Traders, shippers up against common tariff regime

The Ghana Union of Traders Association (GUTA) and other stakeholders in the shipping community, notably the Ghana Institute of Freight Forwarders (GIFF) and the Importers and Exporters Association of Ghana are kicking against implementation of the ECOWAS Common External Tariff (CET) regime in the country.

Among their concerns is the astronomical hike in rates for basic consumables such as tomato paste, cooking oil and frozen foods from 20 to 35 percent, which they fear could swallow their business capital, and disparities in duty rates which do not support the core aim of the programme to promote fair trade across the sub-region.

The groups also feel aggrieved that they — whose business will be controlled by the new regime — were left out of the negotiation process and only primed to “what will be coming” and “what has started”, and would prefer that some of the rates were renegotiated to reflect domestic market conditions.

President of the Ghana Institute of Freight Forwarders Kwabena Ofosu-Appiah said in an interview: “The issue with the CET is somewhat symptomatic of the problems we have as a country; where once we elect people into places the norm is that they take decisions for us.

“With regard to how we — shippers — affected the negotiation process and duty rates, I will say that the occasion just wasn’t there. We were primes as regards what was going to happen and the fact that it is happening, and the fact that Ghana was among the last league of countries to come on-board the CET.

“But we take solace in the fact that this is not an omnibus hike in duty rate; it is actually a review, so you find some people who are smiling to the bank and quite a large chunk who are going to suffer the immediate fallouts from the bands that have gone to 20 and 35 percent.”

As per the Common External Tariff regime, import duty on specific goods for economic development have gone up to 35 percent; inputs and intermediate products have been reduced to 10 percent; final consumer goods now stand at 20 percent; with basic raw materials pegged at five percent and essential goods zero-rated.

Assuming that the 35 percent duty rate is maintained, the Ghanaian importer will have to pay around 58 percent for the importation of these three items as they are already burdened with Value Added Tax, ECOWAS Levy, EDAIF Levy, Special Import Levy and other service charges including the CCVR Levy, Examination Levy, GcNET Levy, IRS Deposit Levy — all of which add up to 23.9 percent.

Mr. Ofosu-Appiah indicated that the harsh effects of the “unfavourable” and “rushed” arrangement will be hard-felt by traders, and by extension the Ghanaian consumer.

“We are aware that the CET is about positioning the region to take advantage of its potentials in certain items that the sub-region has capacity to produce, but the duration and time that the arrangement is being implemented smacks of a certain unfairness, as it is about managing the incidence of this intervention on the people.

“In this case the importer, and by extension the end-consumer, is the one going to suffer the cost of the abrupt manner in which the system is being implemented, no matter how well-intentioned it is; and that is the reality.”

There are a number of disparities in the duty rate regime which the business community argue could shift the direction of trade from the Port of Tema to neighbouring port countries, most likely Togo and Cote d’Ivoire.

For instance, even though Ghana is charging 35 percent on goods for economic development, Cote d’Ivoire was able to negotiate for 20 percent.

Executive Secretary of the Importers and Exporters Association of Ghana, Samson Asaki Awingobit, was of the opinion that since Ghanaian importers were already paying 20 percent even before arrival of the CET while Cote d’Ivoire was paying 10 percent for these items, negotiators could have maintained Ghana’s previous rate to ensure fairness across the board.

“Are we saying that by charging 20 percent on these items, Cote d’Ivoire doesn’t want to increase its domestic rice and poultry production? Ideally, achieving the targets of the common tariff regime demands a long-term approach rather than short-term,” he stated.

According to him, the Ghanaian importer stands over-burdened — and that could lead to a decline in cargo passing through the country’s ports.

“There is danger ahead for the consumer; importers are already suffering from paying for warehousing and storage of goods as well as transportation, and all these will be passed on to the consumer,” he said.

A necessary evil?

Meanwhile, a senior economist at the West African Monetary Institute (WAMI), Dr. Christopher Ahortor, is patting government on the back for implementing the CET as it will promote industrialisation and protect local industries.

He told B&FT in an interview: “Under the regime, goods that the country has the capacity to produce attracts higher taxes than those that it cannot produce; so in the long run, it will protect local industries by discouraging importation of goods that can be produced locally.

“What will happen is that people who import these items will cry foul because of the high taxes; for such people, they can consider mobilising resources to produce these items locally.”

credit:b&ft