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Any hopes for progress on the European Union’s Economic Partnership Agreements with Cameroon? Chofor Che, 24 April 2016


Opponents of free trade in Cameroon are of the view that the European Union’s Economic Partnership Agreements (EPAs) are against the national interest, and such agreements will only create unemployment. They add that the national economy is not ready for EPAs.

Most states in Asia like Indonesia that were not completely ready for free trade and that were not even at the current level of development of African economies have seen some progress in economic development because of free trade and economic partnerships. If we take India for example, they even opted for a unilateral opening to economic partnerships with states in the West without reciprocity from the other.
What matters in trade openness is not having the same economic advatage as partners, but to improve its gain relative to the initial situation. By design and default, other states especially European states are far more advanced than Cameroon in terms of resources and it makes sense, as long as they respect the rules of fair free trade.

According to an inteview accorded in late 2015 to Louis Paul Motaze the Minister of the Economy and Regional Planning, EPAS will permit Cameroon import at lower prices equipment which so far are too costly to import, the more competitive the country gets. According to Motaze, another advatage of Cameroon adhering to EPAs is that this will help open her markets. Cameroon has goods and services to sell to Europeans and the European Union is offering Cameroon a chance to open its market with no quota imposed. Considering this, the major problem Cameroon now faces is production which might be insufficient despite markets being opened to the country. Free trade will reduce the costs of local exporters and thus enhance their competitiveness. With free trade, Cameroon will have cheaper imports, thus export cheaper, so more market share in the global market.

The American firm Frontier Strategy Group published, during the month of February 2015, its ranking of the resilience of countries to external shocks. According to Frontier Strategy Group, Cameroon occupies the 21st position in Sub Saharan Africa. The country is above all number one in the CEMAC zone (a six member community comprising Cameroon, Congo, Gabon, Equatorial Guinea, Chad and Central Africa) in this ranking ahead of Gabon (24th). Some other strengths include vast agricultural land apart from oil production. The country is blessed with vast hectres of forests.

Critics often advance the argument that doing business with partners who have an added advantage over Cameroon will not be beneficial to the Cameroonian economy. This assertion can remain true if only Cameroonian public and private actors called upon to carry out transactions under the EPAs remain dormant rather than become more comeptitive with thier European partners.

Taking advantage of free trade, does not always necessary mean we must have an absolute comparative advantage over other states with whom we are doing business with. The country can make progress as these transactions are being carried out. South Korea had a comparative advantage in rice, but thanks to its openness to free trade has managed to build its comparative advantage in high value technology products. This is a scenario Cameroon has to copy. Cameroon produces cash crops like cocoa and rubber. At the same time Cameroon has raw materials like iron ore, uranium which can give the country added advantage if well exploited and utilised.

Cameroon is the 114th most competitive economy in the world, out of 140 countries assessed by the World Economic Forum (WEF). The country moves up two places compared to last year, but still comes behind Gabon (103rd), first Central African nation in this ranking 2015-2016. However, the WEF emphasizes, that Cameroon is 10 places ahead of Nigeria (124th), the leading economy on the continent. This equally makes Cameroon ready for EPAs with Europe.

There are several ways Cameroon can meet the challenge of competitiveness, not just by possessing a great natural resource base or a large workforce. By investing in human capital, industralisation and innovation, Cameroon can develop comparative economic advantage which will allow the country to sell on the international market at competitive prices. The country can also exploit the economies of scale related to regional integration, for example to bring out competitive companies.

The argument that EPAs will destroy jobs and local industries, is a façade to protect businesses and industries which have always enjoyed healthy profits thanks to state protectionism. And there is no morality to this especially as poor consumers continue to pay to maintain artificial industries in place. The state cannot continue to subsidize businesses and economic operations with taxpayers money whereas there is an opportunity to take advantage of the EPAs.

All the same issues like corruption needs to be addressed for Cameroon to adequately benefit from EPAs with Europe. The American think-tank Heritage Foundation and the Wall Street Journal recently published the 2016 ranking of the economic freedom index in the world, which measures economic freedom in countries since 1995, using criteria such as protection of property rights, the size of the state, budgetary and monetary policy and the fight against corruption. Out of a ranking of 178, Cameroon is positioned 29th in Africa and 130th in the world. When you have too many regulations (lack of economic freedom), companies face additional burdens and costs of transactions, undermining their competitiveness in the end. Corruption too, is a symptom of too much government intervention, so less freedom of choice for households and businesses. Therefore, with corruption, businesses pay bribes, additional expenses instead of investing them. The result is low competitiveness.

In conclusion, for Cameroon to benefit from the EPAs, the government should properly negotiate contracts with the EU. It is also germane for Europe to respect the principle of free trade by stopping subsidies to producers thus encouraging protectionism disguised as non-tariff barriers especially with respect to sanitary and phytosanitary standards, as well as environmental standards.

This article is originally published in the French language at Libreafrique.org

 

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West African Leaders create an illusive custom duty for the sub region envisaged to kickoff in 2015, By Chofor Che, 28 October 2013


Leaders of the Economic Community for West African States (ECOWAS) met on the 25 of October 2013 in Dakar Senegal for an extraordinary summit almost devoted to economic issues to strengthen regional integration. According to Stephane Ballong, Special envoy of Jeune Afrique in a publication dated the 26 of October 2013, this meeting was regarded by the host, President Macky Sall as a historic one. The leaders of ECOWAS states adopted a Common External Tariff (CET) for all fifteen Member States of the Community. Concretely, this means that from the date of application of this new customs duty scheduled to kick off in January 2015, once customs duties are levied on goods at the entrance of one of the states in the sub -region, these goods will be able to move freely in all other states in the sub-region. This will equally allow foreign business partners have access to a market of over 300 million people of the ECOWAS community.

The leaders of ECOWAS states also put in place an additional tax, which regulates importation and protects local production. A tax was also instituted which warrants that member states make some financial contributions to hasten Africa’s regional integration. Ballong of Jeune Afrique concurs that the realisation of this new customs duty planned since the inception of ECOWAS in 1975, is also a strong argument that the community can use in trade negotiations. “Thanks to the Common External Tariff, we now form a solid competitive block”, affirmed Alassane Ouattara, the Ivorian Head of State and Chairman of ECOWAS. According to Kadré Desire Ouedraogo, President of the ECOWAS Commission, ECOWAS states will be able to accelerate trade and financial negotiations for an Economic Partnership Agreement (EPA) that will give guidance on trade with the European Union. EPA is supposed to replace the Cotonou Agreement in force since June 2000 and allow products from states in Africa, the Caribbean and Pacific (ACP) have privilege access to European markets. The Cotonou Agreement contrary to World Trade Organisation (WTO) rules did not allow Africans to develop their business and diversify their economies. Some economists argue that EPA should not only comply with international standards, but also take into account the development dimension of African economies.

The ECOWAS summit in Senegal was a very ambitious one especially with respect to regional integration. Having a single custom duty for the whole sub region is a laudable idea, but will the statesmen of these nations respect the conditions of this newly created customs duty? The responsibility of ensuring that this dream reaches fruition lies in the hands of the leaders of the ECOWAS region. ECOWAS states are still plagued with ills such as corruption. Taxes still remain very high in these ECOWAS states. The private sectors in most of the ECOWAS states remain poorly organised. Decentralisation remains an illusion in some of these states especially as central governments still continue to carry out functions traditionally associated with regional and local governments. Leaving these ills unresolved and instituting a sub regional custom duty will thus be a waste of time because come 2015, these very states that agreed to institute such a custom duty will find fault in it. It is thus germane for African leaders to put the horse before the cart and stop wasting tax payers money by organising summits which produce no fruit. It is important for every African state and most especially ECOWAS states to first of all put in place institutions of transparency and good governance, revamp the private sector, before agreeing on a custom duty for the sub region. If not we may just have another scenario of empty promises.

– See more at: http://africanliberty.org/content/finally-common-external-tariff-west-africa-%E2%80%93-chofor-che#sthash.Q8px7TGt.dpuf

 
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Posted by on October 28, 2013 in Africa Development

 

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