In its blog Talking Points in March, ECDPM highlighted the challenges faced in reconciling ECOWAS trade policy commitments (e.g. the recently agreed common external tariff/CET) with the aspirations of ECOWAS’ regional agricultural policy (ECOWAP). The blog noted that recent discussions in West Africa are gravitating towards a consensus that “protecting a bigger, more competitive market (given that internal barriers to regional trade are removed), coordinated with supply side efforts, could overcome the failures of past attempts at self-sufficiency.”
The blog gives the example of rice, where ECOWAP “plans to build its productive capacities and develop a comparative advantage in rice production”. Currently, however, diverse tariff rates are in place across ECOWAS and WAEMU, ranging from 10 to 110%. The blog poses the question: what should the regional common rice tariff be?
The ECDPM analysis notes that some in the region are arguing for tariff rates closer to Nigeria’s 110%. However, under the March 2013 joint ECOWAS/WAEMU Ministerial agreement on the CET, rice is placed in the 10% tariff band. This has led to complaints from producer organisations over the inadequacy of tariff protection.
Other challenging issues raised by ECDPM in relation to the development of ECOWAP include:
- the scope for new ECOWAS CET rates to exceed national bound rates at the WTO;
- possible WTO limitations on preferential procurement arrangements for cereals produced by smallholder farmers;
- the design of regional trade defence mechanisms;
- the final market access offer to be made on food and agricultural products to the EU under the proposed West Africa–EU Economic Partnership Agreement (EPA).
Meanwhile, analysis posted on the website of the USAID-funded West African Trade Hub project highlights accelerating urbanisation in sub-Saharan Africa, noting World Bank projections that urban food demand will “quadruple in 20 years”. This is seen as presenting both challenges and opportunities for African agricultural producers. Currently, rising demand is outstripping production growth, suggesting that “Africa’s dream of food sovereignty will have to wait for a couple of decades” to be realised. In the interim, food imports are likely to increase significantly, wheat and rice, but also sugar, dairy and vegetable oils.
|The structure of the ECOWAS /WAEMU agreed common external tariff|
|Press reports indicate that agreement has been reached on the treatment of 5,899 tariff lines:|
|0% duty||85 tariff lines|
|5% duty||2,146 (raw materials and capital goods)|
|10% duty||1,373 tariff lines (intermediate products)|
|20% duty||2,165 tariff lines ( final consumer products)|
|35% duty||130 tariff lines (specific goods promoting to economic development)|
|The treatment of raw sugar is still under discussion, as are special geographical exemptions for Cape Verde. Discussions are still ongoing on trade defence instruments, finalisation of which is to be expedited. The EC is committed to supporting the ECOWAS Commission and member states in the implementation of the CET commitments. Seven ECOWAS countries now need to migrate to the 5-band system already applicable in the WAEMU region.|
The World Bank analysis further notes that only 4% of sub-Saharan African food imports are sourced from within Africa (US$1 billion out of US$25 billion). However, it is maintained that as new policies take effect, private investment is mobilised and access to inputs improves, sub-Saharan Africa should increasingly be able to feed itself. This assumes that infrastructural and logistical constraints on moving foodstuffs from production areas to urban areas can be overcome and efficient commercial supply networks can be built up. The analysis highlights the ground-breaking work of the Borderless Alliance in West Africa in relation to this.
However, a cautionary note is sounded in term of investment needs. In the rice sector it is estimated that investment of US$300 million is needed for every extra 100,000 tonnes of rice to be produced. In this context, replacing Ghana’s 350,000 tonnes of rice imports would require US$1 billion of investment.
Across a range of products, West Africa has the capacity to become self-sufficient and even become a net exporter, as highlighted in the rice sector by Dr Papa Abdoulaye Seck, Director General of the Africa Rice Centre. In December 2012, ECOWAS launched its “regional offensive for a sustainable rice production in West Africa”, with background documentation highlighting the productivity gains made over the past decade, as a result of targeted support from public authorities (irrigation schemes and lowland management projects) and a concerted research effort in the framework of the ‘AfricaRice’ initiative.
However, ECOWAS also noted the absence of a genuine regional strategy to address issues related to input supplies, the structuring of different value chains, harmonised standards for processed rice, the regulation of the regional market and the coordination of border protection policies. These are all shortcomings that the new regional offensive is intended to address.
These observations would appear to highlight the need for comprehensive, sustained and coordinated regional policy frameworks. Within these frameworks, investments can then be made to ensure that stakeholders get to grips with the diverse production and logistical constraints faced across the region in producing and delivering standard-quality food products to market.
The analysis from the Trade hub project highlights the importance of:
a) establishing an appropriate time frame for the achievement of underlying policy objectives (decades rather than years); and
b) establishing, in the interim, a managed trade regime which, while meeting immediate consumer needs, does not undermine national sector development objectives.
The EU’s use of trade policy tools in the rice and poultry sectors is potentially highly illustrative in terms of operating a managed trade regime (see Agritrade article ‘ EU rice market developments and prospects’, 22 April 2013), as is Namibia’s use of import licensing arrangements as part of efforts to promote local production of horticulture product (which have increased from 5 to 37% of consumption since the initiation of the scheme).
South Africa’s current poultry sector experience of the constraints placed on the use of bound tariff ceilings, as a result of EPA commitments and the possible need to use trade defence mechanisms, also potentially holds important lessons for West Africa as the region struggles to reconcile trade policy commitments with regional agricultural policy aspirations.