Ghana May Lose $72 Million Revenue

The Minister of Trade and Industry, Dr Kofi Konadu Apraku, has indicated that a reduction in Ghana’s tariffs to create a free trade area with the European Union (EU) will lead to a significant loss in government revenue.

He said Ghana is likely to lose $72 million a year in revenue. He also said the arrangements will lead to a surge in EU imports to Ghana of up to $115 million per year, particularly in year, particularly in the areas of plastics, varnishes, glue, paints food and beverages as well as rubber, metal products and textiles. Dr Apraku stated this when he made a statement in Parliament on the World Trade Organisation (WTO) and the African Caribbean Pacific – European Union (ACP-EU) on trade negotiations.

He said, the arrangements may lead to an increased pressure on the national currency, increased competition for local industries and impart adversely on the national economy and stressed that “this raises a number of concerns for Ghana and the other ACP countries.” He pointed out that, in order to ensure that the negotiations address Ghana’s national concerns, his ministry commissioned the conduct of base studies on national revenue loss and the competitiveness of Ghana’s industry and agriculture.

Analysis of the preliminary results of these studies, according to him, revealed that the country will be at a losing end in terms of revenue-generation. Shedding more light on the trading arrangement, he said, Ghana and other ACP states are currently engaged in trade negotiations with the EU to create a free trade area between the EU and ACP regional groupings. These negotiations, he said, are in accordance with the provisions of the Cotonou Agreement signed in June, 2000, which called for new reciprocal trade arrangements with WTO provisions. He said these agreements known as Economic Partnership Agreements (EPAs) are to replace the unilateral and non-reciprocal trading and market access preferences extended to ACP state under the Lome Convention.

According to the minister, the objective of the new trade cooperation arrangement is to foster the smooth and gradual integration of ACP-states into the world economy, thereby promoting their sustainable development and to contribute to poverty eradication. He said, EPAs are expected to create largely integrated economic areas between ACP regions and the EU, where goods and services will circulate freely.

He said the agreements will therefore, lead to the removal of almost all tariffs and non-tariff barriers between the parties while enhancing co-operation in all areas relevant to trade. Dr Apraku said, another area of concern for Ghana is the need to push the ECOWAS regional integration process forward so as to establish a functioning arrangement capable of dealing with EU with one voice.