Consumer welfare paramount to tariff increases

Accra, Sept. 1, GNA - Government did not increase tariffs on rice to curb its import, as the welfare of Ghanaians was paramount, Mr Kofi Osei-Ameyaw, Deputy Minister, Trade and Industry, said on Thursday. "If prices are low consumers gain and since consumers far outnumber producers, welfare is enhanced in the economy," he said. Mr Osei-Ameyaw was speaking at a dissemination workshop on "Import Surge Study: The Case of Rice in Ghana," organised by ActionAid International in collaboration with the UN Food and Agriculture Organisation.

He said rice had become a staple in most Ghanaian homes making it difficult for local producers to meet demand hence the need to import more to support domestic production.

Import surge as defined by the World Trade Organisation as "when a product is imported into a country in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause serious injury to the domestic industry that produces like or directly competitive products".

Mr Osei-Ameyaw said import surges were generally attributed to subsidized or dumped imports, but that might not be so in all cases. "They could be due to predatory pricing in a bid to gain a foothold in a market or low pricing of exports resulting from large-scale production with attendant economies of scale.

"Trade liberalization may also reduce tariffs to low levels and encourage import surges."

Mr Osei-Ameyaw said one of the advantages of trade liberalization was consumption gain because consumers had a variety of choices and cheaper prices in a liberalized environment.

He said to take action just because prices of the good in question were low was not permitted under WTO provisions. "Action must be taken only if you are able to establish a causal link between the low price and injury or a threat thereof to the domestic industry," Mr Osei Ameyaw said.

Mr Osei-Ameyaw said government had therefore been reluctant to raise tariffs as a means of protection without first ascertaining the real causes of the problem just as the relevant WTO Compatible actions could not be taken without first establishing that the injury was being caused by the cheap imports.

"Doing so without having established the facts would amount to an unjustifiable policy reversal, which was not a mark of good economic management.

"For policy reversals introduced insecurity, instability and a lack of predictability in policy-making which do not encourage business and investment."

Mrs Taaka Awori Akuffo-Gyimah, Country Director, ActionAid International Ghana, said even though Ghanaians had been growing rice for decades they were increasingly reliant on importing it from abroad. "Between 2000 and 2002, Ghana spent 190 million dollars on rice imports alone," she said.

She said the volume of rice imports and the impact on domestic rice prices pointed to what could be described as "an import surge on rice".