What Ghana stands to benefit from Economic Partnership Agreement

Dr. Bawumia did not hide his optimism and government’s desire to leverage the opportunities offered by the EPA when he met Ambassadors of European Union Member States and members of the European business community in Ghana during a cocktail reception held recently to mark the second anniversary of the European Business Organisation in Ghana (EBO-Ghana).

EBO-Ghana started operating in May, 2015 after receiving endorsement of all National European Embassies and the Delegation of the European Union in Ghana. It was established among other things, to facilitate dialogue between EU private sector and authorities of the host country.

The cocktail reception was organized by EBO-Ghana and the Delegation of the European Union to Ghana, to interact with Business related Ministers and newly appointed CEOs of business and trade related public institutions. Private sector organizations such as the Association of Ghana Industries, the Federation of Associations of Ghanaian Exporters, the Private Enterprise Federation and the Ghana Chamber of Commerce were also part of the event.

Opportunities offered by EPA

Last year, Ghana ratified the interim Economic Partnership Agreement which subsequently entered into force on 15 December following its ratification by the European Parliament.

This represented an important milestone in the partnership between Ghana and the European Union as it provided the needed legal backing. With the avowed commitment from both parties, what remains is how to implement the EPA for mutual benefit.

What then are the opportunities offered by this agreement? The EPA is about protecting Ghana's exports and jobs. It is also about creating new jobs through new investments and new opportunities for business and trade. The EPA provides duty-free and quota-free access to the EU market for an unlimited period for imports originating from Ghana. For example, a textile product can enter the EU duty-free if at least one stage in its production, such as weaving or knitting took place in Ghana. In return, Ghana will partially and gradually liberalize imports from the EU over a period of 20 years. In designing this arrangement, due cognizance was given to the different level of socio-economic development in Ghana.

More importantly, Ghana has the right to protect sensitive sectors of its economy from any adverse effects of the EPA as well as to preserve fiscal revenues. In this regard, imports from the EU that will be allowed into Ghana under this agreement consist mainly of goods which are not produced locally. Notably inputs used by local producers such as agricultural inputs - fertilizers and seeds as well as equipment and machinery needed for manufacturing. Agricultural and non-agricultural products, such as chicken, goat and swine meat, tomatoes, fresh and prepared, sugar, palm oil, cocoa powder, flour, frozen fish and beer have been excluded from liberalization in order to protect these sectors.

Additionally, potential investors, whether local or foreign get the long-term stability they yearn for. This is attributable to the fact that under the EPA, they will have a reliable market for their products.

Ghana will thus be seen as being serious about attracting businesses and giving them good prospects to expand their businesses. Ghana is already outperforming most African countries in attracting foreign investors, and this trend will be reinforced thanks to the EPA (FDI in Africa -3% but FDI in Ghana +9% in 2015).

With the Aid for Trade package that comes with the EPA, Ghana’s customs procedures will be reviewed to make it less of a hassle for exporters and importers. This has the potential to tackle the perceived corruption in this area. Significantly, EPA comes with EU development aid. This will help Ghana make the most out of the agreement.

In summary, the objectives of the EPA are simple; increase investments and job creation in Ghana and intensify and facilitate trade between Ghana and the EU towards a sustainable economic partnership.

Safeguards against unforeseen circumstances

The EPA also has separate chapters on trade defence instruments which provide for safeguard measures in case of disruption or risk of disruption of an economic sector, technical barriers to trade, sanitary and phytosanitary measures to help Ghanaian exporters to comply with international standards, trade facilitation and a dispute settlement mechanism. Further negotiations are also possible on services, investment and other trade related issues.

Justification for Dr. Bawumia’s optimism

Clearly, there is something good in the EPA that is worth pursuing, hence Dr. Bawumia’s upbeat attitude towards this agreement. Speaking as a guest speaker at the reception, he said with the coming into force of the interim Economic Partnerships Agreement (EPA), Ghana expects to have access to EU markets with a more diversified portfolio of products. According to him, government wants to move beyond just agricultural products and oil to products from the light manufacturing industries, non-traditional exports, and human talents in the shape of outsourced Business Process Services.

When this is done, government expects that Foreign Direct Investment (FDI) flows from the European Union into Ghana which amounted to US$2.7 Billion between 2010 and 2016 will increase significantly. It is also expected that exports of Ghana to the EU will diversify from commodities into transformed products.

This is already happening in the agri-business where more and more transformation takes place in Ghana (e.g. canned tuna, processed cocoa, etc.). But it should also extend to industrial and consumer goods (cosmetics, textiles, etc.) thanks to the EPA which give a competitive advantage to Ghana vs. other countries currently supplying the EU market.

These will be achieved through what Dr. Bawumia describes as the three “big ideas” that will drive Ghana’s future relationship with the EU.

First, the private sector will be provided the needed support to lead in creating jobs. Secondly, the government intends to build a “Ghana Beyond Aid”. In this regard, the government willengage more in trade and investments that will help create wealth, keep citizens gainfully employed in meaningful jobs that enable them live dignified lives. The objective is to add value to the natural resources and human talents, to engage the rest of the world in exchange for premium returns. Thirdly, as a centre-right, pro-business government that believes that “Ghana is Open ForBusiness” the private sector will be treated as a powerful ally in creating economic value and jobs for the people of Ghana.

The government’s desire to create more sustainable jobs is understandable. All one needs to do to appreciate this need is take a cursory look at the streets of Accra and other regional capitals. Very able-bodied men selling items that are all imported is a common sight. These are people whose energies could be channeled into productive farming ventures, the produce from which could be exported to Europe under the terms of the EPA.

An increase in job opportunities resulting from Foreign Direct Investment in key sectors of the economy is a sure way to redirect the energies of such youthful human resources.

What Ghana stands to benefit from Economic Partnership Agreement

Ghana stands to gain a lot from the Economic Partnership Agreement (EPA) signed between Ghana and the European Union and the Vice President Dr. Mahamudu Bawumia is optimistic about this.

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