From Abuja to DAKAR

Fri, Jul 19, 2013

By publisher

5 MIN READ

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Political and security situations in Mali and Guinea Bissau topped the agenda of the just-concluded ordinary session ECOWAS Summit in Abuja

ECOWAS leaders are to meet in Dakar, Senegal, in October in an extraordinary session to decide on three issues critical to the financial health of the region. The issues are the Common External Tariff CET, the Community Levy and the lingering Economic Partnership Agreement, EPA, negotiations with the European Union, EU. This was the outcome of the just-ended 43rd Ordinary Session of the Authority of ECOWAS Heads of State and Government in Abuja. Issues which dominated discussion at the session were the political and security situations in Mali and Guinea Bissau. The meeting touched on the three issues but deferred decisions on them until the Dakar summit, whose actual date would be communicated to Member States.

The CET is a precursor to a regional Customs Union, which is predicated on the harmonization and convergence of national fiscal, monetary and trade policies of Member States for the attainment of economic integration by the 15-nation economic community with a combined population of more than 300 million people.

At their March meeting in Praia, Cape Verde, regional ministers of finance had endorsed a new five-band tariff regime for West Africa, the subject of 10 years of internal negotiations driven by the technical committee of the Commissions of the ECOWAS and the eight member West African Economic and Monetary Union, UEMOA, following the 2006 decision by the ECOWAS Heads of State and Government. Some 5899 tariff lines are covered under the new tariff regime with tariff ranging between zero and 35 per cent for the 130 tariff lines that fall into the category of specific goods that contribute to the promotion of the region’s economic development.

Under the new regime, five per cent duty is applicable for 2146 tariff lines under the basic raw materials and capital goods category, 10 per cent for the 1373 tariff lines that qualify as intermediate products category while 20 per cent duty is reserved for the 2165 tariff lines under final consumer products.

The ministers agreed that the concerns expressed by some Member States such as the treatment of raw sugar, and the request for special treatment for Cape Verde because of its location and vulnerabilities should be addressed within the framework of trade defence measures. They also agreed on the creation of a 1.5 per cent Community Integration Levy whose scope and operationalisation would be the subject of further regional reflection as part of the mechanisms to enable the region cope with the challenges of implementation of the new tariff regime.

The levy will replace the two existing community levy regimes in the region – the ECOWAS Community levy and the counterpart Community Solidarity levy for the UEMOA, the major sources of funding for the two Commissions. The replacement will also help to ensure uniformity in port charges in compliance with the requirements of the World Trade Organization, WTO. For the effective implementation of the new CET, the ministers had also urged the ECOWAS Commission to expedite the finalisation of the trade defence and other support measures.

The Dakar Extra-Ordinary summit to be attended by the council ministers, ministers of finance and trade, will take a decision after examining the pros- and cons on the CET arguments and also agree on measures to fast-track the negotiations on the EPA between ECOWAS and the EU. The negotiations which have been stalled mainly due to disagreements over the size of the West African market to be open to the EU and the timetable for dismantling the existing tariff, the EPA Development Programme, EPADP, funding to enable the region cope with the cost of adjustment to the EPA, the non-execution clause and the most favoured nation status.

While West Africa is requesting for the injection of nine billion US dollars in fresh funds into the EPADP, the EU is offering six billion EURO in funds already committed under the European Development Fund, EDF, as well as existing bilateral and other sources. West Africa, which includes ECOWAS member states and Mauritania, initially made a 60-per cent market offer over 25 years for the dismantling of the existing tax regimes against EU’s 80 per cent over 15 years. West Africa has now adjusted its position eventually to 75 per cent market offer but over same the transition period as a gesture of flexibility in the negotiations.

In preparation for the resumption of negotiations, the region had undertaken a series of analyses of the impact of an increased market offer on the economies of its member states based on three scenarios, particularly on customs revenue, external trade, real GDP growth, investments inflows and consumption of households. In order to mitigate the potential loss of revenue from the EPA based on these simulations, regional experts had called for the involvement of the private sector and the implementation of a tax reform programme.

The negotiations are being held to establish a World Trade Organisation, WTO, compliant trade regime that will guide trade relations between the EU and the 79-member African, Caribbean and Pacific, ACP, countries for the next 25 years as a successor arrangement to the previous partnership Conventions. The Dakar summit will reach a decision on the way forward with the overall interest of the region at heart.

— Jul. 29, 2013 @ 01:00 GMT