Political debate on Industrialization and EPA are porous ahead of the December Polls
Despite record growth of the Ghanaian economy in recent times, the growth is still fragile in that it depends on primary commodities and external markets instead of being driven by a structural transformation of the economy. Ghanaians are looking for a transformation that puts local businesses on a higher pedestal and delivers jobs for the teeming youth. Ahead of the December polls the need to transform the economy from raw materials-
Two months ago when the Presidential Candidate of the NPP, Nana Akuffo Addo, availed himself at the IEA Platform, a question was posed to him about this trade pact, which was initialled by the NPP Administration, and how it will impact on the Party’s transformative agenda for this country. To the surprise of many, he indicated in a jovial manner, that he will call on Allan Kyeremateng, from Addis Ababa to come and help. He proceeded to say that the European partners understand and if there is the need to review the agreement it will be reviewed when in fact there is no sun set clause in the initialled agreement. It is in perpetuity.
Also, on Thursday, 18th October, 2012, His Excellency, the President, John Dramani Mahama, also took his turn at IEA evening encounter. The President’s view was sought on how the challenges of the poultry sector could be reconciled with the proposed free trade agreement with the European Union. The President, indicated that Ghana was committed to the ECOWAS process but also Ghana and Ivory Coast stand ‘to lose’ if the EPAs are not concluded and hence the desire to break ranks with ECOWAS and sign an agreement with the European Union because of ‘export disruptions’. Specifically, according to the President, Ghana’s leading exports (cocoa beans) will suffer export restrictions from the European Union. This gave me sleepless nights because it is untrue.
With all respect to the candidates, the responses were hollow and anti-
Under the current regime, goods from Ghana, mostly raw materials, enter the EU market duty-
It was in the light of this that ECOWAS adopted a regional mechanism in the form of a solidarity fund to compensate Ghana, Cote d’Ivoire and Cape Verde as a stop-
Firstly, a most recent study (South Centre, November 2011), which updates the 2005 study undertaken by the UN Economic Commission for Africa (UNECA, April 2005) estimates that the cost, due to new duties under the EU Generalised System of Preferences (GSP) that Ghana will incur will be in the region of $52 million, whilst that of her current commensurate loss of tariff revenue from an EPA will be about $374 million. It means that failure to sign the EPA the companies will lose $52 million (paid as duties to EU) whereas signing it will mean that Ghana government will lose $374 million as tariff revenue. The costs of signing an EPA far outweigh the benefits even from this narrow and limited criterion of net fiscal balance.
Secondly, Ghana will have to say goodbye to any industrialisation efforts if the EPA was signed with the EU. The EU’s position, as indicated in the interim EPA, on the elimination of tariffs for 80% of trade; restrictions on the use of export taxes and quantitative restrictions; the provisions on the bilateral, and the standstill clause; will undermine Ghana’s efforts to industrialize and its ability to move up the industrial value chain. The agreement will also bar Ghana from having any better ambitious trade agreement with any other country. European goods and firms will be treated just as Ghanaian goods and firms. Government cannot discriminate in favour of local producers. As a result, Ghana will remain a perpetual supplier of raw materials, with all the adverse implications that this entails including worsening the unemployment situation in the country. For industrial development, Ghana needs to ensure that the policy space is maintained for those industrial sectors which are being developed. Binding most tariffs at zero level under the EPA will disable Ghana’s ability to protect the sectors that are being developed to move up the industrial value chain.
Furthermore, Ghana, as a country, needs to take into consideration the long-
Finally, Ghana should learn from the global economic turmoil that has cast its shadow since 2008. This is the time to be diversifying trade away from over-
As the nation heads towards the December polls, candidates are expected to demonstrate how they will lead the industrial and structural transformation of this dear Nation of ours. EPAs are anti-
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