Industrial Revolution: Why EPA Will Undermine Nigeria

Written By Noel Onoja

More than a year ago precisely February 2014, Nigeria launched its Industrial Revolution Plan with its major aim of changing the country from an importer of most goods to a manufacturing nation that could at least meet most of its domestic needs.

In February 2015, Nigeria made its position clear on the proposed Economic Partnership Agreement (EPA)
understanding that it may turn out to be a gag on Nigeria to agree to an EPA that is inconsistent with its own national development priorities and strategy.

Some experts have continued to argue for the Protectionist policy and Reciprocity of the EPA including the removal of trade barriers between the European Union and the Economic Community of West African States as a major plus and an important factor especially for the ECOWAS member states but then again, ECOWAS member states are bound to suffer the loss of policy space to craft an industrial path that serves the interest of the West Africa region.

According to a 2002 Oxfam report, titled ‘Rigged Rules and Double Standards’, the rules of the EPA are far from being fair, it also points out that the rules of international trade are manipulated in favour of EU countries. Oxfam devised an index to quantify which countries did most damage to African Caribbean and Pacific (ACP) countries in international trade. This measured EU protectionism based on its average tariffs, the size of its tariffs in agriculture and textiles and its restrictions on imports from the poorest ACP countries. The measure is called the Double Standard Index (DSI) because “it measures the gap between the free trade principles espoused by EU countries and their actual protectionist policies.” In this measure, the EU “emerges as the worst offender.” Moreover, “the double standards of [EU] governments are most apparent in agriculture.”

Trade dynamics are rapidly changing in Nigeria and in Africa with the changing times, and the extent to which trade must be liberalised under the new EPA between the EU and ECOWAS remains a highly clinical subject which has been on the negotiation table for the past 11 years.

Nigeria, the largest economy in Africa may already have the needed soil to further deepen the roots of its economic growth and industrial revolution policies, in becoming a major global player, she needs to look more within the continental borders, especially by first, treating the Economic Community of West African States (ECOWAS) sub-region as its domestic market.

The issues has remained that the EU is persistently pushing for ECOWAS to rectify the EPA agreement which ECOWAS leaders however agreed in principle to but put on hold until concerns raised by the regional heavyweight, Nigeria, are addressed before a final decision can be arrived at.

It is however not clear if the trade pact which was supposed to be approved by the Heads of State at their 44th Ordinary summit in Yamoussoukro, Cote d’Ivoire have been acceded to due to Nigeria’s concerns and relunctancy reasonably, there are indications that other states like Ghana and Ivory Coast in the region may want to proceed with the agreement even without Nigeria’s consent and that may not play out well for the region.

Also, According to an article published under the Trade Negotiations Insights,Volume 7, Number 9.

The results of an impact assessment showed that implementation of the EPA in its present form will represent major challenges for Nigeria especially considering the current economic indices of the country, These include massive loss of government revenue, emasculation of the manufacturing industry, devastating employment loses, increase in poverty levels and erosion of policy space. More specifically, the study envisaged an average import tariff revenue loss of around $478 million in 2008 (that figure doubled by 2015), if Nigeria implemented the ’substantially all’ import liberalisation called for. This implies an average 42% loss of total tariff revenue. The impact of this alone would be significant given that it constitutes about 39% of the country’s total non-oil revenue. Expected implications of such a development include drastic reduction in public sector spending or an increase in the level of taxation – two policy options which would damage social and economic infrastructures in the country.

Professor Chibuzo N. Nwoke, the Head of the Division of International Economic Relations, Nigerian Institute of International Affairs did put it that “the urgent and substantial import liberalisation promoted by the EPA will reduce capacity in the manufacturing sector as a result of the influx of imported products. Nigeria’s existing unemployment crisis will be exacerbated as firms lay off workers or shut down operations due to poor sales and lack of competitiveness of local products. Small and medium scale enterprises, which mostly constitute the greater proportion of ACP economies, would be asphyxiated. The net effect of the EPA will, therefore, deepen the process of de-industrialisation in Nigeria, with serious consequences for labour and entrenched poverty. Nigeria’s agricultural sector will also be at major risk, due to EU tariff hikes, higher EU tariffs for processed agricultural products. European support and subsidies to its own farmers will frustrate Nigeria’s trade capacity.”

Rightly put, the former president Goodluck Jonathan’s envoy told the EU and other ECOWAS states that “We looked at it and we came up with 10 points that had to be addressed before any endorsement. The first point is the fact that when we ran our model, using the market access of the classification of the industries or sectors that will be liberalised we found that based on the model, which is an ECOWAS model, it will lead to significant losses in government revenue.”

“So it was important that those 10 [points] that were raised by Nigeria and some other members of states had their reservations as well. If we were to go together, as we all want to, if we want to see ourselves as a region that wants to integrate our economies together, it became important that we saw it as one and we reacted to it as one block.”

While I was wondering why large trade countries like China, India and America were not yet negotiating trade agreement with ECOWAS, the former minister of trade, industries and investment Mr Olusegun Aganga noted that Nigeria and the other ECOWAS countries have to negotiate with not just Europe but India, China, America and other international countries. “We have to negotiate an agreement that works for ECOWAS, that works for Nigeria and the countries in ECOWAS. Once we have an agreement that addresses our needs, that does not undermine the regional economic integration that does not undermine the regional aspiration to become an industrialised region,”

Noel Onoja writes from Abuja [email protected]

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