Under the Cotonou Agreement, which governed trade between the EU and the African Caribbean and Pacific States (ACP), including Ghana, the EU and ACP agreed to conclude new trading arrangements compatible with the WTO provisions, which would be called Economic Partnership Agreements (EPAs).
The EPAs were to be negotiated with a number of regional blocks among the ACP countries during a five-year preparatory period starting from September 2002 and concluding on December 31, 2007.
The negotiations involving West Africa were launched in Cotonou on 6 October 2003.
However, amidst the slow pace of the regional negotiations between West Africa and the EU, and with the December 2007 deadline fast approaching, Ghana was compelled to enter into a bilateral market access agreement on a goods only basis with the EU to maintain preferential market access to the EU after December 31, 2007. That agreement is the Ghana-EU Interim Economic Partnership Agreement (IEPA).
Although the iEPA was concluded in December 2007, and ratified by Ghana in 2016, the implementation of the tariff liberalisation schedule was delayed pursuant to technical adjustments agreed between the EU and Ghana.
The iEPA covers trade in goods only and secures duty-free quota-free access to the European market for Ghanaian goods in exchange for progressive tariff liberalization for EU exports into the Ghanaian market.
In a Joint-Statement between Ghana and the European Union issued on July 1, 2021, the Executive Vice-President and Commissioner for Trade of the European Union, Valdis Dombrovskis and Hon. Alan Kyerematen, Minister of Trade and Industry of Ghana, announced July 1, 2021 as the start of effective implementation by Ghana on the iEPA.
Accordingly, effective July 1, 2021 and pursuant to the terms of the iEPA, Ghana would progressively liberalise tariffs for 80% of the total volume of exports from the EU to Ghana, with cumulative tariff cuts for approximately 22% of applicable tariff lines in 2021, 50% by 2024 and 100% by 2029.
The European Union (EU) is Ghanaâs largest trading bloc. The EU is a significant market destination for many of the top non-traditional horticultural exports including processed cocoa (cocoa paste, butter, and powder); processed fish and seafood; pineapples; bananas; yams; mangoes; cashew nuts; fruit juice; and natural rubber.
Ghanaâs exports to the EU market is about 40% of the countryâs total annual exports. After initialing the iEPA in November 2007, and since the ratification of the Agreement in December 2016, the EU maintained 100% duty-free, quota-free access to the EU market for exporters of Ghanaian products.
Ghanaâs main annual imports from the EU are machinery; vehicles (light and heavy duty); chemicals and allied products; metals; animal products and processed foods. About 40% of Ghanaâs top 20 imports from the EU are machinery, equipment and parts.
Access to cheaper machinery and new technology is expected to enhance Ghanaâs industrialization.
Heavy duty and light transport vehicles also account for about 38.7% of the top 20 imports from the EU into Ghana.
It is to be noted that machinery and equipment (capital goods) imported for production in Ghana from the EU will be liberalized. However, vehicles are excluded from the liberalization.
An important positive effect of tariff liberalization under the iEPA is the impact on aggregate consumption. As implementation of the iEPA leads to a fall in relative prices, there will be a corresponding increase in household consumption and improved welfare.
Ghanaian consumers will benefit from lower prices of locally manufactured fast moving consumer goods, as well as from prices of commodities particularly shipped from the EU market.
Development cooperation and financial adjustment support under the iEPA would facilitate reforms of the fiscal revenue system, improve the business environment and promote the upgrading of the productive sectors in Ghana.
Adjustment Facility Support under the iEPA to Ghana so far is estimated at â¬8,408,000. This mainly includes the Banana Accompanying Measures Support to Horticultural Companies, the Compete Ghana Programme to interface with exporters and key stakeholders, and other trade-related support to the Ghana Investment Promotion Centre (GIPC) and the Ghana Export Promotion Authority (GEPA) towards improving companies and exporters competitiveness in the supply value-chain.
The overall estimated revenue of Ghanaâs imports from the EU is currently â¬133 Million based on the ECOWAS Common External Tariff (CET) revenues and â¬289 Million based on VAT revenues.
It iss estimated that the overall customs revenue losses over the 10-year period of liberalisation in Ghana will be equivalent to 1% of the total revenue collection that the Ghana Revenue AuthorityâCustoms (GRA-CD) has forecast for 2019 during the 10-year timeframe that has been agreed (1st January 2020 â 1st January 2029).
The EU has committed under the iEPA to provide substantial financial support to meet the fiscal adjustment cost to Ghana from the implementation of the iEPA.
At the end of the progressive liberalisation process in 2029, the projected estimated revenue loss from the EUâs Imports is â¬60 Million on CET revenues and â¬280 Million on VAT revenues. However, the expected revenue gain in exports in the medium to the long-term is likely to more than offset the loss in Government revenue.
Read the original agreement below
GHANAâEU INTERIM ECONOMIC PARTNERSHIP AGREEMENT (iEPA)