Economy stutters on free trade agreements –IMANI report

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The country has failed to leverage its trading relationship with key regional blocks – namely the European Union (EU) and ECOWAS – over the past decade, thereby affecting its balance of trade, a report by IMANI Ghana, one of Africa’s leading think-tanks, has shown.

The report, titled ‘Maximising Gains from Ghana’s Trade Partnerships’, shows that compared with neighbouring Ivory Coast, Ghana has for the past eleven years not maximised its gains from doing business with other international trading blocs.

The report indicates that from 2006 Ghana’s exports to the EU grew considerably – from €1.12 billion to peak at €3.48billion in 2012. Since then, the country’s exports have grown negatively to record €2.29billion in 2016.

This trend is similar for imports, as Ghana has also maintained a negative trade balance with the EU, except in 2011 – the same year Ghana started to export crude oil – when it had a trade surplus of €555million.

The report further indicates that Ghana also performed below the West African average. While the average of Ghana’s trade balance with the EU was a deficit of €351million, between 2006 and 2016 West Africa’s average was a deficit of €134million.

However, in the same period (2006-2016), Ivory Coast has maintained a positive trade balance throughout with an average trade Surplus of €1.46billion.

In relation to trade with the United States, quite similar to Ghana’s trade with the EU, Ghana maintained a trade deficit for the entire eleven-year period being considered – though the size of the deficit fluctuated between 2008 and 2012.

In 2015, Ghana exported US$309 million worth of goods to the US and imported $887 million, generating a trade deficit of US$578million.

In contrast, Ivory Coast maintained a trade surplus throughout the eleven-year period. Its average trade surplus was US$806million against Ghana’s average trade deficit of US$557million.

Moving on to the ECOWAS bloc, the case has not been any different. The report shows that exports to the sub-region rose by about 1,170 percent from 2010 to 2011, and miserably plummeted by 70 percent in 2012. Since then, it grew negatively by about 4 percent on average.

The report also highlighted some challenges confronting Ghana in the international markets discussed above.

One of the main challenges, the report says, is Ghana’s inability to conform to Sanitary and Phytosanitary Standards (SPS).

The SPS are measures to protect humans, animals, and plants from diseases, pests, or contaminants.

Another challenge that is faced by the country in trading with its international partners is supply-side challenges, which are categorised into two—productive capacity constraints such as access to credit; and trade-related constraints such as transport infrastructure and trade facilitation.

The report recommended that to address these challenges, a “national SPS strategy and policy must be implemented to streamline, execute and achieve SPS objectives, and ensure that they remain relevant”.

It also adds that there must be continued coordination between the private and public sector in activities to improve SPS measures; work toward establishing demand-driven compliance to quality and safety standards, as well as good agricultural practices domestically.

It further suggests that “government, through the Ghana Standards Authority (GSA), must begin the process of inculcating international standards within the local market. This will enable easy adoption of international standards by new entrants, and will also address fears of potential entrants into the export market”.