Could agreement on ECOWAS CET ease EPA negotiations?
15 December 2013
In October 2013, ECOWAS ministers “recommended that the new regional common external tariff (CET) become operational on 1 January 2015”. Ministers also adopted proposals for an “import adjustment tax” and “supplementary protection tax”, while it was agreed to revisit the proposal to introduce a 1.5% Community levy in 5 years’ time.
The Ivorian Foreign Minister and President of the ECOWAS Council of Ministers, Charles Diby, argued that “the establishment of a unified [CET]” could facilitate “a more successful outcome” in the EPA negotiations, especially regarding the market access offer. This view was endorsed by EC Trade Commissioner Karel De Gucht, who commented that ECOWAS and the EC could “come to a close of these negotiations anytime soon”.
The October 2013 extraordinary meeting of ECOWAS Heads of State and Government reiterated the region’s commitment to concluding an “equitable and development-oriented” EPA, calling for “flexibility and compromise” in resolving outstanding issues. The President of Senegal was designated to “oversee the negotiations in the search for compromises that are mutually beneficial to the parties”.
The proposed EPA Development Programme (PAPED) remains a point of contention, with West African governments seeking some €16 billion of funding to “overcome the cost of adjusting to the impending trade regime” while the EC maintains that “existing funding is sufficient”. On 29 October the EC confirmed (subject to confirmation by the European Parliament and Council) the allocation of €6.4 billion in support to West Africa for the period 2014–2020, with €1.2 billion of this allocated to regional programmes.
In a memorandum prepared for the meeting of the Heads of State and Government meeting, West African civil society bodies asserted the primary importance of regional economic integration and the need for a common trade policy and common sector policies to underpin the establishment of a CET. The memorandum called for effective national actions to operationalise regional commitments and warned that the EPA process should not be allowed to undermine the primary objective of regional integration. In this context it warned that as a result of the EPA process, “West Africa is now fragmented and balkanised into five different trade regimes.”
Similarly, representatives of the Ghana Employers Association have called on the Ghanaian government to “critically re-examine its trade and investment policies, especially Economic Partnership Agreements… as well as other protocols which have compelled us to open our markets”.
Press analysis reviewed by ICTSD points out that if the West African region as a whole does not move forward with an EPA, the bilateral Interim EPAs signed by Côte d’Ivoire and Ghana “could jeopardise the very existence of the [CET]”.
In addition, the application of the agreed ECOWAS tariff would place some members in violation of their agreed WTO tariff ceilings, with ECOWAS as a whole being required to “provide compensations to the WTO members negatively affected”. Given widely differing bound and applied tariffs across West Africa, ICTSD notes that challenges will be faced in maintaining the implementation of the agreed ECOWAS CET.
Editorial comment
A firm commitment on a starting date for the implementation of the ECOWAS CET can be seen as a clear signal of the region’s operational commitment to establish a customs union and, if fully implemented, the CET will place the region in a better position to conclude a regional EPA. It has been argued that the stimulus provided by the EPA process has contributed to the final establishment of the starting date for the implementation of the ECOWAS CET.
It had been feared that in the absence of a fully operational CET, the EPA process could undermine steps towards greater regional trade integration, with tariff elimination towards the EU taking place before regional trade integration. To a certain extent these fears remain, given that agreement on the starting date for the CET is the first stage of what needs to be a broader process of trade policy harmonisation.
There remains considerable variation in the national use of agricultural trade policy tools in West Africa (notably in the use of import bans and import restrictions), with this giving rise to extensive cross-border smuggling in a number of sectors (e.g. rice and poultry). Unless the use of agricultural trade policy tools is reconciled, the conclusion of either bilateral interim EPAs or a regional EPA could still lead to smuggling between regions.
A far wider process of regional agricultural trade policy harmonisation would now appear to be required if trade diversion is to be avoided under any EPA process. In this context, issues would appear to arise as to the proper sequencing of EPA tariff-dismantling processes and the operational application of a harmonised regional trade regime in West Africa.
