Looking more closely at the WA EPA market access offer market - PowerPoint PPT Presentation

Looking more closely at the WA EPA market access offer market access offer 27-28 October 2014 Dakar Peter Lunenborg lunenborg@southcentre.int

Main points • 75% market access is more than 75% • Tariff revenue loss • Impact on West African producers • Impact on regional trade and regional integration • Loss of export taxes, a policy tool to promote domestic • Loss of export taxes, a policy tool to promote domestic processing

West Africa EPA –level of liberalization in terms of value (based on 2012 trade) 91,8% 90,0% l of liberalization 86,1% 85,9% 86,0% Level of lib 82,0% 82,0% 80,7% 80,7% 80,4% 80,4% 78,0% 75,3% 74,0% Togo Senegal Nigeria West Ghana Cote African d'ivoire LDCs Marketing opening for country (groups) in West Africa (%, in value, 2012) Average marketing opening for West-Africa (82% in value, 2012)

Cote d’Ivoire appears to Cote d’Ivoire appears to have a better deal than other WA states

Market access offer • The level of liberalization is 75% in terms of tariff lines. However, in terms of value, the level of liberalization is much higher • How can we get the most reliable figure on liberalisation in terms of value? • HS2012 . The Dakar EPA market access schedule is expressed in HS2012.. in HS2012.. • 2012 or later instead of 2002-2004 . Trade data from 2012 onwards gives the most accurate information • EU28 . EU had 15 member states until May 2004. In 2014, EU has 28 memberstates (EU28) • Data on EU28 exports to West Africa rather than West Africa imports from EU28. EU28 exports are often a better reflection of the actual trade (but not always). Also, most recent publicly available WA import data is not 100% reported in HS2012.

Issue of data N.T.S. Désignation des Taux Groupes Valeur_en_ Commodity Description Part marchandises $ 8710.0 0.00.00 Chars Chars etTanks et Tanks and and other other automobiles armoured fighting 259,864,32 2.2555 blindées de vehicles, motorised, 20 C 7 4842 combat, armés whether or not fitted ou non; leurs with weapons, and parts parties. of such vehicles.

Issue of data –example 2 -Why data on EU28 exports is more suitable than data on NG imports from EU28 NG import Diff in % from EU28, EU28 export of NG HS6 DESC 2012 to NG, 2012 Diff imports 630900 Worn clothing and other worn articles 30 20,862 20832 69440% Waters incl mineral&aeratd,containg 220210 sugar o sweeteng matter o flavourd 78 38,261 38183 48953% Potatoes prepard or preserved,o/t by 200520 vinegar or acetic acid,not frozen 96 29,145 29049 30259% 940360 Furniture, wooden, nes 60 17,723 17663 29438% Imitation jewellery cuff-links&stud of 711711 base metal w/n platd w prec met 35 8,784 8749 24997% Grape must nes, unfermented, other 220430 than that of heading No 20.09 28 6,897 6869 24532% 330300 Perfumes and toilet waters 98 13109 13011 13277%

Tariff revenue losses by liberalisation category (USD Thousands) Within 5 Within 15 Within 20 (Addendum) YEARS YEARS YEARS Total revenue 2020 2030 2035 loss (based on 2012 trade) Country (group) A B C ABC D (exclusion) West Africa West Africa 958,098 958,098 1,139,480 1,139,480 306,805 306,805 2,404,383 2,404,383 1,220,381 1,220,381 Nigeria 361,853 489,313 118,325 969,491 318,743 Ghana 117,287 120,687 44,207 282,181 167,717 Cote d’Ivoire 61,848 50,052 36,222 148,123 106,498 Cape Verde 10,767 14,018 9,636 34,422 42,112 Senegal 115,142 137,865 23,652 276,660 104,573 Mali 19,665 10,658 7,677 38,000 48,096 Togo 101,852 182,269 11,540 295,661 68,688 West African LDCs 406,343 465,410 98,414 970,167 585,311

Tariff revenue loss – distribution within West Africa 148 123 1 1 969 491 969 491 282 181 282 181 970 167 970 167 0% 20% 40% 60% 80% 100% Nigeria Ghana Cote d'Ivoire Cape Verde LDCs

Why tariff revenue losses do not always appear dramatic • Old situation: Average duty of 10% • New situation • Average duty drops to 30%x20% (only tariff collected on exclusions or Category BC which have relatively high tariffs) = 6% 6% • Import increase with 50% • Tariff revenue in old situation: 100 x 0.1 = 10 • Tariff revenue in new situation: 150 x 0.06 = 9 • Tariff revenue loss = 1? • Or tariff revenue loss = 6? 150 x (0.1-0.06)

Products at risk (1) Table –Products at risk for Nigeria (number of tariff lines) Note: tariff lines that are zero-rated under ECOWAS CET are not considered (Partly) Excluded from Competitive situation liberalized under liberalization Grand Total EPA (Group D) EU more competitive than Nigeria (current than Nigeria (current 1,509 1,509 535 535 2,044 2,044 exports at risk) Nigeria does not export the product, but the EU 2,304 675 2,979 does (future exports at risk) Nigeria more 89 15 104 competitive than EU Grand Total 3,902 1,225 5,127

Products at risk (2) 1,7% 1,5% EU more competitive than Nigeria - current exports at risk Nigeria does currently not export but liberalized under 29,0% 23,5% EPA - future exports at risk Excluded from liberalisation Excluded from liberalisation under EPA Liberalisation under EPA, but Nigeria more competitive than EU 44,3% Zero-rated under ECOWAS CET, no tariff liberalisation under EPA

Products at risk – possible impact on production and trade • It is difficult to estimate the precise amount of local production or exports that would be lost due to EPA. However, the export values of the identified products at risk would give an indication of the size of the impact, as well as which locally produced goods would face competition from the EU. face competition from the EU. • Currently, Nigeria exports USD 2.42 billion worth of goods that are under threat of EPA, USD 757.12 million of which are non-oil goods. Consequently, local production of these goods are likely to face pressure and could see significant declines.

Products at risk - Processed oil products The EPA would liberalize the following products in which the EU is more competitive than Nigeria: 270119 Coal nes, whether or not pulverised but not agglomerated 270400 Coke&semi-coke of coal,lignite o peat,agglomeratd o not,retort carbon 270500 Coal gas,water gas,etc,o/than petroleum gases & gaseous hydrocarbons 270740 Naphthalene 271012 Light petroleum oils and preparations 271019 Other petroleum oils and preparations 271091 Waste oils containing PCBs, PCTs or PBBs 271099 Other wate oils 271114 Ethylene, propylene, butylene and butadiene, liquefied 271129 Petroleum gases and other gaseous hydrocarbons nes, in gaseous state 271312 Petroleum coke, calcined 271320 Petroleum bitumen 271390 Residues of petroleum oils/of oils obtaind from bitumin minerals nes 271500 Bituminous mixtures based on natural asphalt etc

Products at risk – agricultural/fisheries products • In agriculture/fisheries, the data suggests the following big ticket items where Nigeria would see a drop in exports/production • Live sheep - the EU is a major exporter of live animals transported by sea over long distance. • Frozen cold-water shrimps and prawns • Milk powder • Wheat groats and meal • Ethyl alcohol • Animal feed preparations

Products at risk - industrial goods • As for industrial goods, the data points to the following losses in exports/production: • Plastics and Rubber products , in particular polyethylene, polypropylene and unvulcanised rubber • Products from the base metal industry including aluminium, iron, copper, lead and zinc based products feature prominently on the list of exports under fire of the EPA. prominently on the list of exports under fire of the EPA. • Light industrial products such as parts of machines, gears (or parts thereof), (parts of) taps, cocks, valves and similar appliances, nes&gearing,ball screws,gear boxes,speed changers/torque converters • Vehicle industry - motor vehicle parts, motorcycles . At present Nigeria does not produce or export cars in any significant amount.

World Bank study has similar conclusions -Negative effects are likely to be concentrated primarily on four sectors: Wood products, Non-metallic mineral products, basic metals, and metal products other than machinery -Wood products: Mainly sawmilling firms making basic wood products such as planks and plywood wood products such as planks and plywood -Non-metallic mineral products: Mainly basic cement and concrete products -Basic metals: Mainly basic construction and furniture parts made of metal -Metal products other than machinery: Mainly doors, window frames, and other parts used in construction

Losses are concentrated on four Losses are concentrated on four sectors sectors

Export taxes – Article 13 • Was not bracketed in Brussels 2012 text • ‘No new duty, export tax or charges with corresponding effect shall be introduced, nor shall those already in effect be increased as far as trade between the Parties is concerned, from the date of entry into force of this Agreement’ (Para 1, Art. 13) entry into force of this Agreement’ (Para 1, Art. 13) • Hot issue in SADC EPA. EU proposed new text on 4 April 2014 • Several countries in West Africa apply and are dependent on the use of export taxes,