16 ECOWAS Countries Begin Uniform Tariff Regime For Imports

SIXTEEN countries within the Economic Community of West African States (ECOWAS) may have started the implementation of uniform tariff on imports, beginning from yesterday.

The tariff, set at 35 percent at most, will modify the rights and obligations of ECOWAS member countries under the Common External Tariff (CET) In Nigeria, government has directed immediate enforcement of the new tariff regime which put duty payable on imported items at 0 per cent for social and necessary items, 5 percent for raw materials, 10 per cent for intermediate goods, and 20 per cent for finished goods that are not produced locally.

Nigeria was granted the possibility of adding a fifth band of 35 per cent for finished goods manufactured locally under the new dispensation that is expected to be reviewed in 2019.

The directive to implement the regional tariff regime in Nigeria was conveyed to the Customs high command yesterday by the coordinating minister of the Economy and Minister of Finance, Dr Okonjo Iweala.

The Customs spokesman, Wale Adeniyi, said yesterday that it was now mandatory for all stakeholders to fall in line with the new tariff regime, saying it would enhance trade facilitation within and outside the region.

The implementation of the ECOWAS CET (2015-2019) together with its Supplementary Protection Measures (SPM) and 2015 Fiscal Policy Measures are being implemented concurrently and took effect from yesterday, after the expiration of the 30 days notice required under the provisions of the ECOWAS Common External Tariff (CET).

By this development, all imports arriving into the country shall be subjected to the rates contained in the CET 2015- 2019 and 2015 Fiscal Measures without recourse to the rates applicable before the coming into effect of the ECOWAS CET 2015 ­ 2019.

The approved Supplementary Protection Measures (SPM)/Fiscal Policy Measures an Import Adjustment Tax (IAT) list, which involves additional taxes on 177 Tariff Lines of the ECOWAS CET, a National List consisting of items whose Import duty rates have been reviewed to encourage more development in strategic sectors of the economy, an Import Prohibition List (Trade) and applicable only to certain goods originating from non-ECOWAS Countries.

This may create a contradiction between the World Trade Organisation (WTO) commitments of individual countries and the requirements of the regional trade integration project essential for West Africa’s economic development.

Following the adoption of the CET, Nigeria’s simple average tariff on agricultural imports dropped from about 32 per cent in 2000 to 15 per cent in 2010, while its tariff on manufactured products fell from 25 per cent in 2000 to 11 per cent in 2010.5 Nigeria accounts for more than half of the sub-region’s imports.

In nominal terms, its total imports increased from USD 6 billion in 1990 to USD 64 billion in 2011, while ECOWAS’s total imports rose from USD 14 billion in 1990 to USD 111 billion in 2011 according to United Nations Conference of Trade and Development (UNCTAD).

In terms of import composition, Nigeria accounted for 40 per cent of ECOWAS’s agricultural imports in 2009 and 79 per cent in 2011, while its industrial imports represented 79 per cent and 65 per cent of those of ECOWAS in 2009 and 2011, respectively.

Following the adoption of the CET, Nigeria’s simple average tariff on agricultural imports dropped from about 32 per cent in 2000 to 15 per cent in 2010, while its tariff on manufactured products fell from 25 per cent in 2000 to 11 per cent in 2010. Nigeria accounts for more than half of the sub-region’s imports. In nominal terms, its total imports increased from USD 6 billion in 1990 to USD 64 billion in 2011, while ECOWAS’s total imports rose from USD 14 billion in 1990 to USD 111 billion in 2011 according to United Nations Conference of Trade and Development (UNCTAD)

These data confirms the huge trade impact of Nigeria on the sub-region and explains its late and reluctant acceptance of the ECOWAS CET.

The CET is said to be incompatible with the individual commitments with WTO. WTO data clearly shows that the application of the ECOWAS common external tariff – both for agriculture and industry – would be a problem with regard to respecting the individual commitments undertaken by the group’s members at the multilateral level.

All West African countries have lower applied agricultural tariffs than those they have bound at the WTO. Nigeria, for instance, has bound its tariff for agricultural products at 150 percent, while its applied tariff is only 33.6 percent The common external tariff is a mild form of economic union but may lead to further types of economic integration.

In addition to having the same customs duties, the countries may have other common trade policies, such as having the same quotas, preferences or other non-tariff trade regulations apply to all goods entering the area, regardless of which country, within the area, they are entering.