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The Director for Multilateral, Regional and Bilateral Trade at the Ministry of Trade and Industry, Mr Anthony Nyame-Baafi, has disagreed with concerns from the business community that the Common External Tariffs (CET) is disingenuous to their operations, explaining that the new tariffs are rather in the wider interest of the country.

He was confident the CET would help increase the production of member states, increase revenue and also minimise smuggling, the three challenges stifling growth of economies within the sub-region.

The CET is an initiative of the Economic Community of West African States (ECOWAS) aimed at normalising the tariff regimes in the 16-member countries.
It took effect on February 1 and resulted in the increment of some levies in the country.

This led to some form of agitations for its removal by some business groupings, including the Ghana Union of Traders Association (GUTA).

The Importers and Exporters Association also kicked against the implementation of the CET as they were of the view that some of the taxes such as the taxes on poultry and household items were too high and that was going to make importing through Ghana unattractive.

But Mr Nyame-Baafi, speaking in an interview with the Graphic Business, said government adjusted such taxes upwards in order to protect the local industries who produced such items.

Tariff adjustments

He said it was agreed by ECOWAS to allow member states to make adjustments to three per cent of the tariffs within the first phase of implementation, which is the first five years.

“Based on this, ECOWAS came up with its own list of products that the adjustment could be applied and we varied the products in the list and came up with the tariffs we want to adjust after consultation with key stakeholders,” he said.

“Under the CET, it was agreed that we would apply five per cent import duty on rice but based on the country’s policy of encouraging local rice production and preventing massive importation of rice, we decided to maintain the 20 per cent that we charge on rice importation,” he explained.

He said the import duties for vehicles under the CET were also too high so government decided to review them downwards.
He, however, pointed out that after the first phase, all ECOWAS countries will charge the same tariffs on all products.

Stakeholder consultations

Mr Nyame-Baafi said the ministry went round all the 10 regions in the country to sensitise and educate all stakeholders on the CET before it was finally implemented.

He said it met with business associations such as the Association of Ghana Industries, the Ghana Chamber of Commerce, and the Ghana Union of Traders Association to educate them on the CET.
“There were some associations who had a few challenges but we resolved them before the take-off,” he noted.

The CET

The common external tariff regime means that the same tariff will be imposed on an eligible item imported into the ECOWAS sub-region, irrespective of which ECOWAS member country it lands in.

Under the regime, Ghana’s four-band tariff system will expand to become five band, namely basic essential goods; primary raw materials/capital goods; intermediate goods; final consumer goods and specified goods for economic development.

Ghana currently has 6,057 commodity lines on which it applies import duties. This will reduce to 5,899 items when the CET comes into force, an elimination of 168 commodity lines under the regional tariffs.

However, the new system will reduce the 725 commodity lines that attract zero per cent import to 85 lines, while expanding the scope of commodities admitted under the five per cent band from 375 to 2,146.

Through the CET, the countries of this region are standardising the tariff treatment of goods entering the ECOWAS region, thereby nullifying all domestic national legislations of the ECOWAS member states as well as that of the West African Economic and Monetary Union (WAEMU), mostly French-speaking West African countries.

The CET of ECOWAS is made up of five tariff bands where goods are taxed based on the category they belong. As such, essential social goods (classed in category zero) will attract no tax; while essential commodities, basic raw materials, capital goods, specific inputs, classed in the first category, will be taxed at five per cent with 2,146 tariff items.

Inputs and intermediate products (classed in the second category) are taxed at 10 per cent with 1,373 tariff lines. Final consumer goods (classed in the third category) and specific goods for economic development (classed in the fourth category) will be taxed at 20 per cent with 2,165 tariff lines and 35 per cent with 130 tariff lines respectively.