Agriculture, our Economy, and the EPAs: What Should Prez Mills Do?

At the ECOWAS Business Forum in Ouagadougou last week, Dr. Mohammed Ibn Chambas reiterated the need for West Africa to re-launch agriculture. He also touched on the EPA negotiations with the EU, and regional integration agenda.

This is important for us for obvious reasons. Now, let’s take a cursory glance at the significance of the agricultural sector for the Ghanaian economy. We know that this economy is largely agrarian; agriculture has been the mainstay of the economy since time immemorial. It contributes at least 40% to our GDP, and has been the largest employer of our people, even though the youth of today seem to be shunning away from it. Governments have tried at its modernization, success or failure of which we all know.

The Economic Partnership Agreements (EPAs) are a set of free trade agreements currently being negotiated between the European Union (EU) on the one hand, and the African, Caribbean and Pacific (ACP) on the other hand. The pact requires Ghana, like other ACP countries, in the interim, to liberalize 80% of our economy. The remaining 20% protection would be gradually removed over the 10-12 year implementation period. I don’t intend to delve any deep into the EPAs!

No doubt free trade is good. But when it comes to some sensitive parts of the economy, we agree some level of protection is necessary. For instance, WTO talks collapsed in Cancun, Mexico in September 2003. And one of the reasons mostly attributed to was the failure of industrialized countries to remove agricultural subsidies (a form of protection). The EU continues to heavily subsidize agriculture, yet we’re called upon as via the EPAs to remove tariffs, quotas, or all forms of trade restriction. We are asked to “expose” the poor Ghanaian farmer to unfair external competition. Regrettably, we have high penchant for imports that we prefer “perfumed rice” to local rice, for instance.

The EU is by far Ghana’s largest trade partner. Tariff revenues (and revenues from quota licenses, etc) form a chunk of the government revenue for most African economies, and is estimated to be around 15% for Ghana. The EPAs will bereave the country of these revenues on imports from the EU, and guess which sectors would be hit hardest, key social sectors such as education and health.

The EPAs also carry binding rules on investment, government procurement and competition policy. Under this, the government would not be able to discriminate against foreign (EU) investors. And so we’ll see foreign investors taking over our retail businesses, in lieu of producing. It’s something we do not want to see happen. The list of demerits can go on and on. Not to worry about the flip side of the coin. The claim of more influx of foreign direct investment into Ghana? We have liberalized investment regime in Ghana since the 1980s, but FDI flows have not proved to have increased significantly. Or larger market access for Ghanaian exports? At least, 80% of our exports already enter the EU duty-free, etc.

So what’s my point? We can’t have an effective re-launch of agriculture happening in tandem with implementation of the EPAs. EPAs will frustrate agriculture in the subregion. EPAs will exacerbate rural poverty, and preclude the much desired poverty alleviation. Unfortunately, like Ivory Coast, Ghana signed the interim agreement on the EPAs onn December 13, 2007. And like President Abdoulaye Wade of Senegal said, this interim signature is a threat to regional integration. Even though the EPAs are WTO-compatible and are supposed to replace the WTO-incompatible Cotonou Agreement, the EU is mandated by the WTO to provide Cotonou-equiavlent arrangements for ACP countries that are not willing to enter into the EPAs! So we won’t lose significantly, if at all, by not agreeing!

Civil society, non-governmental organizations, and Policy experts very often seem to normally “have their say, but politicians always have their way”. I don’t know whether the agreement already signed can or cannot be reneged. President Mills promised change that is development-oriented and people-centered. If repeal is feasible, we pray His Excellency to do something about the EPA interim agreement he was bequeathed. Trust me, a repeal will do Ghana a great deal of good. It would pre-empt the economic peril that looms in the near future.

Iddisah Sulemana (iddisah@gmail.com) The University of Akron Akron, Ohio, USA