Manufacturing firms have had to record a staggering loss running into billions of Cedis in revenue due to inherent challenges in exporting goods to Benin for the past six months due to their exit from the ECOWAS Trade Liberalization Scheme.
According to the Managing Director of Interplast, Hyssam Fakhry, Benin has simultaneously commenced charging customs duties on products exported from Ghana, a move that has adverse effects on the promotion of regional economic integration.
“A client importing any goods which were recognized by Trade Liberalization from Ghana has now to pay the duty on the said goods. The implication is that we, Ghanaian exporters, are no more competitive with regard to our peers from other countries. Furthermore, customers have started cancelling their orders and purchasing elsewhere. We have already lost some significant projects due to this situation”.Hyssam Fakhry
That notwithstanding, ECOWAS asserts that, Member States shall reduce and ultimately eliminate Customs duties and any other charges with equivalent effect except duties notified in accordance with Article 40 and other charges which fall within that Article, imposed on or in connection with the importation of goods which are eligible for Community tariff treatment in accordance with Article 38 of this Treaty. Any such duties or other charges are herein after referred to as “import duties.”
Trade openness, which forms the crux of ECOWAS comes to question here. With this, the inability of developing countries to fully embrace trade openness in their economic and developmental process is making them to participate somewhat marginally in the world economy.
The modes and indicators of trade openness include the rapid growth of international trade, foreign direct investment (FDI) and international flows of capital and information. This could be one of the reasons for the formation of various regional economic groups around the world such as European Union (EU), Organization of Economic Co-operation and Development (OECD), Organization of Petroleum Exporting Countries (OPEC), with a view to harmonizing policies in order to reap the gains of economies of scale.
Hence, the countries in West Africa have come under one umbrella- Economic Community of West African States (ECOWAS), to maximize their potentials in order to reap the gains of trade openness.
Forecasting the prolonged stay of the situation, Mr. Fakhry, warns of job losses and the reduction of clientele from Benin market if urgent interventions are not taken.
“We have no option but to lay off staff. Our profits too will fall dramatically and this will affect the Ghanaian economy”.
One of the main objectives of ECOWAS is to promote the economic integration of the region by establishing, among other things, a free trade area. The instrument created for this purpose is the ECOWAS Trade Liberalization, which ensures the free movement of products within the region without the payment of customs duties and taxes.
The ETLS is a tool which aims at the operationalization of the Free Trade Area. The ETLS mechanism ensures the free movement of originating products without the payment of customs duties and taxes of equivalent effect on importation into ECOWAS Member States.