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THE INTERIM GHANA- UK TRADE PARTNERSHIP AGREEMENT

By
Professor Paul Kuruk
Chief Negotiator
Deputy Chairman, Ghana International Trade Commission (GITC)


On 2 March 2021, the Interim Trade Partnership Agreement between the Republic of Ghana and the United Kingdom of Great Britain and Northern Ireland (UK) was signed by the two countries. This brief describes the background and key elements of the new trade agreement.

I. BACKGROUND

Previously, trade between Ghana and the UK had been conducted within the framework of the Interim Economic Partnership Agreement between Ghana and the European Union (Ghana-EU iEPA) since the UK was a member of the EU. However, with the contemplated exit of the UK from the EU on 31 December 2020, there was the need for a new agreement to be entered into between Ghana and the UK, in order to avoid trade disruptions between the two countries after 31 December 2020.

In this regard, in March 2018 Ghana and the UK initiated negotiations on a post Brexit Ghana – UK Trade Agreement. It is to be noted that after several rounds of negotiations, the Ghana and the UK negotiating teams were unable to come to a consensus on a number of substantive issues.

The fundamental point of divergence between the two negotiating teams was that whilst the UK sought to roll over and replicate the provisions of the Ghana – EU iEPA, Ghana was in favour of using the text of a Regional Economic Partnership Agreement (EPA) which had been signed between ECOWAS and the EU in 2014 as the foundation for a new Ghana – UK Trade Agreement.

The position of Ghana was based on the fact that the Ghana-EU iEPA in its current form is inconsistent with the requirements of the ECOWAS Customs Union and violates material provisions of the ECOWAS Customs Union Protocols, hence is not acceptable to ECOWAS.

In addition, Ghana was of the view that, since both Ghana and the UK (as a member of the EU prior to 31 December 2020) have both signed the Regional EPA between ECOWAS and the EU, the Regional EPA text would be better aligned to the requirements of the ECOWAS Customs Union Protocols.

After a series of high level political engagement between Ghana and the UK, it was agreed to use the Regional EPA as the foundation text for a new Ghana – UK Trade Agreement rather than using the Ghana-EU iEPA as originally demanded by the UK.

Against this background, on the 31 December 2020, Ghana and the UK issued a Joint Ministerial Statement announcing that Ghana and the UK had agreed on the main elements of a new Ghana – UK Trade Agreement and needed time to finalize the text of the new agreement.

Negotiations between the two sides continued apace and were concluded on 4 February 2021. Following the signing of the new Agreement on 2 March 2021, it has been provisionally applied by both countries since 5 March 2021 pending its ratification by the Parliament of Ghana.

II. KEY ELEMENTS OF THE GHANA-UK TRADE AGREEMENT

1. Objectives: The objectives of the Agreement are:
(a) to establish a legal framework for an economic and trade partnership between Ghana and the UK which contributes to sustained economic growth;
(b) to build the foundation for negotiating a free trade agreement between the UK and the Economic Community of West African States which promotes regional integration, economic cooperation and good economic governance in the West African region and increases intra-regional trade;
(c) to contribute to the harmonious and progressive integration of Ghana into the world economy; and
(d) to strengthen economic and trade relations between Ghana and the UK taking account of the significant difference in competitiveness between the two countries.

2. Tariff Liberalisation: Ghana and the UK have agreed to eliminate custom duties on imports as follows:
(i) Obligations of the UK: Products originating in Ghana would be imported into the UK free of customs duties, except in the case of the products indicated in Annex B of the Agreement.
(ii) Obligations of Ghana: Ghana has undertaken to progressively reduce and eliminate customs duties applicable to products originating in the UK. Ghana’s liberalization schedule comprises four groups of products:
(a) for the Group A, the liberalisation will start in 2021 to be completed in 2029.
(b) for the Group B, which includes mainly raw material and equipment for existing and infant industries, the liberalisation will start in 2024 to be completed in 2029.
(c) for the Group C, which includes goods with a high fiscal revenue value, the liberalisation will start in 2024 to be completed in 2029.
(d) the products of Group D will be excluded from the scope of liberalisation. Sensitive products in this category relate to livelihoods, food security, rural development particularly in agriculture and agri-processing as well as infant industries products, high-revenue goods to mitigate the potential net fiscal impact and luxury goods.

The market access provisions of the Agreement effectively guarantee duty free-quota free access to the UK market for products made in Ghana and preferential access to the Ghanaian market for 80% of UK exports.

3. Development Cooperation and Financial Adjustment: The UK has committed to cooperate through financial and non-financial forms to support Ghana. It has undertaken to support, through its development policies and instruments, development cooperation activities for regional economic cooperation and integration and for the implementation of the Agreement. The UK has agreed to provide funding with a view to ensuring a simple, efficient and quick implementation of the Agreement.

4. Exemptions in relation to Customs Duties and Other Charges: The Agreement excludes from the definition of customs duties, certain taxes or other internal charges; anti-dumping, countervailing or safeguard measures; and fees or other charges imposed in accordance with the Agreement on fees and other charges. In this context, the Agreement permits destination inspection fees to be charged by inspection companies in Ghana for services rendered. It also permits the Export Development and Investment Fund (EDIF) levy to be imposed in Ghana on all imports at the rate of 0.5 % CIF with the objective of generating funds to stimulate the export sector and support trade in general.

5. Agriculture, Fisheries and Food Security: The Agreement underscores the importance that the UK attaches to development of the agriculture and fisheries sectors in Ghana. The Agreement further recognizes that the UK considers that raising the means of subsistence in the rural environment is essential for reducing poverty. In relation to subsidies, the UK has undertaken to ensure transparency in its domestic support policies and measures. It has also agreed to exchange information concerning any agricultural policy measure at the request of Ghana.

6. Rules of Origin: The rules of origin applicable to the Agreement are set out in Protocol No. 1 defining the concept of 'originating products' and the methods of administrative cooperation.

7. Most Favoured Nation Clause: The UK has agreed to provide to Ghana any more favourable tariff treatment that it grants to a third Party if the UK becomes party to a preferential agreement with the third Party in question after the signing of Agreement. On its part, Ghana would grant the UK any more favourable tariff that it grants to a major trading partner as defined in the Agreement.

8. Trade Defence Measures: The main trade defence measures are anti-dumping and countervailing duties, multilateral safeguard measures, bilateral safeguard measures and certain measures applicable to infant industries.

9. Export Duties and Taxes: The Agreement prohibits the introduction of new duties or taxes on exports or charges with equivalent effect or increases in existing export duties applied in trade between Ghana and the UK from the date of entry into force of the Agreement.

10. Regional Integration: Ghana and the UK have agreed that regional integration is an essential part of their partnership and a powerful tool for achieving the objectives of the Agreement and have agreed to give it their strong support. To this end, the UK has agreed to facilitate progress of customs reforms within the West Africa region, particularly within the context of the ECOWAS customs union.

11. Standstill Clause: A standstill clause prohibits the introduction of new customs duties or increases in existing custom duties, on products covered by the liberalisation between the Parties from the date of entry into force of the Agreement.

12. Quantitative Restrictions: All prohibitions or restrictions on imports or exports are required to be eliminated, with the exception of the customs duties and taxes and the fees and other charges as specified in the Agreement, irrespective of whether they are implemented through quotas, import or export licensing or other measures. The Agreement also prohibits the introduction of new measures.

13. Technical Barriers to Trade, Sanitary and Phytosanitary Measures: Chapter 3 of the Agreement deals with technical barriers to trade, sanitary and phyto-sanitary measures and contains provisions regarding cooperation, transparency of trade conditions and exchange of information.

14. Dispute Settlement: The dispute settlement procedures in the Agreement would apply to any dispute regarding the interpretation or application of the Agreement with the exception of matters concerning anti-dumping and countervailing duties, multilateral safeguard measures and the financing of development cooperation.

15. Institutional Arrangements: A Trade Partnership Committee has been established within the framework of the Agreement with responsibility for the administration of the fields covered in the Agreement.

16. Ratification and Entry into force: The Agreement is required to be ratified or approved by Ghana and the UK in accordance with their respective constitutional rules and procedures. The Agreement would enter into force following the date on which Ghana and the UK have notified each other of the completion of the procedures. Pending the entry into force of the Agreement, Ghana and the UK may agree, by notification, to provisionally apply the Agreement, in whole or in part.

17. Duration: Either Party may give written notice to the other of its intention to terminate the Agreement and the termination shall take effect six (6) months after notification to the other Party.

III. THE PATTERN OF GHANA-UK TRADE

The Ghana-UK Trade Partnership Agreement creates a free trade area between Ghana and the UK which have a combined population of over 100 million people. The current Ghana-UK trade is valued in excess of $1.1 billion.

The value of Ghana’s exports to the UK in 2019 was US$415.12 Million, according to the United Nations COMTRADE database on international trade. The top 10 categories of exports were (i) mineral fuels, oils, distillation products; (ii) meat, fish and seafood preparations; (iii) cocoa and cocoa preparations; (iv) edible fruits, nuts, peel of citrus fruit, melons; (v) edible vegetables and certain roots and tubers; (vi) wood and articles of wood, wood charcoal; (vii) cereal, flour, starch, milk-preparations and products; (viii) machinery, nuclear reactors, boilers; (ix) optical, photo, technical, medical apparatus; and (x) animal, vegetable fats and oils, cleavage products.

During the same period, the value of Ghana’s imports from UK was US$685.55 Million. The top 10 categories of imports were: (i) wood and articles of wood, wood charcoal; (ii) machinery, nuclear reactors, boilers; (iii) articles of iron or steel; (iv) plastics; (v) vehicles other than railway, tramway; (vi) electrical, electrical equipment; (vii) other made textile articles, sets, worn clothing; (viii) ceramic products; (ix) printed books, newspapers, pictures; and (x) beverages, spirits and vinegar.

IV. BENEFITS OF THE GHANA-UK TRADE AGREEMENT

The Ghana-UK Trade Partnership Agreement will promote the following:
1. Tariff Liberalization: the new agreement will ensure trade continuity on preferential terms between Ghana and the UK. In particular, Ghana will have duty free-quota free access to the UK market for Ghanaian products and will avoid the imposition of tariffs on specific goods imported from Ghana into the UK.

2. Export Development: The duty free-quota free access to the UK market for products made in Ghana will be crucial for developing Ghana’s export potential and export diversification. The non-traditional exports which will benefit from the Agreement include horticultural products, processed cocoa, processed fish, pineapples and bananas. The non-traditional export sector is an important emerging sector in the Ghanaian economy with great potential for growth and expansion. Non-traditional exports to the UK alone constitute about 35 percent of the total exports to the entire European Union for the past 10 years.

3. Competitiveness of Local Industries: The removal of tariffs on intermediary goods and machinery from the UK (such as fertilizer, chemicals, and machinery) would mean cheaper inputs for Ghanaian businesses. It would also make locally produced goods more competitive and support industrial development in Ghana and the country’s integration into global value chains.

4. Protection of Sensitive Industries: To protect certain sensitive industries and to raise revenues, the Agreement excludes from Ghana’s tariff liberalisation commitments, import duties for a number of agricultural and non-agricultural processed goods including: frozen poultry, worn clothing, sugar, margarine, frozen beef, food preparations, animal feed, non-alcoholic beverages, frozen mackerel, frozen tuna, ceramics, and cement.

5. Trade Remedies: Additional methods of protection are provided in the Agreement through the use of safeguard measures to block a sudden increase in imports if need and taking measures to protect food security.

6. Development Cooperation and Financial Support: Development cooperation and financial adjustment support under the Agreement would facilitate reforms of the fiscal revenue system, improve the business environment and promote the upgrading of the productive sectors in Ghana.