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Background to and issues arising from the establishment of the ECOWAS CET

A review has been posted by the European Centre for Development Policy Management (ECDPM) examining the process leading up to the decision by the heads of state and government of the Economic Community of West African States (ECOWAS) to implement a common external tariff (CET) from January 2015. It notes that the technical nature of crafting a CET should not overshadow the hard choices that have to be made over which (or rather whose) industries are to be protected, and under what condition and which (whose) are to be subject to reduced levels of tariff protection.

The analysis highlights the pre-existence of the West African Economic and Monetary Union (usually known by its French abbreviation UEMOA) CET, structured within four tariff bands: 0% for essential social goods; 510% for inputs and intermediary products; and 20% for final consumption products. It notes the difficulties non-UEMOA countries faced in simply transferring into this tariff structure.

The analysis argues, [I]t is not surprising that a country like Nigeria, with significant productive capacities, and a more protectionist trade policy, would find it hard to align itself with a CET designed by countries with different structural features and policy objectives. This kind of problem, which reaches beyond Nigeria, led to the creation of the fifth band, at 35%, for specific goods for economic development to assuage the fears of the largely Anglophone non-UEMOA ECOWAS countries.

Defining what products fell into which categories prompted heated debates, particularly for rice and other cereals. Agricultural producer organisations from across the region actively lobbied for rice and other cereals to be placed in the 35% tariff band, in order to nurture national production. The final tariff, however, was set at 10%. A key debate was over what relative importance should be attached to boosting domestic production through protectionist measures (e.g. Nigeria sets tariffs of up to 100% and uses import bans to nurture domestic production) rather than meeting urban consumer demand for cheap food.

To reconcile these differences, it was agreed that, for a transitional period, tariffs applied nationally may vary from the CET (up to 70% from the CET rate, for 3% of tariff lines). This needs to be viewed against the background of a history of non-implementation of agreed regional commitments. Special exemptions from compliance with the CET may also be granted to countries whose bound tariffs are below the new CET.

These special arrangements could potentially throw up the problem of trade deflection under any economic partnership agreement (EPA) (trade deflection occurs where advantage is taken of differing extra-regional duties to export via the low-duty importer to a neighbouring country in the context of a free trade area), with this reinforcing the need for strong monitoring mechanisms, in order not to undermine the already troubled application of the ECOWAS Trade Liberalisation Scheme.