Why EPA dangerous to Nigeria’s manufacturing sector

Manufacturers consider the Economic Partnership Agreement (EPA) being proposed to the Economic Community of West African States (ECOWAS) by the European Union as a Greek gift, citing inherent dangers it poses to the struggling productive sector of the Nigerian economy as reasons why Muhammadu Buhari, Nigeria’s president, should reject ratifying it.
 
The EPA is an economic agreement between the European Union (EU) and the ECOWAS, including the West African Economic and Monetary Union, known in French as UEMOA.The basic philosophy of EPA is to open the EU market to West African products on a duty-free and quota-free basis. In exchange, the West African market will become partially and gradually open to the EU.
Under the agreement, 75 percent of West African market will be gradually liberalised in favour of the EU export products over the next 20 years. The EU is investing hugely in the trade partnership, having set aside up to 6.5 million Euros to support development programmes in West African countries during the first five years of EPA implementation.
José Manuel Barroso, the then president, the European Commission, in July 2014,described the agreement as ‘a partnership of equals,’ saying that it will pave the way for sustainable economic growth in West Africa, generate jobs and guarantee well-being for the region’s citizens.
 
Proponents of the trade agreement, particularly those in European economies, argue that the region will have the opportunity of experiencing first-hand what Sierra Leone, which is currently enjoying full access to the European market under the ‘Everything But Arms’ agreement, has enjoyed over the years.
They also say it does not pose any problem for the economy of the region as the nature of traded goods between the two regions is completely different just as the products of both sides are not in competition with each other.
 
They also argue that the trade arrangement could help drive ECOWAS countries from a system of tax collection which is excessively reliant on high import duties to a system that depends on domestic taxation.
The proponents further say it will lead to higher GDP growth rate, employment creation and moderate standard of living.
However, Nigerian manufacturers say the country is not yet ready for the European agreement, stressing that implementation of the scheme will simply kill the manufacturing sector.
“Nigeria has very limited capability to produce and export industrial goods,” Frank Jacobs, president, Manufacturers Association of Nigeria (MAN) said, at an international conference on the EPA held in Abuja.
“Most of the industries in the country are undeveloped and are plagued by lack of supportive infrastructure.  EPA, therefore, may appear a good course in the document proposal but may be catastrophic if implemented, as it will stifle the slowly recovering manufacturing sector in the country,” Jacobs said.
According to him, the EPA will confine the country’s economy to a mere market extension of the EU, since Africa’s largest economy cannot compete with Europe on all fronts.
“Nigerian manufacturers are not averse to free trade cooperation but such should be better done in a situation of equal economic development. Any attempt to coerce the country into a free trade arrangement will only succeed in killing the fledgling manufacturing sector which has just started to recover from a long period of comatose,” he stressed.
He emphasised that given the challenges faced by local manufacturers, ranging from infrastructure and cost to environment, EPA will only destroy companies that have invested in intermediate products manufacturing.
“Nigeria, indeed ECOWAS, will perpetually continue to be exporters of unprocessed raw materials and importers of processed goods. No country that depends on  exportation of unprocessed raw materials can be considered as developed. The rationale for the establishment of the Raw Materials Research and Development Council (RMRDC) will be questioned as it will be more fashionable to import from the EU than to develop raw materials locally,” he added.
ODINAKA ANUDU
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