Question

Write a three page paper on the Economic Community of West African State ( ECOWAS) trade agreement

Answer 1

ECOWAS – An Introduction

The Economic Community of West African States, also known as ECOWAS, is a regional economic union of 15 countries (Benin, Burkina Faso, Cabo Verde, Cote d Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo). Collectively, these countries comprise an area of 5,114,162 square kilometer and in 2015 had an estimated population of over 349 million.

The union was established on 28 May 1975 with the signing of the Treaty of Lagos, with its stated mission to promote economic integration across the region. A revised version of the treaty was agreed and signed on 24 July 1993 in Cotonou. Considered one of the pillar regional blocs of the continent-wide African Economic Community (AEC), the stated goal of ECOWAS is to achieve "collective self-sufficiency" for its member states by creating a single large trade bloc by building a full economic and trading union. Trade and market integration are at the heart of ECOWAS’ aims and objectives. Article (3) of the Revised Treaty of ECOWAS stipulates the removal of trade barriers and harmonization of trade policies for the establishment of a Free Trade Area, a Customs Union, a Common Market and an eventual culmination in to a Monetary and Economic Union in West Africa.

ECOWAS serves as a peacekeeping force in the region, with member states occasionally sending joint military forces to intervene in the bloc's member countries at times of political instability and unrest. In recent years these included interventions in Ivory Coast in 2003, Liberia in 2003, Guinea-Bissau in 2012, Mali in 2013, and Gambia in 2017.

Impact of ECOWAS

Trade in the Community is evolutionary. There was a time when old trading links were still being relied on to sustain business exchanges in the area. ECOWAS, since its inception has had a trade policy designed to increase intra-regional commerce, raise trade volume and generally galvanize the economic activities within the region in such a way as to positively impact on the economic well-being of ECOWAS citizens.

The ECOWAS trade policy is also meant to foster the smooth integration of the region into the world economy with due regard for the political choices and development priorities of states in the desire to cause sustainable development and reduction of poverty.

The total trade of the region has averaged $208.1 billion. Exports are projected at approximately $137.3 billion while imports total about $80.4 billion. The main active countries in trade are Nigeria, which alone accounts for approximately 76 percent of total trade followed by Ghana (9.2 percent) and Cote d Ivoire (8.64 percent). The trade surplus of the region, estimated at about $47.3 billion is attributable to Nigeria ($58.4 billion) and Cote d’Ivoire ($3.4 billion) when all other Countries have a deficit in the trade balance.

A main feature of the Community trade policy is ECOWAS Trade Liberalisation Programme. The objective of the programme is to progressively establish a Customs Union among the Member States of the Community over a period of fifteen years, starting from 1 January, 1990, the date of entry into force of the Scheme. The Customs Union will among others involve the total elimination of customs duties and taxes of equivalent effect.

The ECOWAS trade liberalization programme involves three groups of products viz. unprocessed goods, traditional handicraft products, industrial products.

The programme is meant to give several advantages to member States and their citizens as they trade among themselves. An example is given here: One of the advantages accruing to unprocessed goods imported from a member state is total exemption from import duties and taxes, free movement without any quantitative restriction as well as non-payment of compensation for loss of revenue as a result of their importation. Provided that unprocessed products among other conditions, originate from member states of the Community and must appear on the list of products annexed to the decisions liberalizing trade in these products.

There are also conditions which apply to the other categories of traditional handcraft and industrial products. In effect, this also means that the Member States shall not impose new duties and taxes of equivalent effect or increase existing ones. The rates of these duties and taxes which serve as the starting point for the elimination of tariffs are listed in the ECOWAS Customs Tariff for each member state. It is a rule binding on states that there shall be no creation of non-tariff barriers and those in existence shall not be increased.

In taking the community’s economy to the next level, trade facilitation cannot be over emphasized. It is a critical aspect of trade. It also involves private sector promotion. The establishment of ECOWAS Common Investment Market and the Development of Common Investment Code and Policy are welcome compliments. The same goes for the ECOBIZ World Market Information System which led to a positive increase in the activities of the Investment Promotion Agencies of West Africa (IPAWAS). E-commerce is being promoted in the region with a platform already developed by ECOBIZ. Relating to trade capacity building, an Inter-Institutional Committee under the ECOWAS Trade Negotiation Capacity Building project (TNCB) has now been established.

All of these have created a situation where the Common External Tariff (CET) which took off in January 2015 now has a real opportunity to give a boost to the economies of West Africa while allowing citizens of the area to have a real chance of enjoying the benefits of a trade.

With the CET, member countries will be paying a uniform tariff at all borders in the sub-region. It is one of the landmarks of ECOWAS. Through CET, citizens of West Africa will have a real chance of enjoying the benefits of a trade boost. With this development, an improvement of the implementation of the ECOWAS Trade Liberalization Scheme (ETLS) can now also be safely expected. The CET is an important milestone on the road to the creation of a customs union for West Africa.

ECOWAS – United States Trade Relation

In September 2016, United States Trade Representative hosted ECOWAS officials for the second meeting of the United States-ECOWAS Trade and Investment Framework Agreement Council. Among the topics discussed were a review of current activities in support of shared trade and investment objectives, a vision for the ECOWAS–United States trade relationship in the medium to long-term, and broadening ECOWAS– United States trade and investment cooperation to new areas.

The United States had a $14.1 billion in total (two ways) goods trade with ECOWAS countries during 2017. Goods exports totaled $4.8 billion; goods imports totaled $9.3 billion. The United States goods trade deficit with ECOWAS countries was $4.5 billion in 2017.

United States goods exports to ECOWAS countries in 2017 were $4.8 billion, up 15.0% ($631 million) from 2016. The top 5 United States export markets in the ECOWAS countries for 2017 were: Nigeria ($2.2 billion), Ghana ($860 million), Togo ($482 million), Cote d Ivoire ($320 million), and Benin ($250 million). The top export categories in 2017 were: vehicles and parts ($983 million), mineral fuels ($939 million), machinery ($606 million), cereals ($527 million) and plastics ($287 million).

United States goods imports from ECOWAS countries in 2017 were $9.3 billion, up 58.6% ($3.4 billion) from 2016.

The top 5 United States import suppliers from the ECOWAS countries for 2017 were: Nigeria ($7.1 billion), Cote d Ivoire ($1.2 billion), Ghana ($750 million), Liberia ($91 million), and Senegal ($72 million).

The top import categories in 2017 were: mineral fuels ($7.5 billion), cocoa and cocoa products ($1.2 billion), rubber ($160 million), edible fruit & nuts ($88 million), and artificial flowers, feather or down articles ($57 million).

The United States goods trade deficit with ECOWAS countries was $1.7 billion in 2016 and $4.5 billion in 2017. The United States goods trade deficit with ECOWAS countries increased by 169% in 2017 compared to 2016.