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EPA threatens N6.2b non-oil exports revenue, local industries - MAN

EPA Threatens N6.2b Non-Oil Exports Revenue, Local Industries - MAN

Vanguard (Lagos)

April 19, 2007

By Franklin Alli

Manufacturers Association of Nigeria has warned that harmonisation of tariffs under the proposed ECOWAS - European Union Economic Partnership Agreement (EPA), will lead to loss of over 478 million dollars (about N6.2 billion) in revenue from non-oil exports annually, and closure of some industries in the country.

The Economic Partnership Agreement is billed to come into effect from January 2008. It stipulates opening up of the ECOWAS market on a reciprocal basis, to EU products on gradual reduction of tariff from 2008 and complete elimination of tariff on EU products by 2020. As part of preparation for the EPA negotiation, meetings of stakeholders continue at the regional and national levels.

Impact Assessment Studies conducted by MAN to determine the implications of EPA on the country, made available to Vanguard, stated that "In specific terms, average import tariff revenue loss of around USS478 million or 42 per cent of tariff revenue is envisaged in 2008 for Nigeria. Tariff accounts for 39 per cent of non-oil export revenue. The expected implication of this development is drastic reduction in public sector spending or increase in the level of taxation. The two options hold very negative consequences on social and economic infrastructures."

Citing the performance of the Africa, Caribbean and Pacific (ACP) Member-States under Lome Convention in its twenty-five year span, MAN discovered that no significant economic benefits were recorded

"Almost all Africa, Caribbean and Pacific (ACP) Member-States remain at the poverty level.

ACP countries share of EU market declined from 6.7 per cent in 1976 to 3 per cent in.1998. FDI showed similar trend," the report stated.

"Likewise, in the last fifteen years, ECOWAS’ exports to the EU, on the average, recorded only 4 per cent growth (if crude oil export by Nigeria is removed from the export list) in contrast with 84 per cent export growth recorded in trade with ECOWAS by EU for the same period. Review of ACP countries’ share of EU market under Lome Convention showed a decline from 6.7 per cent in 1976 to 3per cent in 1998. Foreign Direct Investment during the period recorded similar decline," said MAN.

The implication of this trend is that the goals of EPA with regard to ’robust’ export opportunities in EU market for ECOWAS products is very unrealistic, especially in the face of stiff and unrestrained competition expected from new entrants into the membership of EU.

The looming danger posed by the ECOWAS Common External Tariff (CET), the precursor to EPA, has started to manifest across all industrial sectoral groups in Nigeria.

The urgent and substantial import liberalization promoted by EPA has the strong potential to further weaken trade relation which currently is estimated at about 10-15 per cent among ECOWAS members. ’When compared with exports within the more developed trading blocks such as EU, Asia Pacific Economic Cooperation, intra-regional trade in West Africa is abysmally low.

If ECOWAS and other regional groups in Africa are made to liberalize their economies at a faster pace and not in line with their own poverty and development plans, the outcome would further constrain regional cooperation and throw away all benefits associated with regional integration.