EPA deal: The challenge of reciprocity between unequal trade partners
The October deadline for African countries to conclude their Economic Partnership Agreements (EPAs) with the EU has once again raised agitations among Nigerian manufacturers and other West African countries who have remained divided over the path forward.
If key partners in the West African region like Nigeria, choose not to sign and implement the regional EPA, some countries in the region will face a daunting choice – lose their preferential access to the European market or undermine their regional integration with West Africa under the ECOWAS Trade Liberalisation Scheme (ETLS).
For countries presently enjoying the preferential access to the EU market, it is a very difficult position for them. For others, the utilitarian objective of the deal is being queried in order not to undermine steady growth being recorded in the industrial sector.However, many actors in the region are starting to think about what might happen if the regional deal falls through and various ECOWAS countries start to seriously consider bilateral deals with the EU.
Such bilateral deals, rather than a region-wide EPA, would make the West African common market unworkable and individual countries could lose many of the benefits they currently enjoy under the ETLS. These benefits include preferential access into the markets of other West African countries for products which have been approved under the ETLS.Worried by this trend, manufacturers in Nigeria have kicked against government ratifying the EPA in its present form to avoid socio-economic crisis that may follow from the action.
According to the Manufacturers Association of Nigeria (MAN), Nigeria is mainly a commodity-goods producing country and has limited capability to produce and export industrial goods to Europe if it trades same in an EPA free trade arrangement.
Already, in a move to aid the ratification of the Economic Partnership Agreement (EPA) by West African countries, especially by Nigeria and Gambia, the European Union (EU) had announced plans to spend at least €6.5 billion every five years beginning, from 2015-2019, as well as during the transition period of 20 years till 2035.EU Ambassador/Head of EU delegation to Nigeria and ECOWAS, Michel Arrion, had noted that the EU has no offensive agenda for Nigeria and other countries in the region, adding that other West African countries will appreciate Nigeria’s contribution to the West African regional cohesion as they need the EPA to retain their EU access after October 2016.
Indeed, worried that Nigeria’s stance on the Economic Partnership Agreement (EPA) may affect ratification of the trade treaty in the ECOWAS region, as well as terminate the temporary free access to the European Union being enjoyed by other ECOWAS member states, the EU has urged the Federal Government to review its protectionist policies in the interest of the region.
According to the EU, the EPA has no hidden agenda; rather the benefits of the trade deal should be properly appraised by stakeholders.MAN President, Dr Frank Jacobs, while making the position of the association known to the Federal Government, stated that EPA will stifle existing manufacturing industries as they will become uncompetitive because cheaper finished goods from European countries would flood the nation’s markets.
According to him, the action will lead to the de-industrialisation which could have catastrophic implications on employment generation and poverty alleviation in the country, adding that Nigeria will incur significant revenue loss through removal of tariff estimated at about $1.3 trillion.
“The truth is our economy is currently challenged. The situation should not be compounded by government appending its signature or domesticating EPA. Rather, concerted efforts from all stakeholders should be garnered to overcome our current economic challenges.“The recent policy of resource-based industrialisation which is adopted by the Federal Government that aims at utilising the country’s abundant natural resources to produce goods that he country needs and which would ensure a sustainable and enduring industrialisation would automatically be killed. In fact, companies which have already started investing in production of raw materials and intermediate products would be forced to close down.
“Nigeria will perpetually continue to be exporters of unprocessed raw materials and importers of processed goods. Nigeria would then become an extension of EU market.“Government should continue to adopt home-grown policies and strategies that have the capacity to offer required economic fillip and achieve desired results. MAN assures President Muhammadu Buhari that the association as always is open to further engagement and detailed presentation on our views on EPA.”
Arrion had said EU will be making strong commitments in terms of financial development assistance, saying that the EU and its member states have all agreed to provide a minimum of €6.5 billion of trade development assistance every five years till 2035.
“Every five years, we are committed to give grants, development assistance. EU and the 28 member states have agreed to give a minimum of €6.5 billion for every five years. In the last five years it was €8.5 billion. We are very comfortable to provide this development assistance.
“Nigeria is maintaining import bans against ECOWAS. You can do this outside ECOWAS but not within. You are part of the same community and bound by some rules relating to free movement of goods and people. We have no offensive agenda for Nigeria because we believe that Nigeria and ECOWAS are very interesting places where European or other non European businesses could invest because there is enough room for investment,” he said.
He assured that the EU will not invade the West African market with products that could compete with domestic products of what Nigeria and other countries in the region would be producing, pointing out that the EU has removed all its export subsidies to the West African market
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