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Fair Trade? Why Should it not Be Fair to All?
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Fair Trade? Why Should it not Be Fair to All?

Sat, 1 Dec 2007 Source: Danso, Kwaku A.

Folks, there is a debate going on that has escaped me but I think my opinion should weigh in here now. I have studied the price of products in Ghana like a book, whiles conducting research in the last few years and also engaged in some real estate construction business. There is no reason why Ghana government should be allowed to impose levies and taxes sometimes to the tune of hundred percent or more on products we import from abroad, but we expect to ship our products to Europe or America levy-free. I know some of you will sing the song, but what is fair should be fair to all sides!

In a GNA report produced on Ghanaweb of November 26, 2007 we read:

Fresh produce exporters are urging government to go it alone and sign the interim Economic Partnership Agreements (EPA Light) with the European Union if the ECOWAS bloc was not ready to do so. They said that was to avoid disruption to trade in January 2008. West Africa Trade Negotiators at a meeting in Abidjan had asked for extension of the World Trade Organization's waiver but the EU is unwilling to accede to the request (Ghanaweb, 2007, November 26).

In our debate on the issue among members of the Ghana Leadership Union, a writer wrote: Folks, A typical example of some of the tactics - divide and rule beginning to surface: The fresh fruit exporters are urging govt to sign forgetting the wider ramifications that the whole future of Ghana's trade with the EU is at stake, just because they will lose come January 2008, forgetting that much bigger losses are ahead. Hmnn (GA)
The report ended by saying that: The EU also maintained that it could not extend the existing system and that the only legal alternative to EPA, which was called the Generalised System of Preferences or "GSP", offered much less generous market access, unless a country was classed as "Least Developed" by the United Nations - which Ghana is not. (Ghanaweb, 2007, November 26).
Folks, there is a saying that what one wishes one gets. It appears Ghana is not among the Third World or Least Developed Countries (LDC) anymore? But China is? Come oooon!! This charade that we wish for a good name for our nation is not helping but hurting. Any examination of economic and human development indices would not put Ghana above the Least Developed Nation or LDC status. In fact I dedicate a whole chapter in my book comparing these indices between the LDC, the Medium Developed and Developed nations, and compare the indices with the Transparency International’s Corruption Perception Indices (CPI). (See Danso, K.A., 2007, Leadership Concepts and The Role of Government in Africa: The case of Ghana, p.157, Philadelphia, USA: Xlibris). It will be very difficult for any nation that has a per capita income of $320 (UK $28,350, USA $37,610), average life expectancy of 55 (UK 77, USA 77), under-5 mortality rate of 97 per 1,000 (UK 7, USA 8), Population under $2 per day as 78.5% (UK and USA 0%), to consider itself other than at the very bottom. Medium Developed nations would have about three times the per capita income and far better Human Development Indices (HDI). As such one can only say that whoever re-defined Ghana as medium income perhaps used false documents and lied, and we are paying the price now for it.
Having said all that let us examine this so-called fair trade. Under normal circumstances, fair trade is fair trade and one should not impose 100-200% duties and taxes on EU goods and have the consumer in Ghana pay twice to three times the price whiles we expect to ship our goods tax free to Europe and make the European pay less.
Example, Europe does not grow pineapples and so it won’t make a difference if taxes are imposed on our products or not, except if Hawaii, a US state, decides to ship to Europe and hence perhaps undercut our prices. Failing that the Europeans won’t mind a small increase and may not even notice. They will buy. However they will not impose a 50-100% duty and add VAT and other charges to triple the price. I am paying $2.99 per pineapple here at Costco in California and I just think the price is very low considering that this is only the pay of a worker around here for say 5 to 10 minutes. In Ghana however, let’s take a product I know that costs around $3 in the US. Take a simple Air Conditioning grille that I buy here at retail at Home Depot for $3. The cost in Ghana is $30! I recently got an estimate for a roof gutter for a house. In the US the price is $651 and in Ghana the same quotation was C44.5 million or $4,788!! Why?
Folks, in addition to paying duties and taxes on the products at the ports, the installer of these products is asking for more VAT and NHIL. Gadammit!! As an American would say! A second hand car that costs $10,000 to $20,000 in Ghana makes it virtually impossible for even professionals like Nurses and Doctors in Ghana to be able to afford. The amortized monthly payments will be more than their salaries – a major difference! Those cars like Toyota Camry and Honda Accord at 2.3 liter engine costs about $5,000 when 6-9 years old in America and look very “new” at the Ghanaian market description. In fact I can show you a 1993 BMW 325i and 1995 BMW 525i and you will think they are new. In Ghana a friend on our GLU forum is waiting for his car and in mourning, asked to pay GC9,400 ($10,000) in duties and taxes for a 1994 BMW 325i. This car would not cost more than say $3,000 here in the US. Quaker Oats breakfast cereal cost about 8 times the price I pay in the US market. All these observations were made by this writer and documented over a 4 year period for his doctoral research studies.
QUESTION is why should the Ghanaian consumer suffer so much for so-called preferential trade when it actually makes us poorer? It may appear I am back supporting the argument of Imani President Franklin Cudjoe. However, what is fair should be fair. Perhaps we should negotiate for an equal dollar volume of shipments in trade so that we get to ship an equal amount of whatever goods for the same amount we import from them. That will force a free open area for our exporters. It will also force the Europeans to think of manufacturing in Ghana instead of being limited on their shipments and trade to us of their products. Why do you guys think the Japanese started auto assembly plants in the US? Don’t Americans have enough car assembly plants? There was a time in the late 1980s when the US Congress was threatening to impose special duties on the Japanese luxury vehicles such as Lexus (Toyota), Acura (Honda), Infinity (Nissan). Today these vehicles are made in the US, with several plants and a factory only a mile or so from my house and creating highly paid workers for Americans! One Ghanaian friend got a job there a few years ago and he has moved from a $10 per hour to about $25-$30 per hour. He has saved enough to buy a nice house last year.
Folks, I know my opinion will not be asked by Honorable Finance Minister Baah Wiredu or reach him since his email will not work either. However, if you asked my opinion, I’d say that I sincerely think that so far as we are not making similar products as imported from the EU, putting levies and taxes on their goods is simply a means for the government to generate more revenue and punish the Ghanaian consumer. Enough taxes! The cost of living in Ghana is actually higher than in California if you factor in similarly equipped rental housing, phone, electricity, water, Internet service, with food being a slightly lower if one sticks to local foods. But how do you do without imported milk, sugar, flour, etc? There is nothing wrong in imposing taxes on goods, but why should the consumer of Ghana pay say $20,000 for a car that costs say $5,000 in Europe or America? This is simply because after adding shipment costs ($2,000) and government duties and taxes are paid (estimated $8,000), that is the market price if the importer is to make a small profit!
So what is the government doing with the money they collect? Well, don’t ask me! If by helping government to make more money in fact it is helping the nation to build better roads, provide water and other needed services, then one could call it a sacrifice of the rich for the nation he or she loves. As it is, there is no such tangible benefit for paying so high a price by a few. Rich people as well as poor people die on our poor roads! Only the government elites are renovating their houses with poly-talk water storage and generators, and buying expensive vehicles they hope to take with them when their term of office over. It is public thievery at its legal best, as our lawyer leaders know how to do! So why should we support this preferential trade agreement? Whose benefit is it anyway? I think it hurts more than it helps Ghanaians!
If there is a strategic way we can squeeze the Europeans to manufacture their cars in Ghana to serve the West African market, then I will be all for any levies or duties or taxes we choose to impose, within reason of course. Any taxes that amount to more than say 20% of what a person paid for a product is simple extortion! The government of Ghana has been engaged in this extortion for over two decades, starting with Dr. Kwesi Botchwey’s Marxist-socialist Robin Hood taxation days in the 1980s! Excessive taxation is simply an indication of governmental failure. Since our culture of our people is a fama-Nyame (give-it-to-God) culture, and nobody can speak up or force the issue, we all suffer. Those who suffer the most are the poor graduate teachers or professionals in Ghana who deserve better, but are left only to imagine and take bribes to try and imitate middle class Western lifestyle. Some policies also are simply made out of envy of their colleague overseas. The others leave the country at any opportunity they get.
In conclusion, let fair trade be fair, unless we can demonstrate a need to do what Europeans and Americans do best, i.e., seek their own self interest no matter what the case may be! In this case, do we know what our self interest is as a nation? Do we want to force the Europeans and Japanese (Americans later) to manufacture their cars in Ghana or else,,,? Or do we want to sing and dance free and fair trade when we don’t really know what is free and fair to all!

Kwaku Abiam Danso, PhD Fremont, California & East Legon /Accra, Ghana k.danso@comcast.net

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Folks, there is a debate going on that has escaped me but I think my opinion should weigh in here now. I have studied the price of products in Ghana like a book, whiles conducting research in the last few years and also engaged in some real estate construction business. There is no reason why Ghana government should be allowed to impose levies and taxes sometimes to the tune of hundred percent or more on products we import from abroad, but we expect to ship our products to Europe or America levy-free. I know some of you will sing the song, but what is fair should be fair to all sides!

In a GNA report produced on Ghanaweb of November 26, 2007 we read:

Fresh produce exporters are urging government to go it alone and sign the interim Economic Partnership Agreements (EPA Light) with the European Union if the ECOWAS bloc was not ready to do so. They said that was to avoid disruption to trade in January 2008. West Africa Trade Negotiators at a meeting in Abidjan had asked for extension of the World Trade Organization's waiver but the EU is unwilling to accede to the request (Ghanaweb, 2007, November 26).

In our debate on the issue among members of the Ghana Leadership Union, a writer wrote: Folks, A typical example of some of the tactics - divide and rule beginning to surface: The fresh fruit exporters are urging govt to sign forgetting the wider ramifications that the whole future of Ghana's trade with the EU is at stake, just because they will lose come January 2008, forgetting that much bigger losses are ahead. Hmnn (GA)
The report ended by saying that: The EU also maintained that it could not extend the existing system and that the only legal alternative to EPA, which was called the Generalised System of Preferences or "GSP", offered much less generous market access, unless a country was classed as "Least Developed" by the United Nations - which Ghana is not. (Ghanaweb, 2007, November 26).
Folks, there is a saying that what one wishes one gets. It appears Ghana is not among the Third World or Least Developed Countries (LDC) anymore? But China is? Come oooon!! This charade that we wish for a good name for our nation is not helping but hurting. Any examination of economic and human development indices would not put Ghana above the Least Developed Nation or LDC status. In fact I dedicate a whole chapter in my book comparing these indices between the LDC, the Medium Developed and Developed nations, and compare the indices with the Transparency International’s Corruption Perception Indices (CPI). (See Danso, K.A., 2007, Leadership Concepts and The Role of Government in Africa: The case of Ghana, p.157, Philadelphia, USA: Xlibris). It will be very difficult for any nation that has a per capita income of $320 (UK $28,350, USA $37,610), average life expectancy of 55 (UK 77, USA 77), under-5 mortality rate of 97 per 1,000 (UK 7, USA 8), Population under $2 per day as 78.5% (UK and USA 0%), to consider itself other than at the very bottom. Medium Developed nations would have about three times the per capita income and far better Human Development Indices (HDI). As such one can only say that whoever re-defined Ghana as medium income perhaps used false documents and lied, and we are paying the price now for it.
Having said all that let us examine this so-called fair trade. Under normal circumstances, fair trade is fair trade and one should not impose 100-200% duties and taxes on EU goods and have the consumer in Ghana pay twice to three times the price whiles we expect to ship our goods tax free to Europe and make the European pay less.
Example, Europe does not grow pineapples and so it won’t make a difference if taxes are imposed on our products or not, except if Hawaii, a US state, decides to ship to Europe and hence perhaps undercut our prices. Failing that the Europeans won’t mind a small increase and may not even notice. They will buy. However they will not impose a 50-100% duty and add VAT and other charges to triple the price. I am paying $2.99 per pineapple here at Costco in California and I just think the price is very low considering that this is only the pay of a worker around here for say 5 to 10 minutes. In Ghana however, let’s take a product I know that costs around $3 in the US. Take a simple Air Conditioning grille that I buy here at retail at Home Depot for $3. The cost in Ghana is $30! I recently got an estimate for a roof gutter for a house. In the US the price is $651 and in Ghana the same quotation was C44.5 million or $4,788!! Why?
Folks, in addition to paying duties and taxes on the products at the ports, the installer of these products is asking for more VAT and NHIL. Gadammit!! As an American would say! A second hand car that costs $10,000 to $20,000 in Ghana makes it virtually impossible for even professionals like Nurses and Doctors in Ghana to be able to afford. The amortized monthly payments will be more than their salaries – a major difference! Those cars like Toyota Camry and Honda Accord at 2.3 liter engine costs about $5,000 when 6-9 years old in America and look very “new” at the Ghanaian market description. In fact I can show you a 1993 BMW 325i and 1995 BMW 525i and you will think they are new. In Ghana a friend on our GLU forum is waiting for his car and in mourning, asked to pay GC9,400 ($10,000) in duties and taxes for a 1994 BMW 325i. This car would not cost more than say $3,000 here in the US. Quaker Oats breakfast cereal cost about 8 times the price I pay in the US market. All these observations were made by this writer and documented over a 4 year period for his doctoral research studies.
QUESTION is why should the Ghanaian consumer suffer so much for so-called preferential trade when it actually makes us poorer? It may appear I am back supporting the argument of Imani President Franklin Cudjoe. However, what is fair should be fair. Perhaps we should negotiate for an equal dollar volume of shipments in trade so that we get to ship an equal amount of whatever goods for the same amount we import from them. That will force a free open area for our exporters. It will also force the Europeans to think of manufacturing in Ghana instead of being limited on their shipments and trade to us of their products. Why do you guys think the Japanese started auto assembly plants in the US? Don’t Americans have enough car assembly plants? There was a time in the late 1980s when the US Congress was threatening to impose special duties on the Japanese luxury vehicles such as Lexus (Toyota), Acura (Honda), Infinity (Nissan). Today these vehicles are made in the US, with several plants and a factory only a mile or so from my house and creating highly paid workers for Americans! One Ghanaian friend got a job there a few years ago and he has moved from a $10 per hour to about $25-$30 per hour. He has saved enough to buy a nice house last year.
Folks, I know my opinion will not be asked by Honorable Finance Minister Baah Wiredu or reach him since his email will not work either. However, if you asked my opinion, I’d say that I sincerely think that so far as we are not making similar products as imported from the EU, putting levies and taxes on their goods is simply a means for the government to generate more revenue and punish the Ghanaian consumer. Enough taxes! The cost of living in Ghana is actually higher than in California if you factor in similarly equipped rental housing, phone, electricity, water, Internet service, with food being a slightly lower if one sticks to local foods. But how do you do without imported milk, sugar, flour, etc? There is nothing wrong in imposing taxes on goods, but why should the consumer of Ghana pay say $20,000 for a car that costs say $5,000 in Europe or America? This is simply because after adding shipment costs ($2,000) and government duties and taxes are paid (estimated $8,000), that is the market price if the importer is to make a small profit!
So what is the government doing with the money they collect? Well, don’t ask me! If by helping government to make more money in fact it is helping the nation to build better roads, provide water and other needed services, then one could call it a sacrifice of the rich for the nation he or she loves. As it is, there is no such tangible benefit for paying so high a price by a few. Rich people as well as poor people die on our poor roads! Only the government elites are renovating their houses with poly-talk water storage and generators, and buying expensive vehicles they hope to take with them when their term of office over. It is public thievery at its legal best, as our lawyer leaders know how to do! So why should we support this preferential trade agreement? Whose benefit is it anyway? I think it hurts more than it helps Ghanaians!
If there is a strategic way we can squeeze the Europeans to manufacture their cars in Ghana to serve the West African market, then I will be all for any levies or duties or taxes we choose to impose, within reason of course. Any taxes that amount to more than say 20% of what a person paid for a product is simple extortion! The government of Ghana has been engaged in this extortion for over two decades, starting with Dr. Kwesi Botchwey’s Marxist-socialist Robin Hood taxation days in the 1980s! Excessive taxation is simply an indication of governmental failure. Since our culture of our people is a fama-Nyame (give-it-to-God) culture, and nobody can speak up or force the issue, we all suffer. Those who suffer the most are the poor graduate teachers or professionals in Ghana who deserve better, but are left only to imagine and take bribes to try and imitate middle class Western lifestyle. Some policies also are simply made out of envy of their colleague overseas. The others leave the country at any opportunity they get.
In conclusion, let fair trade be fair, unless we can demonstrate a need to do what Europeans and Americans do best, i.e., seek their own self interest no matter what the case may be! In this case, do we know what our self interest is as a nation? Do we want to force the Europeans and Japanese (Americans later) to manufacture their cars in Ghana or else,,,? Or do we want to sing and dance free and fair trade when we don’t really know what is free and fair to all!

Kwaku Abiam Danso, PhD Fremont, California & East Legon /Accra, Ghana k.danso@comcast.net

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Columnist: Danso, Kwaku A.