ECOWAS Ghana protects Agric Sector under ECOWAS CET

The Ministry of Finance says the agricultural sector is being protected more than any other sector following the implementation of the ECOWAS common external tariff (CET).

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The Ministry of Finance says the agricultural sector is being protected more than any other sector following the implementation of the ECOWAS common external tariff (CET).

The ECOWAS CET is structured along five “bands” of 0, 5%, 10%, 20% and 35%. This structure arguably reflects a wish to promote local value addition: “Essential social goods” are placed in the 0% duty band, inputs and intermediary products in the 5 and 10% bands, while final consumption goods are placed in the 20% band, the “fifth band” at 35%, for “specific goods for economic development”

Fifty five percent (55%) of agricultural tariff lines are in the 20% and 35% band and none in the 0% band. Ninety percent (90%) of the products in the 35% band are agricultural products.

Ghana has included rice in lists of commodities that will benefit from Supplementary Protection Tax Measures.

Thus Ghana will continue to tax imported rice at the current rate of 20% in order to give the needed protection to the local rice industry.

The CET rate for rice, a key component of food security with growing import and growing production, will start at 10%, the same as under the UEMOA CET, with the possibility that protection for rice under the ECOWAS CET could gradually climb through the 20% band and reach the 35% band.

The implementation of the CET started from January 1, 2015 in some countries in the sub-region, and in Ghana on February 1, 2016.

The CET is intended to facilitate free trade and advance greater integration to the level of Custom Union. The adoption of a uniform regime of customs and related charges will hopefully help address the problem of cross-border smuggling, combat dumping and also bring economic benefits to the people of the sub-region.

Ghana currently has 6,057 commodity lines as against 5,889 of ECOWAS CET. This means that with the adoption of the regional tariffs, 168 of Ghana’s commodity lines will be eliminated.

Ghana presently has 725 commodities that are admitted at zero percent (0%); the CET when adopted will reduce the number (zero rated items) to 85. However, the scope of commodities admitted under the 5% band has been broadened from 375 to 2,146 under the CET. This signifies a big boost to local industries as these items are mainly basic raw materials that are currently taxed at 10%.

Ghana’s third tax band that taxes 2, 333 items at 10% would be reduced to 1,373 whilst 2,624 items admitted at 20% would see a marginal decline to 2,165.

The ECOWAS new tariff line of 35% will apply to only 130 consumption goods, mostly food items, which Ghana presently taxes at 20%.

Items in the 35% tariff band are referred to as special goods for economic development because the region has a comparative production cost advantage.

These include commodities under Chapter 15 of the Harmonized System (HS) such as groundnut oil, palm oil, coconut and cotton- seed oil. Equally, certain meat preparations found under Heading 1602 have their import duty rates raised 20% to 35% to ensure coherence with other meat products.