ABSTRACT
The ECOWAS Trade Liberalization Scheme (ETLS) has been the tool for ECOWAS to establish a free trade area in West Africa. The scheme that was drawn up in 1979 but began implementation in 1990 has seen some achievements, but it has also seen some challenges. Using the WTO-plus framework as a tool, an assessment is made of the ETLS and its implementation, and explores whether the scheme has succeeded in the creation of a free trade area in the West African sub-region. Some obstacles to the establishment of a free trade area as well as recommendations towards improving the ECOWAS methods of achieving a free trade area in the region are explored by the researcher. Gathering data through interviews and secondary sources like books, journal articles and official documents and reports from ECOWAS, UNIDO, and the EU, the study has been able to assess the ETLS and its implementation and offered a conclusion on whether the performance of the scheme has been good so far. In the end, the conclusion is that, even though the scheme has achieved some heights in its implementation of, amongst others, the MFN Treatment and regional accreditation systems, it has generally failed in the creation of a free trade area. This is because of shortfalls in the implementation of such provisions like the national treatment provisions, transparency mechanisms, competition policies, harmonization models, amongst others.
CHAPTER ONE INTRODUCTION
As the world becomes more globalized, new challenges also arise. Some of these challenges can best be addressed globally, not internally. Global hunger, poverty, global warming and so on are issues that have become the focus of many international organizations. Through bilateral and multilateral agreements and policies, states attempt to solve these problems.
Integration has been a widely recognized and accepted way for states to address some of its problems. “From its lowest to its highest forms, integration has been said to progress through the freeing of the barriers to trade, the liberalization of factor movements, the harmonization of national economic policies and the complete unification of these policies.”1 Integration comes in many forms including free trade areas, customs unions, common markets, complete economic union and a political union.2 For the purposes of this study, the focus will be on free trade area.
There is said to be a free trade area (FTA) when states eliminate all trade restrictions between them, while maintaining their individual freedoms to formulate other trade policies with third countries.3 An example of a free trade agreement is the North American Free Trade Area (NAFTA), made up of the United States of America, Mexico and Canada. A free trade agreement is important because it encourages healthy competition and improves efficiency within the area through member states’ increased specialization in specific production sectors, and also saves resources by ensuring a better allocation of them into the most productive areas.4 There is a free trade scheme within West Africa through its regional economic body, the
Economic Community of West African States (ECOWAS), known as the ECOWAS Trade Liberalization Scheme (ETLS).
ECOWAS was established with the objective of “liberalizing trade among member states through the elimination of tariff and non-tariff barriers and the ultimate achievement of an economic and monetary union, after successfully going through the process of a free trade area, customs union and a common market”.5 Specifically, the aim is to remove tariff and non-tariff barriers to trade within the region; establish a common external tariff (CET) for trade relations with third countries; remove all obstacles to the movement of the factors of production, including people and capital; and harmonize trade policies across its member states to improve trade in the region.6 The creation of the ECOWAS Trade Liberalization Scheme is the policy move to begin the achievement of the objectives of ECOWAS.
West Africa’s trade liberalization policy, “the ECOWAS Trade Liberalization Scheme (ETLS) is the main ECOWAS operational tool for promoting the West African region as a free trade area.”7 It officially started operating in 1990, even though it was formulated in 1979. Fifteen (15) West African states under ECOWAS are signatories to the scheme. The ETLS is meant to create opportunities by creating new markets for goods and services outside the signatory countries; to increase investment opportunities for third countries and corporations; to cheapen trade by removing all customs duties; and to facilitate the movement of goods through customs to make trade faster, while harmonizing technical and sanitary standards.8
The implementation of the scheme is supposed to be conducted in stages. The first stage is the complete liberalization of trade in goods that are not processed, as well as handicraft products.9 The second stage is the gradual liberalization of trade in industrial products and the
third stage is the gradual institution of a Common External Tariff (CET), which would lead to a customs union.10
The scheme has undergone a series of transformations to define exactly what categories of goods should be covered under since 1979.11 According to the Scheme, goods that are covered include “wholly produced goods, i.e., goods that have raw materials which completely originate from the community; goods which do not have raw materials that completely originate from the region but their production requires the use of different materials which are classified under a different tariff sub-heading from that of the product; and finally, goods that are made of raw materials which do not completely originate from the community but their production requires the use of materials which have received a value added of at least 30% of the ex-factory price of the finished goods”.12 Specific products that are covered under the scheme vary from country to country. For instance, in Ghana, Alugan Company’s Glass Louvre Blades are covered under the scheme, Densu Industries’ Dental Antiseptic and so on, are covered under the scheme.
ECOWAS has, in recent years, dedicated its efforts towards a monetary union with the establishment of the ECO, the currency which is intended to be the new common currency for the member states of ECOWAS. There have been summits upon summits to discuss the way forward. The current deadline to meet this goal is the year 2020.13 With just under two years to go, preparations towards the achievement of the goal are being spearheaded by Ghana, Niger and Ivory Coast.14
The main goal of ECOWAS is to create a strong regional economic community to facilitate the trade in goods. The plan to achieve this follows laid-down procedure as established
by ECOWAS. The elimination of tariff and non-tariff barriers is the beginning. This is followed by the creation of a free trade area, a common external tariff (CET) in dealings with states and other bodies outside the regional community and then an economic and monetary union.15
The research problem, then, is whether ECOWAS, through the ETLS, has accomplished its agenda of removing the technical and physical barriers to trade, establishing a free trade area, along with the other objectives, which is supposed to pave way, according to the ECOWAS stated goals, for the establishment of a monetary union.
The research, thus, focuses on assessing how successful the ECOWAS agenda for establishing a free trade area has been by examining the performance of the trade liberalization scheme. The ETLS is the mechanism for implementing a free trade area in the West African sub- region hence, an assessment of the scheme will inform the researcher on how prepared the community is towards establishing a monetary union by the year 2020.
- What progress has the ETLS made in establishing West Africa as a free trade area?
- What are the obstacles to achieving the ETLS goal of establishing a free trade area?
- How can ECOWAS improve upon its methods of achieving a free trade area?
- To assess the performance of the ETLS in establishing West Africa as a free trade area
- To investigate the factors militating against the achievement of a free trade area
- To recommend ways in which ECOWAS can achieve its goal of a free trade area in the sub-region
The research focuses on the implementation of the ECOWAS Trade Liberalization Scheme by ECOWAS regionally and by member states within their individual countries, with a focus on Ghana.
