final process of determining the CET to be applied.

In an interview, ECOWAS Trade Commissioner Hamid Ahmed noted that negotiations around tariff levels for basic products had been particularly difficult, with producer countries asking for higher tariffs and non-producer countries arguing for lower ones. However, he maintained the final tariff outcome seemed “reasonable”, and expressed the view that “agricultural products should not be too protected”, with the focus being on improving competitiveness. The Commissioner saw the transport and distribution costs of imports as affording some natural protection, with the main problem arising where imported products were subsidised.

In the meantime, there are concerns over possible problems with WTO members, since some countries have bound tariff commitments that are lower than the agreed CET. However, the Commissioner felt that the indulgence of WTO member states could be sought with regard to this discrepancy. 

Editorial comment

While at the ECOWAS level a CET is being adopted, Nigeria, the largest ECOWAS economy, is following a quite different agricultural trade path, linked to its domestic agricultural transformation agenda. As part of its cassava blending policy, on 20 July 2012 the Nigerian government raised the effective duty on wheat grain imports from 5 to 20%, while from 1 July 2012, a supplementary levy of 65% was imposed on wheat flour imports, taking the effective duty to 100% (see Agritrade article ‘ Questions raised over Nigeria’s cassava blending and wheat tariff policy’, 18 November 2012). In the course of 2012, a supplementary levy of 40% was imposed on rice imports, taking the effective duty to 50% (see Agritrade article ‘ Nigerian president hails success of government’s rice sector initiative’, 13 January 2013), a move which gave rise to increased cross-border smuggling of rice from Benin.

Nigeria has scheduled an import ban for rice from 2015, while at the beginning of January 2013 the Nigerian government announced a complete ban on imports of “packaged sugar, granulated and in cubes”, in the context of a tariff policy that incentivises imports of raw sugar for local processing.

These tariff announcements need to be seen against the background of earlier Nigerian efforts to establish a 50% “fifth” tariff band within the CET, in support of its agricultural transformation policy agenda. Tariff and non-tariff restrictions are seen by the Nigerian government as a central component of the policy framework aimed at stimulating investment in the transformation of the domestic agricultural sector.

While provisions exist in the ECOWAS Treaty for special taxes and temporary protection measures, the overall thrust of Nigerian tariff policy would appear to raise questions of consistency with its ECOWAS CET commitments and regional trade integration ambitions.




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