Ghana is ill prepared for EPA - Study
Ghana is ill prepared for EPA - Study
Accra, June 1, 2006, GNA - Empirical studies conducted on the impact of the proposed Economic Partnership Agreement (EPA) on Ghana has shown that the country is ill prepared and would face detrimental effects if it decides to join now.
A seminar attended by trade experts and people in academia expressed worry and raised pertinent issues such as: The impact of EPA on the African Caribbean Pacific (ACP) states, its adverse effects on overall revenue, and the fear that it will undermine regional integration effort in the sub-region.
Presenting the findings under the auspicious of the Ministry of Trade and Industry on Thursday, Professor Cletus Dordunoo, the Consultant, who conducted the study said Ghana would face a net welfare loss of 482,747,471,858 cedis should it append to the EPA.
The EPA, under the Cotonou Agreement and which succeeded the Lome Convention focuses on reciprocal preferential treatment of trade between the ACP states and the EU countries. Between 2008 and 2020, ACP states are expected to operate at the free trade area under the EPA.
Nonetheless, Ghana, Nigeria and Cote d’Ivoire, who are not Least Developed Countries (LDCs) within the West Africa region could opt out of the EPA but experts fear that the agreements which conforms with the WTO rules would soon become a conditionality by development partners.
Prof. Dordunoo said "Ghana-EU trade is relatively high and is about 43 per cent of total imports, therefore, the overall direct trade effect of a reciprocal trade agreement are likely to be significant with some risks of trade diversion.
"Adjustment costs are likely to be substantial. For instance 1.8 trillion cedis is estimated to be lost in custom duties if Ghana decides to join the EPA," he said.
Prof. Dordunoo said a reciprocal free trade regime under the EPA would in no doubt tremendously increase Ghana’s import bill and therefore affects macro-economic indicators as well as create balance of payment problems.
He said, "In the light of high dependency on trade based taxes and for the fact that the EU play a dominant role as a source of imprt, we need to recognise the profound fiscal implications which can arise as a consequence of the introduction of free trade in Ghana-EU trade relations".
Prof. Dordunoo said very few ACP countries have conducted in-depth analysis of the quantitative impact of an EPA with the EU. He said the impact of phasing off tariff reductions in a gradual manner under the EPA might be too fast for LDCs economics and even for Ghana since most companies would have to close down because of production deficiencies and supply constraints.
Prof. Dordunoo said it would be difficult to estimate the costs and benefits of EPAs for national economies and the regional groupings that were spearheading the negations efforts with the EU at present.
He said the EPA in doubt would offer variant opportunities for ACP states such as provide free market access, foster smooth and gradual integration into the global economy and enhance productive supply and trading capacity.
In his recommendations, Prof. Dordunoo said should Ghana decide to go for EPA, there would be the need to devise ways and means to control balance of payment, develop and follow internal policy reforms for a major expansion in exports, and the need for development finance to propel growth.
In addition, he said, the country needed to identify areas of resource requirement, harmonise policies to address EPA induced effects on government revenue and adjustment in labour factor as well improved international competitiveness through measures that tackle supply constraints.
