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% 86,1% 85,9% 80,7% 80,4% 82,0% 86,0% 90,0%

l of liberalization

80,7% 80,4% 75,3% 74,0% 78,0% 82,0% Togo Senegal Nigeria West African LDCs Ghana Cote d'ivoire

Level of lib 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

• ther 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
• nwards 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

• f 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 marchandises Commodity Description Taux Groupes Valeur_en_ $ Part 8710.0 0.00.00 Chars etTanks and

• ther

Chars et automobiles blindées de combat, armés

• u

non; leurs parties. Tanks and

• ther

armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts

• f such vehicles.

20 C 259,864,32 7 2.2555 4842

Issue of data –example 2 -Why data on EU28 exports is more suitable than data on NG imports from EU28

HS6 DESC NG import from EU28, 2012 EU28 export to NG, 2012 Diff Diff in %

• f NG

imports 630900 Worn clothing and other worn articles 30 20,862 20832 69440% 220210 Waters incl mineral&aeratd,containg sugar o sweeteng matter o flavourd 78 38,261 38183 48953% 200520 Potatoes prepard or preserved,o/t by vinegar or acetic acid,not frozen 96 29,145 29049 30259% 940360 Furniture, wooden, nes 60 17,723 17663 29438% 711711 Imitation jewellery cuff-links&stud of base metal w/n platd w prec met 35 8,784 8749 24997% 220430 Grape must nes, unfermented, other 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 YEARS Within 15 YEARS Within 20 YEARS (Addendum) 2020 2030 2035 Total revenue loss (based on 2012 trade) Country (group) A B C ABC D (exclusion) West Africa 958,098 1,139,480 306,805 2,404,383 1,220,381 West Africa 958,098 1,139,480 306,805 2,404,383 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

969 491 282 181 148 123 970 167 1 969 491 282 181 970 167 0% 20% 40% 60% 80% 100% 1 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)

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

Products at risk (2)

29,0% 23,5% 1,7% 1,5%

EU more competitive than Nigeria - current exports at risk Nigeria does currently not export but liberalized under EPA - future exports at risk Excluded from liberalisation

44,3%

Excluded from liberalisation under EPA Liberalisation under EPA, but Nigeria more competitive than EU 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

• f 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
• n 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,

Cote d’Ivoire and export taxes (1)

Tariff line Description 2005 rate 2011 rate .. Cola nuts 14% of the f.o.b. value 14% of the f.o.b. value .. Wood and wood products Various rates (1% to 35% of the reference value) varying according to species .. and favouring processed products .. Cashew nuts CFAF 10/kg CFAF 10/kg .. Coffee CFAF 50/kg CFAF 50/kg 1801.0011.00; 1801.0012.00; 1801.0018.00 Raw cocoa (superior; standard; other) CFAF 220/kg 14.60% of the registered c.i.f. value 1801.0019.00 Roasted cocoa .. Source: WTO Trade Policy Review 2012 (Côte d'Ivoire, Guinea-Bissau and Togo)

Cote d’Ivoire and export taxes (2)

Tariff line Description 2005 rate 2011 rate 1801.0020.00; 1803.1000.00; 1803.2000.00 Broken cocoa beans, raw or roasted; cocoa paste (not defatted; wholly or partly defatted) .. 13.90% of the registered c.i.f. value 1802.0000.10 Cocoa cake CFAF 105/kg 6.95% of the registered c.i.f. value 1804.0000.20; Natural cocoa butter; other cocoa and CFAF 13.90% of the 1804.0000.20; 1804.0000.90 Natural cocoa butter; other cocoa and deodorized cocoa butters; CFAF 210/kg 13.90% of the registered c.i.f. value 1805.0090.00 Cocoa powder, not containing added sugar

• r other sweetening matter

CFAF 105/kg 6.95% of the registered c.i.f. value 1806.1000.00; 1806.2000.30 Cocoa powder, containing added sugar or

• ther sweetening matter; couverture

.. 1806.2000.00; 1806.3200.90 Other preparations (in solid, liquid or paste form) in containers or packages of a content exceeding 2 kg; chocolate in blocks, slabs or bars .. 10.64% of the registered c.i.f. value

Cote d’Ivoire and export taxes (3)

• In the context of their cooperation with the

development partners, the authorities have pledged to apply a maximum cumulative rate of 22 per cent

• f the registered c.i.f. value for all export taxes on

cocoa (registration tax, DUS and fees); this practice has been in place since the 2009/2010 season. has been in place since the 2009/2010 season. (footnote 66, WT/TPR/S/266/CIV/Rev.1)

Nigeria and export taxes

• The export amendment decree of 1992 allows that all raw

material or unprocessed commodities, whether mineral or agricultural, may be subject to the payment of an export levy as may be prescribed, from time to time, by order of the NEPC (not currently operational). - see also http://www.placng.org/lawsofnigeria/node/127 see also http://www.placng.org/lawsofnigeria/node/127

• A 0.5% levy is imposed on all exports in lieu of pre-shipment
• inspection. This effectively serves as an export tax because it is

payable on all exports regardless of whether a pre-shipment inspection is required by the importing country. (WT/TPR/S/247/Rev.1, page 33)

Ghana and export taxes

• 57. Export taxes are applied on cocoa and
• hydrocarbons. The tax rate for cocoa beans is

determined by the Minister of Finance and Economic Planning; fiscal income from export taxes on cocoa totalled GC 616 billion in agricultural year 2005/06. The rates on hydrocarbons are US$0.09 per litre on The rates on hydrocarbons are US$0.09 per litre on aviation turbine kerosene and US$0.03 per litre on gas

• il. Export duties on timber products were abolished

in 2005. The share of export taxes in total Government revenue has decreased significantly, from 11.4% in 1998 to 2.3% in 2005.

Source: Ghana TPR 2008, WT/TPR/S/194/Rev.1, page 33-34)

Senegal and export taxes

• Senegal TPR 2003
• 54.

The Senegalese authorities confirm that no products are subject to export duties or taxes and that exports are also exempt from VAT. (WT/TPR/S/119, page 46)

• Senegal TPR 2009
• Senegal TPR 2009
• 89.

An annual royalty of 3 per cent of the pit head value (difference between the f.o.b. value of the mineral substance and all the costs incurred from the pit head to the delivery point) is levied on gold exported. (WT/TPR/S/223/SEN/Rev.1, page 182)

Niger and export taxes

• Niger TPR 2009:
• 80.

A 3 per cent statistical export charge (RSE) still applies to all goods exported, except mineral substances (subject to the mining levy regime (Chapter IV(3))). The taxable base for the RSE is the c.i.f. value, except for exports of live animals, products of animal or plant origin or fisheries live animals, products of animal or plant origin or fisheries products, mineral products and articles in cast iron, iron and steel, for which the taxable base is a unit value.

• 81.

Since 2006, a flat rate tax has been imposed on cigarettes intended for special transit and/or re export at a rate of 0.25 per cent of the c.i.f. value. Niger has a large re export trade (for example, cigarettes), mainly going to Nigeria, which is Niger's second most important trade

• partner. (WT/TPR/S/223/NIG/Rev.1, page 85)

Benin, Burkina Faso, Mali and export taxes

• Benin - In 1993, Benin abolished export duty, but a fiscal exit

duty of 3 per cent f.o.b. still applies to cocoa beans, crude oil and precious metals.

• Burkina Faso - The shipment of some live animals and raw

hides abroad is subject to the levying of the following taxes: bovine animals (CFAF 3,000 per animal); sheep and goats (CFAF 250 per animal); poultry (CFAF 50 per bird); and raw (CFAF 250 per animal); poultry (CFAF 50 per bird); and raw hides (CFAF 100 per kilo). Burkina Faso also imposes a levy of CFAF 500 per export certificate for works of art, which goes to the National Cultural Promotion Fund (FNPC). (Source: WT/TPR/S/236/BFA/Rev.1, page 207-208)

• Mali - The production of gold, which for the most part is

exported, is subject to a levy of 3 per cent ad valorem under the

• ISCP. Exports of cotton are also subject to a 3 per cent ISCP.

(WT/TPR/S/236/MLI/Rev.1, page 290)

Guinea Bissau and export taxes

• The export tax is composed of the following: a customs

(aduaneiro) tax (6 per cent in February 2012); a rural contribution tax (contribuição predial rustica) (2 per cent); and a fixed advance payment on profits tax (3 per cent); giving a total of 11 per cent. The tax base is determined by the State on the basis of a notional price (preço tributário) fixed in dollars (i.e. US$750/tonne since February 2011 (i.e. US$750/tonne since February 2011

• Since 2011, a new levy has been imposed on exported raw

cashew nuts (CFAF 50/kg for the 2011-2012 season), which is paid into an industrialization promotion fund (FUNPI). In 2012, this fund has around US$20 million

• The taxation on exports of cashew nuts represents one

third to 40 per cent of the State's fiscal revenue Source: WTO Trade Policy Review 2012 (Côte d'Ivoire, Guinea- Bissau and Togo),

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