Report by Abu Mubarik, for Inform Ghana
Policy think tank, IMANI Ghana, says the central arguments being advocated for by anti Economic Partnership Agreement (EPA) activists are nothing short of “arguments to protect unproductive industries that are causing the government billions in bailouts and subsidies.”
IMANI also noted that signing the EPA “is a sure way of diversifying our exports.”
This was contained in a statement released to media houses Tuesday night.
The statement explained that: The purported upfront monetary loss to the government, should import tariffs be removed from applicable commodities imported from the EU are reportedly valued at USD 378 million.
What this also means is that, the statement explained further, with a total EU import portfolio for 2012 valued at EURO 3,614million (USD 5,023million), the slashing of tariffs will result in an average savings of 7.4% for consumers of these commodities.
The net savings should also compensate for any increments in taxes on incomes and profits by the government, it added.
It said the sector for manufacturing of machinery and equipment and of transportation equipment is not occupied by any major local entity, thus removing tariffs has a net benefit of lowering costs of these commodities to consumers, and in fact, lowering the cost of production of local industries.
According to the statement, in the textiles industry, its struggles pre-date the EPA agreements with the EU. The main challenges of the Textile industry today are cheaper products and also fake products from China. In spite of the import tariffs imposed on the imported textiles, the local industry is still on the ropes, the statement further noted.
It said: This scenario makes it clear that imposition of tariffs is not in itself a solution to the high cost of production in Ghana. Thus, the onus falls on government to assist local industries to improve their competitiveness. This will enhance their productivity and lead to better competitiveness.
On non traditional exports (NTE), It said that it is not financially prudent to collapse the NTE industries that are currently productive, profitable and making growing contributions to GDP, by gambling on industries with questionable future profitability, the statement noted in apparent response to claims that rectifying the EPA will lead to the collapse of nascent industries.
The economic importance of these companies, if the EPA is not signed, are the loss in corporate tax contributions, employee tax contributions, annual payroll and job creation, social security contributions, direct purchases, contribution to GDP, and various other social responsibilities within the Ghanaian economy, the statement cautioned.
It also predicted the collapse of the NTE if the EPA is not signed.
On Foreign Direct Investment (FDI), the statement said: If Ghana fails to ratify the EPA, the country will find it extremely difficult to attract FDI into the NTE sector and it will also need to find favourable export markets and import partners.