Business News of 2014-05-09

‘Industries must re-strategise for EU market’

…as EPAs likely to be signed

The Ministry of Trade and Industry says industries must re-strategise to take advantage of the European market as the country prepares to sign the ECOWAS-EU Economic Partnership Agreements (EPAs) by the October 1st 2014 deadline.

A senior director in charge of exports at the Ministry, Charles Folikumah, said in an interview that government is willing to sign the agreement by the stipulated date because it has no alternative.

“Ghanaian industries must reposition themselves to take advantage of the EU market as this will be a better option. The fear of losing the EU market and the fear of losing investment makes it compelling to have an arrangement of some sort,” he said.

He cautioned of dire consequences for the country’s export industry should the EU deny the nation access into its market.

The EU is Ghana’s largest export market, accounting for more than half of all exports -- and loss of the current tax-free access regime will, at least initially, cause the country’s exporters to lose competitiveness in the EU market.

Not signing the agreement would particularly strangle the non-traditional exports sector -- exports apart from cocoa, gold, oil and timber -- more than a third of which is sent to the European Union.

About 80 percent of Ghana's banana produce, Mr. Folikumah said, is consumed by the EU market while ECOWAS countries buy just 10 percent. Should Ghana fail to sign the agreement, the consequences will be dire on the economy, he added.

“The employment created in the country’s agricultural sector is huge, and therefore we must do critical evaluation and critical thinking about the way forward for the EPAs. Government needs to consider the agricultural economy and the job it creates and sign the EPAs by the stipulated date.”

Civil society and other interest groups against the EPA rebut this, saying that agriculture is one of the sectors most vulnerable to collapse if the agreements are signed -- aside from their worries over loss of import-duty revenue.

According to Action Aid Ghana, the local branch of the international development agency, the country could lose about US$88.6million annually if it signs the EPAs, with combined import revenue losses of US$1.12billion by 2022.

\For his part, Mr. Folikumah maintained that whether the country signs the agreements or not, it has an “economic adjustment cost” to bear.

He also said signing the partnership will challenge Ghana to build its competitiveness, increase the capacity of local industries, and increase exports to take advantage of the opportunity.

The government’s stance meanwhile has the support of private sector export groups.

“Government should sign it. It’s not just the trade arrangement that is involved; we have essential areas we are overlooking,” said Anthony Sikpa, President of the Federation of Associations of Ghanaian Exporters (FAGE).

The Ghana Export Promotion Authority has also warned that the country’s goal of boosting the value of non-traditional exports to US$5billion by 2017 will be endangered if the agreement is not signed.

Other business groups, such as the Private Enterprises Federation, have asked government to make available the full agreement to help them take an informed stance on the issue.