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Re-aligning ECOWAS protocols to suit Nigerian market

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Ellen Johnson Sirleaf, ECOWAS chairman PHOTO:AFP

Ellen Johnson Sirleaf, ECOWAS chairman PHOTO:AFP

Nigeria joined the other member states of the Economic Community of West African States (ECOWAS) in 2000 to sign the ECOWAS Trade Liberalization Scheme (ETLS) and ECOWAS Common External Tariffs (CET).

 

The two protocols were meant to facilitate trade, ensure economic integration and facilitate free movement of goods and person across the fifteen member states and foster deeper interaction in the sub region.

For instance, the ETLS provides for goods produced in any member state to be imported into any member state at zero percent duty rates. This includes, prohibited items provided that such goods have 40 per cent local value addition to satisfy ‘rule of origin’ required, while the common external tariff (CET) harmonizes all customs duties across the board for all imports from a third party country.

These protocols are, however, without hiccups, as the ECOWAS corridor has not be devoir of irregularities and complaints by players in the business climate of member states. There has been complaint ranging from excessive charges (mostly illegal) at the numerous check points along the corridor, uncounted number of uniformed government agencies both known and unknown to users of the corridor, unnecessary delays at check points running into days which most times make perishable goods like tomatoes to be useless by the time it gets to its point of delivery.

At its plenary on November 29, 2016, the Nigeria senate initiated a resolution for the suspension of these trade protocols based on a motion on what it called the ‘abuse of customs tariff and indiscriminate issuance of fiscal policies’, and their negative impact on the national economy.

Sponsored by the Chairman of the senate committee on customs, Hope Uzodinma, who maintained that his advocacy was based on the need to protect the country’s national interest, especially, now that Nigeria was making efforts to rebuild its economy. The senate also urged the government to review the process of enacting the tariff handbook, in order to identify all abuses and revenue leakages with the recommendation that the senate shall approve all tariff regimes by the government before they can be implemented.

His words, “we entered into these protocols with the hope that the rule of origin, which means that genuine production from member countries is the product that will enjoy zero duty tariff, but they embarked into sharp practices, allowing Malaysian companies to build oil tank farms in Cote’d’Ivoire, Ghana, and Togo, and then doing bulk shipping to these countries and packaging to enter Nigerian border in the name of ECOWAS treaty without paying duty.

“Now these ECOWAS countries will receive duty on bulk cargo delivered to them, get employment for their citizens who will repackage the products, and then remove the products to Nigeria without paying duty and enjoy the benefits of our market free.”

The Senate wants Nigeria to pull out of the two economic treaties as a result of what it considers to be a “breach of ECOWAS Protocols and Economic sabotage.”

“I’m aware that prior to training of the ECOWAS Trade Integration Protocols, the Nigerian economy was booming with the manufacturing sector having at least 70-75 percent capacity utilization with oil prices going for between $80-$120 per barrel”, he said.

Uzodinma said the two ECOWAS Protocols, CET and ETLS had damaged the real and manufacturing sectors, causing the exit of manufacturing firms like Dunlop, Michelin and Lever Brothers from Nigeria to neighbouring ECOWAS States, to manufacture and ship same products back to Nigerian market at zero duty.

Apart from the huge revenue loss, the situation compounded unemployment in Nigeria, two factors Uzodinma said Nigeria should no longer tolerate. The senate said what is happening in the sub region amount to economic sabotage and breach of protocol especially from Nigeria’s closest neighbour, Benin Republic, which has been a smuggling depot for rice and vehicle imports for the Nigerian market.

It observed that the concept has led to the collapse of manufacturing sector in Nigeria, with Members State deploying sharp practices to repackage products from Asia into Nigeria at zero percent duty.

It specifically noted how vegetable oil from Asia found its way into Nigeria from huge tank farms built in Cote d’ Ivoire, where ship from Malaysia and other Asian countries dump their vegetable oil before repackaging it for export to Nigeria.
It, therefore, resolved that the FG should suspend the two ECOWAS Protocols, an arrangement many believed means “technical” exit of Nigeria from the regional body.

Nigerian traders under the umbrella of the National Association of Nigerian Traders (NANTS) however is considering ways by which its members can benefit from the protocols and make the utmost use of it.

Ken Ukaoha who is a member of the ECOWAS task force on trade and the president of the traders association explained at a sensitise forum organised for members of the association in Abuja that Nigerian traders would no longer want to be used as stooge in the hands of politicians where all they do is dress up in uniforms and pay curtesy calls on public office holders, an adventure he said has not added any value to traders over the years.

“Away from paying curtesy visits and political jamborees, we should look beyond importation of goods from other countries but rather export goods. This is the only way we can contribute to the diversification plans of the federal government”.

The trade lawyer said gaining more economic momentum, increasing volume of trade across the sub-region and ultimately revamping the Nigeria economy should be the baseline for which Nigeria traders should operate making an upmost use of the protocols. Ukaoha advised members to form themselves into groups which will give them more authenticity and empower the association to be able to stand as surety for them in financial institutions in the event of the need to take loans. He said they should make their businesses more formal by registering with the corporate affairs commission (CAC) outside of which Nigeria government may not be willing to do business with them.

“You need to move into the global market as traders and I think this is an avenue that will help us to know that our trading horizon does not end in that little space where you have your shops. At this time of global economic problems, our mandate is to wake up and extend our tentacles to other sides. We have almost about 400 million people in ECOWAS, this is a huge market for us to explore”.

He said the fact that Nigeria is not a land locked country should be an area to be leveraged upon.A consultant to the association, Nwiabu Legborsi Nuka said the essence of the CET is to reduce cost, foster monetary policy and increase of trade between member states which ultimately meant increase of the GDP of its members, and hence, to better welfare.

His words, “ECOWAS has moved from a Free Trade Level to enter into the Custom Union level which is characterized with the Common External Tariff. This stage of economic Integration requires countries to abandon their individual tariff structure and adopt a common external tariff on trade with third countries”.

He said the knowledge that CET may be exposed to some risks has made some measures such as anti-dumping, anti-subsidy and countervailing, supplementary protection, safe guarding measures and others to be put in place. The grouse of the Nigerian senate however is that these measures are not achieving the desirables.

Olusegun Adegun, who spoke on ETLS, the benefits, procedures and dispute settlement mechanism lamented that in spite of the numerous benefits accruing from the ETLS, the scheme has been marred by obvious lack of legal backing at the national level, hence the charging of full duties by custom authorities in disregard of the regional laws and policies.

“As it is now, ETLS does not provide any mechanism where traders in the region who have been molested or extorted could establish any redress just as it is in the EU. The ECOWAS Court of Justice is limited as matters of strict economic issues are outside its jurisdiction and individual citizens are often require to depend on their countries to espouse their rights before the Court in appropriate cases. This is unlike the case in the EU where the European Court of Justice is the referee between member states, Institutions and individuals in disputes relating to EU law.With the position of the Nigerian traders, suspension of the two ECOWAS protocols may mean a technical exit of Nigeria from the regional body.



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