Unlike its neighbors, Ghana and Cote D’Ivoire, Nigerian non-oil exports to the European Union continue to be subject to 5% tarrif rates. This is because the FG has not yet put pen to paper on the Economic Partnership Agreement (EPA).
Basically, the EPA is an agreement seeking free trade between member states of the Economic Community of West African States (ECOWAS) and the EU, allowing the entry of a percentage of imports from Europe into West Africa and vice versa, free of tariffs.
Nigeria has been somewhat at a disadvantaged position since her neighbors have signed the EPA due to the strain on the ECOWAS Trade Liberalisation Scheme (ETLS) as Nigeria is a target for the free movement of goods for many imports moving through the ECOWAS corridor.
Thus, ECOWAS countries can move goods through Nigeria tariff free while Nigeria continues to pay tariffs for its own non-oil exports.
Commenting on the situation, the President of Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs said that non-oil exports to the EU are minimal with raw materials dominating the exports, hence the need for the government to protect growing industries and encourage value-addition.
The EU’s counter-argument is that the Federal Government was protecting firms that were already about 50 years old, adding that such firms were no longer infant industries but ones whose interests could be protected using the safeguard measures created under the EPA.
Director, International and Bilateral Relations, EU, John Clarke said: “The world will not cease to exist with or without the EPA. Nigeria did not need the EPA six years ago as the oil and gas sector was booming. However, Nigeria has a need for the EPA now. Nigeria will face World Trade Organisation (WTO) level tariffs which are higher while neighbouring countries will have comparative advantage over Nigeria”
Whatever the reasons are, the sad situation on ground now remains that Nigeria cannot take full advantage of exports to the EU. The tariffs alone may make exporters balk at actually exporting their goods to the EU. For a country seeking to boost its exports, this could be a worrying development.