ECOWAS agrees common external tariff with greater agricultural protection
23 February 2014
According to a report by ECDPM, the 15 ECOWAS states have agreed a common external tariff (CET) to come into effect in 2015 which “will lead (on average) to higher nominal rates of protection on agricultural products” than the UEMOA CET. Although the ECOWAS CET is only slightly higher for most chapters than the UEMOA CET, it should be noted that eight ECOWAS members are not members of the UEMOA area, so this is not a comprehensive basis for comparison.
The new regime will supersede the CET of the eight UEMOA states as well as the national agricultural tariffs of the seven non-UEMOA states in ECOWAS, which varied sharply. Tariffs on rice, for example, ranged from 0% in Gambia to 50% in Nigeria. Hence, the actual change in tariff protection for agriculture will vary between country and product.
In broad terms, the largest increases compared to the UEMOA CET are for meat and cocoa (HS Chapters 2 and 18), with an average tariff increase of 7.25 percentage points; these are followed by oils (Chapter 15); meat and fish preparations (Chapter 16); and cereal preparations (Chapter 19), where average tariffs have risen by 3 to 5 percentage points. But there have been some partially offsetting falls as well: “Chapter 1 (live animals) and Chapter 9 (coffee, tea and spices) experience a decrease in average protection of about 7.5% and 4.5% respectively.”
The CET has divided some 5,899 product lines between five tariffs: 0%, 5%, 10%, 20% and 35%. Agricultural products tend to be more heavily protected than others: “55% of agricultural tariff lines are in the 20% or 35% band and none are in the 0% band. Ninety percent of the products in the 35% band are agricultural goods.”
Some important goods which will be subject to high tariffs are wheat flour (20%) and coffee beans, canned turkey and pork, fresh and frozen pork and yoghurt (35%). Rice, by contrast, will be subject to a tariff of only 10%, though the ECDPM report also states that this “could gradually climb through the 20% band and reach the 35% band”.
Member states have been given some latitude to maintain higher national tariffs compared to CET for a number of years by means of two measures: the Import Adjustment Tax and the Complementary Protection Tax, which become operative at the start of 2015. However, only a limited number of goods may deviate from the CET, with the use of these two tax measures limited to a basket of goods that do not exceed 3% of the lines in the CET (i.e. 174 tariff lines).
Significantly, the ECDPM report argues that in the area of agriculture “national policies are rarely regionally oriented” and goes into some detail on the failure to harmonise ECOWAS agricultural policy.
Editorial comment
Agreeing a CET is an important step for countries seeking to integrate their economies. It removes one of the major reasons for maintaining robust customs formalities at internal borders, which is to avoid “trade deflection” (i.e. imports occur through the country with the lowest tariffs and are then transhipped to other countries).
A CET also nominally allows the region to project itself with a single voice in trade arenas such as the WTO and the recently finalised West Africa–EU EPA negotiations. Indeed, the conclusion of the West Africa CET negotiations led EC officials to express optimism about reaching an agreement on the outstanding issues in the EU–West Africa EPA negotiations.
However, while a great deal of hard work went into agreeing the CET, it needs to be borne in mind that tariffs are not the only form of “protection” applied by West African governments. By definition, the agreement on the CET will not remove national differences in the application of these other forms of protection. Given that “national policies are rarely regionally oriented”, progress towards more regionally coordinated agricultural policies would appear to be necessary to facilitate the establishment of a common approach to using other forms of protection applied nationally by West African governments.
Thus, the establishment of the CET may only go part of the way to removing the causes of “trade deflection”. This in turn may only partially ease the difficulties faced in the implementation of the recently concluded EPA negotiations on a region-wide comprehensive EPA.
More broadly, it can be argued that having uniform tariffs on extra-regional imports will not assist development at a regional level unless trade in domestically produced goods is also facilitated.
