After many years of following the dictates of the free world, Ghana seems to eye the protectionist policies of the early days that followed its independence period in the 1960s.
Ghana is at the crossroads of a contentious debate as the nation grapples with the proposed Import and Export Regulations 2023 Legislative Instrument (LI). Sylvester Bagoro from the Third World Network asserted that every country protects some part of its local production, a fact that is now mirrored in the heated discussions surrounding the potential implementation of the LI. This regulatory move has sparked concerns and debates among various stakeholders, who are wary of its impact on their business, the economy and the potential for corruption.
The primary motivation behind the Import and Export Regulations 2023 LI is the perceived need for protectionism to address Ghana’s foreign exchange challenges, balance of payment issues, and other economic concerns. Critics argue that the proposed bill relies on outdated quantitative restrictions that may have adverse effects on the citizens and the overall economy. The fear of corruption, including cronyism, favoritism, and nepotism, looms large, especially with the wide-ranging powers vested in the minister to accept or reject recommendations, irrespective of the committee’s findings.
One of the critical aspects of the debate is Ghana’s international commitments, particularly its status as a signatory to the World Trade Organization (WTO). The WTO generally frowns upon tariffs, quotas, and restrictions, as outlined in Article 11. However, exceptions are made for circumstances related to national security and balance of payments struggles, aligning with Ghana’s rationale for the proposed LI.
“No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.”
WTO, Article 11
The controversy deepens as Ghana, a prominent member of the African Continental Free Trade Area (AfCTA), considers a move that seemingly contradicts the principles of interconnected trade within the continent. Concerns about the immediate capacity of local producers to fill the void left by restricted imports have fueled apprehensions of hyperinflation and an increase in black market activities. Critics argue that, given the major sources of Ghana’s imports (Canada, Russia, Germany, Belgium, Brazil, and Poland), the move may not be directly related to AfCTA, further complicating the narrative.
While acknowledging the need for restrictions on specific items like Yemuadie and mineral water, many analysts advocate for a more transparent approach using tariffs. The call for transparency stems from concerns about rent-seeking behavior and the corruption potential associated with quantitative restrictions. Priscilla Twumasi Bafour acknowledged the potential benefits but emphasizes the critical need to address implementation challenges and corruption risks.
“I don’t think this is a bad idea but the implementation and the potential for corruption are things that must be looked at.”
Priscilla Twumasi Bafour
Some voices in the debate propose a holistic approach akin to the European Union’s strategy when seeking to boost poultry production.
“When you look at the EU. When they wanted to increase the production of poultry, they looked at the whole value chain; the cereals, the maize, and the fish. All the things that you need to produce were well thought out.”
Sylvester Bagoro
They argue for a comprehensive examination of the entire value chain for restricted commodities, ensuring a well-planned and effective transition. Sylvester Bagoro, a commentator on the issue, highlighted the EU’s success in boosting poultry production by addressing all aspects of the value chain, including cereals, maize, and fish.
In addition to these discussions, there are suggestions for subsidies to support local producers, drawing inspiration from foreign markets’ practices. Proponents of subsidies argue that this approach can enhance the price competitiveness of local industries, fostering their growth and sustainability in the face of import restrictions.
It is evident that the debate extends beyond mere economic considerations. It involves a delicate balancing act between protecting local industries, adhering to international commitments, and mitigating the potential for corruption. The final decision will undoubtedly shape Ghana’s economic landscape and its standing in the global trade arena.
One proposal that could be readily enforced is taking out non-controversial items on the 22-list such as water, guts and animal intestines, out for immediate restriction as broader consultation continues on the rest of the items.
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