Nigeria’s agro product exporters could see their goods banned from Europe over the Federal Government’s reluctance to sign the Economic Partnership Agreement (EPA) trade deal proposed by the European Union.
The country’s reluctance could lead to termination of the temporary free trade access being enjoyed by agro product exporters.
“The EU is no more comfortable with Nigeria on the EPA. This is exactly two years after negotiations, but what we have seen is more of opposition. The EU will likely block some of Nigeria’s agro products, especially cocoa and grains, maybe in 2017,” a source who is close to the EU told BusinessDay in confidence.
The source disclosed that the EU believes that if Nigeria, being the economic powerhouse in ECOWAS, agrees on the deal, Gambia, which has also rejected the trade deal, would have little option but concede.
John Clarke, director of International and Bilateral Relations for the EU, had hinted at this during an investment forum organised by the Lagos Chamber of Commerce and Industry (LCCI) on November 9.
Clarke had said that if Nigeria does not ratify the EPA, the country’s exports would be subjected to the World Trade Organisation (WTO) standard tariffs, which are very high.
The EPA is a free trade agreement between the 15 countries of the Economic Community of West African States (ECOWAS) and the Europe Union, seeking to enable West African countries access the European market and vice versa, without paying tariffs. Europe is committing 6.5 billion euros every five years, beginning from 2015 to 2019, including during the 20-year transition period that will end in 2035.
The EU will open its market completely from day one, while West Africa will remove import tariffs partially, over a 20-year transition period once the deal is ratified.
For agricultural products or finished consumer goods currently produced in West Africa or for which the region plans to develop production capacity, West Africa will not reduce its import duties.
The EPA document shows that West Africa has excluded all the products which are considered most sensitive and currently face a 35 percent duty under the ECOWAS Common External Tariff (CET), such as meat (including poultry), yoghurt, eggs, processed meat, cocoa powder and chocolate, tomato paste and concentrate, soap and printed fabrics from being imported into the region from Europe.
Other products excluded from liberalisation include fish and fish preparations, milk, butter and cheese, vegetables, flour, spirits, cement, paints, perfumes and cosmetics, stationery, textiles and apparel and fully built cars. West Africa accounts for more than 38 per cent of total trade between the EU and all African, Caribbean and Pacific (ACP) regions, according to the European Commission.
Cocoa is Nigeria’s major non-oil export product, sharing between 23 and 28 percent of the total exports each year.
“Nigeria has little to lose but a lot to gain from the EPA,” said Olu Fasan, Visiting Fellow in the International Relations Department of the London School of Economics.
Fasan said ECOWAS countries would lose preferential access to the EU market next year if the EPA is not ratified, but stressed that neither Nigeria nor any other ECOWAS country should be influenced by the threat of losing their EU access.
Trade analysts believe China will never want the negotiation to succeed because the EPA is a threat to the country’s export interest in the region.
“The EU is competing with China for Nigeria’s signature and we are looking at the value each can bring,” said Abiodun Adedipe, chief consultant at Biodun Adedipe and Associates Limited.
Though the EPA provides an opportunity for Nigeria to freely access the €16.5trn EU market, trade experts and manufacturers say it is not good for Nigeria at the moment.
Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN), told BusinessDay that Nigeria should not ratify the EPA because the country’s manufacturing sector and that of Europe were not equal
“The markets will be choked with products that will cause undue competition to the existing locally manufactured products, and we currently lack the capacity to flood the European market with our own products,” Jacobs said.
Bassey Edem, national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said Nigeria should refrain from signing the trade deal until the country’s infrastructure and productive capacity have improved, so that exports would benefit from the agreement and output from the sensitive sectors would be able to compete with import from EU.
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