Safeguarding Nigerian industries through standards under AfCFTA regime
Preparatory to the African Continental Free Trade Area (AfCFTA), implementation in July 2020, there are concerns about how the Nigerian economy, especially the industrial sector, will surmount domestic realities to be able to compete under a liberalised African market. While several tariff barriers have been proposed, the use of standards as non-tariff barriers is key in safeguarding the local market and enhancing ease of penetration of Nigerian-made products to other markets. FEMI ADEKOYA writes.
For advocates of protectionism, encouraging domestic production aids business for the manufacturer, the supply chain, the end-user, and the economies, large and small, that it exists within.
However, the appeal to produce locally is easily eroded by challenges of infrastructure, low disposable income, unchecked competition from foreign goods, mostly sub-standard but appealing because of price, quality and access to cheap finance.
Considering that key economic factors like labour, population and capacity to buy, used by any investor to determine the availability of a market favour Nigeria, concerns remain that the Nigerian manufacturing sector is operating below capacity due to several challenges.
With a new market regime expected to commence in 2020 as a result of the AfCFTA, the implementation of key safeguard measures is crucial for local industries and businesses to thrive.
Industry operators had warned that if not properly handled, the AfCFTA could affect the economic growth and development of Nigeria; killing off local industries with influx of goods; with the implication of the agreement being that Africa will become a continent without boundaries.
According to the Manufacturers Association of Nigeria (MAN), if liberalisation under the African Continental Free Trade Area (AfCFTA) is not checked through safeguard measures about 4301 of 4779 total manufacturing tariff lines of 5%, 10% and 20% will be moved to 0% in the first five years, thus leading to the closure of virtually all manufacturing companies within the period.
The first impact of liberalisation through tariff cuts, according to MAN, is the surge in imports of manufactured goods into the country, while other impacts are on the outputs, incomes, employment and investment of the manufacturing firms.
In principle the import surge is expected to reduce sales/output; the magnitude would be higher for competing manufactured goods. This implies that full liberalisation from the onset moving 90% of tariff lines to zero percent would have catastrophic implications for Nigeria.
To address these challenges, the Director-General of the Standards Organisation of Nigeria, (SON), Osita Aboloma, stated that SON’s Council has approved a new set of 128 Nigeria Industrial Standards for publication, dissemination and use by stakeholders in Nigeria, to drive economic advancement by manufacturers, processors, assemblers and importers of products and services.
According to him, these standards, which are to further boost industrial and commercial activities in the country, are in view of the imminent implementation AfCFTA.
Aboloma explained that the agreement has further necessitated rapid development and harmonisation of standards, conformity assessment procedures as well as mutual recognition of quality marks, to cover all sectors and facilitate trade across the continent through the elimination of technical barriers.
He enumerated areas covered by the approved standards to include civil/building technology, chemical technology, electrical and electronics, food/codex, petroleum products as well as liquefied petroleum cylinders among others.
For instance, the agency recently announced that it has commenced talks with filling plants owners and other relevant stakeholders in order to commence the re-qualification of used gas cylinders.
Safeguards under AfCFTA
To successfully access the African Common Market, under the AfCFTA, or meet local technical regulatory requirements, Governments are expected to introduce more and more regulatory requirements to address inter-alia health, safety or environmental issues in accordance with the World Trade Organisation’s (WTO) Technical Barriers to Trade (TBT) Agreement, and the rights and obligation of members.
Similarly, consumers are expected to demand safety and quality assurance; while private and public authorities will continue to scrutinise imported/exported goods for compliance; and producers increasingly will need reputable evidence that their products and services meet regulatory, technical and other requirements.
Though AfCFTA seeks the elimination of tariff and non-tariff barriers, there are the TBTs issues. For inastance, while the AfCFTA binds all State parties to commit to the progressive elimination of tariffs and non-tariff barriers to trade in goods, under the TBT Annex, Article 5: Fields of Cooperation, has provided that States Parties shall cooperate in the development and implementation of standards, technical regulations, conformity assessment procedures, accreditation, metrology, capacity building and enforcement activities in order to facilitate AfCFTA.
Further in Article 6.2 b, c, d and f respectively, calls on the State parties to adopt the harmonised African standards by ARSO and AFSEC.
There is therefore a corresponding drive to create a more robust, adaptive, cost-effective, user-friendly and sustainable quality infrastructure (QI) system that provides access to appropriate standardisation, metrology, accreditation, conformity assessment, and market surveillance capability and capacity, along with attendant education and promotion programmes, and based on a Quality Policy.
Speaking at the 56th council meeting of the African Organisation for Standardisation (ARSO), in Ouagadougou, Burkina Faso, Aboloma stated that Nigeria, through the instrumentality of the SON, would continue to play vital role towards African’s economic integration and trade facilitation by applying effective standards and quality assurance initiatives.
He commended the exemplary contributions of the founding fathers of ARSO like Nigeria via SON, for their vision and ideas on ways to stimulate Africa’s development and global competitiveness using of standardisation tools.
According to him, ARSO has been playing a key role in the liberation of the African continent by. facilitating the harmonisation of National and regional standards and conformity assessment processes.
Hitherto, SON, through ARSO had recommended the need to harmonise about 1000 regulations in Africa, and align them with international standards if it hopes to increase market access and boost regional trade.
To drive AfCFTA implementation, Aboloma cited the need for zero tolerance for substandard products and ensure that Nigeria benefits fully from the deal.
As safeguard measures, MAN also recommended that, “high information barriers and uncertainty in achieving market access can be mitigated with appropriate export promotion strategies, including tax exemptions, provision of market information, etc. Government should overhaul, enhance and strengthen already established programmes in these areas to fit the cost of liberalisation.
“There is need for significant public investment to cooperate in the formulation and enforcement of continental rules of origin (RoO) to forestall trade deflection, institutionalization of contingent protection measures and implementation of the trade facilitation agreement (TFA)”, MAN added.