ABUJA: AS Nigeria joined 18 other countries in the Economic Community of West Africa States (ECOWAS) in the implementation of a Common External Tariff (CET) a week ago, stakeholders have expressed optimism that it would usher in transparency in the process of international trade, besides putting an end to smuggling.
Although full implementation of the regional trade regime, aimed at creating a common market and regional integration, is yet to be fully implemented at the nation’s gateways, as the Nigeria Customs Service is said to be configuring its system in line with the provisions of the new regime, many of the port users were very exited at the idea, believing it would be beneficial to the great majority of the Nigerian masses who are already looking forward to the drop in prices of imported items.
But the President, Association of Nigerian Licensed Customs Agents, Prince Olayiwola Shittu, said such expectation could become real with the insistence on proper procedure and the competitiveness of the ports.
“Definitely, it will stop smuggling, create competition among nations and attract more vessels to Nigeria because there will be no more diversion of cargoes.
If what you are going to pay in Ghana or Ivory Coast is the same thing you are going to pay in Nigeria, why taking your goods there? It will encourage the development of inter- states trade and this will be to ECOWAS what EU is to Europe, that is regional integration,” he said. He however cautioned that CET should not be misconstrued to mean that all goods will become cheaper as a result of common tariff because, Nigeria had before now built in tax component into the tariff for some imported items, in order to protect the local manufacturers.
According to him, Import Adjustment Tax was granted Nigeria for some items so as not to make the country a dumping ground for some foreign goods. These items, according to him, will have to attract tariffs higher than what is obtainable in other ECOWAS countries, “Where rate of duty in Nigeria is at per with ECOWAS Common External Tariff (CET), and there is no Import Adjustment Tax, such goods shall have free entry into Nigerian without additional payment, provided that proper declaration had been made at the point of import,” he said.
He therefore called for proper understanding of the CET provision before any conclusion, he said, adding that he expected the new regime to eliminate corruption if proper procedures and compliance level are adopted.
To Lucky Amiwero, the President of the Council for the Managing Directors of Customs License Agents, Nigerians could only benefit from the regime if adequate infrastructure is put in place, although he agreed also that it will encourage development of common market, free movement of goods and services within the sub region “The Common External tariff, which will no doubt bring about common market in within ECOWAS, will also bring about customs union, a regional market, and movement of goods and services from one country to another, but we don’t have good infrastructure, we don’t have enough energy supply, we don’t have good procedure within the Nigeria Customs Service that will implement the CET.
Other countries within the sub region will benefit from our disadvantaged position,” he said The Customs spokesman, Wale Adeniyi, had said last week that it was now mandatory for all stakeholders to fall in line with the new tariff regime, saying it would enhance trade facilitation within and outside the region.
The implementation of the ECOWAS CET (2015-2019) together with its Supplementary Protection Measures (SPM) and 2015 Fiscal Policy Measures are being implemented concurrently and took effect after the expiration of the 30 days notice required under the provisions of the ECOWAS Common External Tariff (CET).
By this development, all imports arriving into the country shall be subjected to the rates contained in the CET 2015-2019 and 2015 Fiscal Measures without recourse to the rates applicable before the coming into effect of the ECOWAS CET 2015 2019. There is an approved Supplementary Protection Measures (SPM)/Fiscal Policy Measures, an Import Adjustment Tax (IAT) list, which involves additional taxes on 177 Tariff Lines of the ECOWAS CET, a National List consisting of items whose Import duty rates have been reviewed to encourage more development in strategic sectors of the economy, an Import Prohibition List (Trade) and applicable only to certain goods originating from non-ECOWAS Countries.
But critics of the new regime said it could create a contradiction between the World Trade Organisation (WTO) commitments of individual countries and the requirements of the regional trade integration project essential for West Africa’s economic development. The agricultural sector is most affected by the new tariff regime in many countries in the region.
With the adoption of the CET, Nigeria’s simple average tariff on agricultural imports dropped from about 32 per cent in 2000 to 15 percent in 2010, while its tariff on manufactured products fell from 25 per cent in 2000 to 11 percent in 2010. Nigeria accounts for more than half of the sub-region’s imports.
In nominal terms, its total imports increased from USD 6 billion in 1990 to USD 64 billion in 2011, while ECOWAS’s total imports rose from USD 14 billion in 1990 to USD 111 billion in 2011 according to United Nations Conference of Trade and Development (UNCTAD).
In terms of import composition, Nigeria accounted for 40 per cent of ECOWAS’s agricultural imports in 2009 and 79 per cent in 2011, while its industrial imports represented 79 per cent and 65 per cent of those of ECOWAS in 2009 and 2011, respectively. These data confirms the huge trade impact of Nigeria on the sub-region and explains its late and reluctant acceptance of the ECOWAS CET.
The CET is said to be incompatible with the individual commitments with WTO. WTO data clearly shows that the application of the ECOWAS common external tariff – both for agriculture and industry – would be a problem with regard to respecting the individual commitments undertaken by the group’s members at the multilateral level.
All West African countries have lower applied agricultural tariffs than those they have bound at the WTO. Nigeria, for instance, has bound its tariff for agricultural products at 150 percent, while its applied tariff is only 33.6 percent.
The common external tariff is a mild form of economic union ,but may lead to further types of economic integration. In addition to having the same customs duties, the countries may have other common trade policies, such as having the same quotas, preferences or other non-tariff trade regulations apply to all goods entering the area, regardless of which country, within the area, they are entering.
Nigeria’s trade policy has been rather protective. Only recently, the country has made efforts, along with other sub-regional partners, to liberalize trade in order to reap benefits related to trade liberalization.
One such effort was Nigeria’s acceptance of the ECOWAS CET. Prior to consenting to the CET; Nigeria had a maximum tariff peak of 150 per cent, which was reduced to 50 per cent during the transition period.
This indicates that the country liberalized its trade by about 67 per cent following the ECOWAS CET. Imports responded accordingly, with a 967 per cent increase in 2011 compared to the 1990 level.
