Questions over Nigeria/ECOWAS-EU economic partnership agreements

Opinions are divided as to the propriety or otherwise of the proposed  Economic Community of West African States (ECOWAS) and European Union (EU) Economic Partnership Agreement (EPA) with Nigeria as industry stakeholders have raised the alarm that the implementation of the EPA will have negative rippled effects on the nation’s fragile economy. Ibrahim Apekhade Yusuf in this report examines the issues

Nigeria’s socioeconomic interest in the medium, short to long term could be under severe threat if the claim made by some concerned individuals is anything to go by.

Specifically, the Manufacturers Association of Nigeria (MAN) has expressed dismay over the plan by the federal government to enter into Economic Partnership Agreement (EPA) with the Economic Community of West African States (ECOWAS) and European Union (EU).

According to MAN, the move is a mechanism to make Nigeria a dumping ground for finished products from the EU.

In a statement signed by the Director General, Segun Ajayi-Kadir and made available to The Nation, the body argued that the EPA agreement, if signed by the federal government would lead to de-industrialisation of the Nigerian economy.

In the statement which reads in part, the MAN said, “The Agreement would lead to de-industrialisation as it is structured to limit the growth of manufacturing in West Africa, particularly in Nigeria. The implication of this is that our economy will remain a provider of raw materials and importer of finished products.”

What EPA is all about

The Economic Partnership Agreements between the EU and African, Caribbean and Pacific countries and regions aim at promoting ACP-EU trade – and ultimately contribute, through trade and investment, to sustainable development and poverty reduction.

Trade with ACP countries represents more than 5% of EU imports and exports. The EU is a major trading partner for ACP countries.

The EU is the main destination for agricultural and transformed goods from ACP partners – but commodities (e.g. oil) still form a large part of ACP-EU trade. The EPAs intend to support trade diversification by shifting ACP countries’ reliance on commodities to higher-value products and services.

The EPA negotiation process between West Africa and the European Union started in February 2014 and is currently in review by the administration of President Muhammadu Buhari.

But MAN is insistent that the agreement is thoroughly checked, if it is to be ever considered.

“Nigeria’s concerns with respect to EPA Market Access should be addressed before the country could endorse the Agreement just as it was done before the take-off of the ECOWAS CET. This is to ensure that Nigeria is not used as a dumping ground for finished products from the European Union.”

The association had earlier sent a warning signal to the present government stating why the EPA, in its present form should ‘not be signed.’

“Taking into consideration the negative consequences the EPA would have on local manufacturing in particular and the economy in general, especially in the areas of job creation, loss of investment and revenue to government.

“Bearing in mind that with parameters to measure West African States are not at the same level of economic development with any European country, so the trade reciprocity can be tilted to the advantage of the EU.”

MAN holds the view and very strongly too that “given the reality of today’s world and the current stagflation in the economy, our nation can ill-afford to rely on exporting raw commodities such as crude oil, natural gas, solid minerals and unprocessed agricultural products. We need to break this circle and invoke deliberate efforts to industrialise our economy, which is consistent with government policy on improving ease of doing business.”

In defence of EPA

Notwithstanding the welter of criticisms against the EPA, there are people who feel strongly that the agreement is in Nigeria’s best interest.

In a statement by Michel Arrion, EU Ambassador to Nigeria and ECOWAS, he offered what he considered important clarifications about the Economic Partnership Agreement and EU trade policy.

While responding to insinuations in some quarters that Nigeria’s non-oil exports face ban in Europe if Nigeria does not sign the EPA, the diplomat said such was farther from the truth.

In the statement which reads in part, he recalled that: “When, in June 2015, the EU adopted a temporary ban on imports of dried beans from Nigeria, due the repeated interceptions at the EU border of dried beans’ consignments containing high residuals of a pesticide dangerous for human health, several Nigerian media stated that the ban applied to all Nigerian non-oil exports to the EU (not only to dried beans), and some even claimed that this was an attempt to put pressure on Nigeria on the EPA. Again, this information was grossly wrong.”

Pressed further, he said: “Another example of misleading information often heard in relation to the EPA is that, if the EPA enters into force, the Nigerian market would be flooded by cheap European products. This scenario cannot occur for several reasons. First, European products are not “cheap”: even if they were imported to Nigeria duty free, European products would still be more expensive than several products produced locally or imported from Asia. Second, the EPA has been negotiated in a way to reduce any risk of a possible negative impact for West Africa. Indeed, the main objective of the EPA is to support, not to undermine, the economic development and industrialisation of West Africa. To make sure that such objective can be effectively achieved, the EPA gives more obligations to the EU than to West Africa, and more rights in favour of West Africa than the EU.”

The EPA, he stressed, “Requires the EU to completely remove tariffs and quotas on imports of any good from West Africa, West Africa is allowed to keep tariffs up to 35% on several goods imported from Europe, particularly on goods belonging to the so-called sensitive sectors, such as agriculture, food and beverages. The EPA provides this protection in favour of West Africa for an unlimited period of time. West Africa is required to gradually remove import duties only on capital goods (machinery, spare parts, components, or inputs such fertilisers, agrochemicals), which are goods that in principle do not compete with locally produced goods, but which are needed by domestic producers and would become cheaper for them as a result of the EPA.”

Besides, he said, the timing of the market opening provided by the EPA is also in favour of West Africa. While the EPA requires the EU to immediately remove duties on all imports from West Africa, West Africa’s market opening will be gradual and slow, starting after five years of its entry into force (a transitional period which applies only in favour of West Africa) and gradually taking place for additional 15 years (overall a period of 20 years).”

He further noted that the EU has already committed 6.5 billion euro in development cooperation projects linked to trade, industry, energy and transport infrastructure for Nigeria and West Africa for the first five years of implementation of the EPA. Similar funds will be committed throughout the whole EPA implementation process.

A refreshing perspective

On the fears that the implementation of the EPA might make Nigeria a dumping ground for foreign goods, Prof. Jonathan Aremu, a renowned economist and professor of International Economic Relations at the Covenant University while offering a rather dispassionate position of the hotly debated issue said, there is need to have a true grasp of the situation.

“The basis for the EPA needs to be understood very well,” he said.

Going down memory lane, Aremu, who retired as deputy Director, Research and Planning at the Central Bank of Nigeria (CBN) recalled that before the World Trade Organisation (WTO) was set up in January 1995, goods coming from Nigeria as well as African Pacific countries entered Europe at a preferential import duty.

“Most of them entered with free import duty and it a country like Nigeria to sell more into European countries than other countries that are not former colonies of the European Union. But with the coming of the WTO, that violates the principle of no special nation treatment which says that all members of the WTO should be treated equally. And that’s why the WTO had to inform the EU as well as the African Caribbean countries, made up of about 77 countries in all to sign an agreement for themselves to actually justify why they should maintain that preferential treatment. In other words, they must be able to have an Economic Integration Agreement that will allow them to be able to use Article 24 of the General Agreement on Trade and Tariff (GATT).”

Expatiating, Aremu who is President/Chairman of Board of the Chartered Institute of Financial and Investment Analysts, Nigeria, (CIFIAN), further observed that, “The When you go into Economic Integration Agreement, which is permitted by Article 24 of GATT, then you can actually offer yourself some sorts of preferential treatment and that is the basis for the EU having to have a free trade area with the African Caribbean Pacific countries, including ECOWAS, which is one of the sixth groups.”

He reiterated that the whole idea of the EPA was informed by the fact that the initial Lome 4 agreement can no longer continue.

Rather than to politicise the issue, the university don believes that the matter can be resolved with diplomacy.

“The negotiations have been on for so long. The Nigerian government knows what they actually want but the issue is that what they want has to be what is agreeable within the global setting. I can’t talk for ECOWAS or Nigeria but what is important is that if the country says it wants to actually see how to be able to make its own environment better before entering into any agreement, l think that all what they need to do is to table all the things that they want. The issue is that the basis for the EPA is just because of the fact that the preferential arrangement which was going on up to the end Lome 4 can no longer continue.”

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