Ecowas Trade Liberalization Scheme: Still in the Doldrums

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Ecowas Trade Liberalization Scheme: Still in the Doldrums

By Ugochukwu Chimeziri

Introduction

The objective of the Ecowas Trade Liberalization Scheme (ETLS) is to establish a custom union among all member states of Economic Community of West African States (Ecowas). The Scheme also aimed at the total elimination of custom duties and taxes of equivalent effects, removal of non-tariff barriers and the establishment of a common custom external tariff to protect goods produced in the member states.

The goods protected by this protocol fall under the category of unprocessed goods like livestock, mineral products etc, traditional handicrafts and industrial products of community origin.

Trade experts have been worried that irrespective of regional backing the protocol enjoys, its aspirations have not been achieved at all. This has given rise to divergences in the custom tariffs across the region.

The truth about the whole issue is that trade and movement of goods, services and people are yet to be achieved in the sub-region.

It is not an understatement to say that Ecowas is not yet a Free Trade Area (FTA). According to free encyclopedia, FTA is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs and trade freely among themselves. This state of trade unity is not yet in existence in Ecowas when compared to what is obtainable in the European Union (EU).

Ecowas need to summount the hurdles of a custom union to a single market, then monetary union before talking of economic union. EU which is trying to sign the Economic Partnership Agreements with the Ecowas is not just an economic union but also a fiscal union.

Factors militating ETLS

Just as every protocol by Ecowas is facing one regional hurdle of the other, the ETLS is still compressed by a lot of regional stoppers'. It is right to make mention of some of the challenges militating the ETLS.

In spite of the numerous benefits accruing from the ETLS, the scheme has been marred by obvious lack of legal status hence the charging of full duties by Custom Authorities. As it is now, ETLS does not provide any mechanism where traders in the region who have been molested or extorted could establish any redress just as it is in the EU. This has even empowered corruption along the Lagos/Abdijan trade corridor.

Barriers to movement of goods due to road blocks at border posts have just been a system in the same trade corridor. For instance while Ecowas recommended just two posts between Mile 2 and Seme border, physical inspection reveals over 40 posts with so many agencies replicated at very close distances. Lack of adequate awareness and sensitization of the scheme which leads to inability of companies to tap fully its opportunities is another challenge facing the protocol. Rejection of some products by member states from total tariff exemption even after admission of companies to the scheme is still yet another problem.

Another challenge which has actually impacted negatively on the effectiveness of the ETLS is the sovereignty of member states. Because, each member state is a sovereign state, the liberty to observe or not to observe the ETLS rules comes into play.

This single problem is the bed rock of all other problems that are working against the protocol. Every member state has developed some reasons why certain rules of the ETLS must not completely be observed in its territory. Even international manipulations have also exploited this loop hole by infusing into their colonies some salient anti-ETLS policies which these member states run as their domesticated technical policies. Para military personnel at various border posts have also exploited this avenue by enriching themselves through extortions they make from the traders in the region. Even cases of molesting and harassing women-traders have been so rampant simply because the victims cannot access any Ecowas court to seek for redress.

Still on the influence of international pressures in West Africa, there has been this cold war between an Anglo West African states and Francophone West African states. This has further deepened the challenges that are stalling the growth of ETLS and even other protocols of the region.

For instance, the Ecowas Monetary Cooperation Programme (EMCP) requires member countries to undertake economic reforms to achieve some common economic targets known as convergence criteria. However, owing to the fact that the Francophone countries already have in existence a West African Monetary Union known as UEMOA, which they regard as being more superior, the dichotomy between the Francophone and Anglophone countries was further entrenched. To meet this challenge, the Anglophone countries, through the initiative of Nigeria and Ghana, proposed a fast track to monetary integration for its member countries. Thus, on December 15, 2000, Nigeria, Ghana, the Gambia, Sierra Leone, Liberia and Guinea (a French speaking country) established the West African Monetary Zone (WAMZ) as the second monetary zone in the Ecowas. The major objective is to facilitate rapidly the achievement of a WAMZ monetary union with a common central bank and a single currency for eventual merger with the UEMOA under the Ecowas.

The programme of activities for the realization of the EMCP include, the requirement to achieve the convergence criteria, such as a single digit inflation of less than 5 per cent, budget deficit /gross domestic product (GDP) of less than 4 per cent, central bank financing of government budget limited to 10 per cent of previous year's tax revenue, gross external reserves should finance not less than 3 months import cover. Other secondary criteria are the prohibition of new domestic debt arrears and liquidation of existing ones; tax revenue to GDP, wage bill/tax revenue and public investment/tax revenue should not be less than 20, 35 and 20 per cent respectively; maintaining real exchange and interest rates.

Of the primary convergence criteria, Nigeria's inflation rate in 2005 was 11.6 per cent which was higher than the target of 5.0 per cent, while the budget deficit to GDP was 1.1 per cent which is lower than the 4.0 per cent prescribed. There was no central bank financing of deficit, while months of imports cover stood at 19.7 months, above the 3 months stipulated. Overall, with the exception of inflation rate, Nigeria met other 3 major convergence criteria.

This brings us to the next challenge which has frustrated protocols of the region. Economic wellness! Some of the member states including the Francophone states depend reasonably on the resources coming from their masters. Most time, these resources do not come string free and because rejecting such conditionality could be devastating, they swallow them hook, line and sinker. This has also created some imbalance in the system.

Language barrier to some extent has contributed also to the case at hand.

I was at Aflao border between Togo and Ghana last quarter of 2010 when an English trader suspected to be a Nigerian was trying to move his goods across the Togo's border into Ghana. He was held by the customs at the Togo's border. His offence was not that he was carrying unacceptable goods but because he could not speak French. The custom officer kept asking him questions in French and at a time somebody who is suspected to be one of the officials at the Togo borders advised the trader to hire an interpreter so that he could respond appropriately to the questions he was being asked. The trader paid an equivalent of N7,500 to get an interpreter for a conversation that did not last for more than 20 minutes. But surprisingly, shortly after the French speaking custom official left the scene to buy a pack of cigarette, he was perfectly speaking English. That created a serious case of not regarding the value addition the protocol could create if well observed in the region. In effect, low awareness was indicated as a big challenge to the protocols as well as other protocols.

Way forward

The way forward would be first to intensify awareness to officials at the borders, traders and everybody in the region.

It was in view of the fact that so much was needed to be done in terms of awareness creation in everything trade in West Africa that the EU thought that it was time to raise Non State Actors (NSA) to contribute in awareness creation to trade actors and players in the region.

In Nigeria, the National Association of Nigerian Traders (Nants) which was the only qualifying NSA from Nigeria to secure the EU's grant for this sensitization has actually be doing a lot in carrying out sensitization programmes across the country. In effect, Nants has ran the following workshops and trainings across the nation for traders and para-military officials at the Nigerian ports of entry and exit.

Recently Nants organized a two-day national workshop entitled Mobilizing Traders for Effective Participation in the West African Regional Integration Process'. The workshop which held in Lagos recently saw the coming together of the representatives of major and minor market traders associations across the nation.

In his welcome address, Mr. Ken Ukaoha, president, Nants said that with Economic Community of West African States (Ecowas) moving from Ecowas of states to Ecowas of people there was need to carry the regional traders along. He added that carrying such traders along was crucial since the policies and reforms for a borderless community within the Ecowas and global arena directly affect them.

Details of the Nant's outreach programmes can be ascertained in its web site. But the most important scenario would be for players to embrace the new idea about unity especially now that Ecowas has taken steps towards signing the EU's proposed EPA.

The National Association of Nigerian Traders (NANTS) is the umbrella organization of traders in raw materials, industrial and finished goods (locally made and imported) in Nigeria.

However, to encourage and improve the interlink between market access and production of goods, NANTS membership has recently been expanded to include local manufacturers of certain items (such as shoes, garments, cosmetics, furniture, household goods), local raw material providers, etc, as well as local farmers in various agriculture produce. Women constitute about 65% of NANTS membership.

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