Ghana is projected to lose 1 percent of its total revenue in the implementation of its interim Economic Partnership Agreement (iEPA) with the European Union (EU).
The lose in revenue, according to Deputy Minister for Trade and Industry, Herbert Krapa, will be due to the removal of import duties on goods imported into the country from the EU.
Speaking to the media on the 1 percentage points loss in revenue, Mr Krapa averred the economic benefits and development assistance to be derived from the interim trade pact will be more beneficial to the country than the expected revenue loss.
“The trade agreement offers Ghana the opportunity to take advantage of development assistance provided by the EU, the projection in terms of revenue loss is 1 percent over the period of the implementation of the agreement. But if you juxtapose that with the benefits we are going to derive from the pact in terms of how much we are enjoying in exporting into the EU, its massive. We are going to attract more FDI, the free zones will expand and more jobs will be created,” he stated.
Speaking further, he allayed fears of the possible collapse of local industries in the country on the back of the iEPA.
The interim Economic Partnership Agreement (iEPA) between Ghana and the European Union (EU) has taken off enabling both countries to now trade in quota-free and duty-free of goods.
The iEPA, according to a joint press statement by the Ministry of Trade and Industry and the EU, took effect on Thursday, June 1, 2021.
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The iEPA, guarantees duty-free and quota-free access to the EU market for products made in Ghana, giving the country access to the European market for 80 percent of the total volume of exports to the trade bloc.
Details of the agreement indicates that Ghana will progressively reduce its tariffs to zero for 78 percent of its imports from the EU by 2029. In the future, the EU and Ghana might decide to expand the EPA to possibly include provisions on investment and trade in services.
Per the agreement, Ghana, by the end of 2021 is expected to remove duties or tariffs on products from the EU where tariffs are at 5 percent and 10 percent. Then, in 2024, almost half of the goods to be liberalised will be at 0 percent; and in 2029, those products currently at 20 percent and 35 percent will be fully liberalised.
According to government, several EU development cooperation programmes are linked to the EPA, as the development cooperation programmes will aim to facilitate the reform of the country’s fiscal revenue system, improve the business environment and Ghana’s competitiveness.
One of such programmes is the Investment Promotion and Business Linkages project, implemented in partnership with the Association of Ghana Industries (AGI), which seeks to support the export readiness of Ghanaian SMEs. It supports SMEs to strengthen their business profile, undergo due diligence processes, understand buyer requirements and negotiate with importers and buyers.
The trade agreement makes room for certain industries and products to be exempted. Ghana will not remove import duties for a number of agricultural and non-agricultural processed goods, including: frozen poultry (current import duties at 35 percent); worn clothing (import duty now at 20 percent); sugar (now at 20 percent); margarine (now at 20 percent); and frozen beef (now at 35 percent).
Others include food preparations (20 percent); animal feed (now at 5 percent); non-alcoholic beverages (now at 20 percent); frozen mackerel (now at 10 percent); frozen tuna (now at 10 percent); ceramics (now at 20 percent); and cement (now at 20 percent).
Both government and the EU say the agreement has mutual benefits which ensures a win-win situation for both parties, allaying fears that the EU wants to take advantage of the country.
