Benefits of iEPA

Compete Ghana - Benefits of iEPA

How does iEPA benefit Ghana as a Country?

The tariff cutting process for Ghanaian exporter to the EU started in 2016, opening up for Ghanaian exporters to the EU. By 2029 Ghana will have progressively reduced its tariffs to zero for 80% of its tariff lines from the EU. In the future, the EU and Ghana might decide to expand the iEPA to include, for example, provisions on investment and trade in services. 

The iEPA provides the following benefits to Ghana:

  • The Agreement secures continuity for the significant EU Market where Ghana exports about 40% of its total
    annual exports.
  • It ensures there are safeguards against shocks and disruptions to Ghana's national economy as a result of unfair business practices such as dumping of cheap goods by EU businesses;
  • The Agreement provides support to compensate for possible revenue loses as a result of Ghana removing tariffs
    on 80 % of goods imported from EU;
  • The trade-related cooperation under the iEPA will facilitate reforms of the fiscal revenue system, improve the business environment and promote the upgrading of the productive sectors in Ghana;
  • The Agreement will create a stable and more predictable trade flow that will improve the investment climate in Ghana and offer opportunities for increased investments in the export sector.
  • Finally, the iEPA will enable the businesses to enhance their exports, increase their production base, thereby
    generating more jobs in the Ghanaian economy

The impact of the EU-Ghana iEPA on Ghana​

Enhancing the competitiveness of Ghana industries:

The iEPA will benefit manufacturing firms in Ghana and exporters, by reducing significantly the cost of imported inputs and capital equipment and improve market access to the EU. In addition, it will benefit ordinary Ghanaian households, particularly low-income category, by reducing the costs of many households' consumption items.
The expiration of EU market access under the Cotonou regime and its non-replacement with the Ghana-EU Interim iEPA would have automatically reverted Ghana to the much less favourable Generalized System of Preferences (GSP) regime. This means that two thirds of the non-traditional export would have attracted import duties on them. Without the iEPA, about two-thirds of Ghana's non-traditional exports would have faced very high tariffs with the potential to suffocate Ghana's fast-growing non-traditional exports (NTEs).
If local industries are assisted with adequate means to improve their productivity, their competitiveness would be enhanced and this would lead to significant increases in employment and incomes for the Ghanaian workforce.

Impacting on Trade Development:

The openness to international trade and trade facilitation through the EU-Ghana iEPA will nurture faster economic growth in Ghana. The EU Non-traditional exports correspond to an emerging sector in the Ghanaian economy with great potential for growth. The EU is the number one market for Ghana export consignments and a significant market destination for many of the top non-traditional products. these products include processed cocoa (cocoa paste, butter, and powder), processed fish and seafood, pineapples, bananas, yams, mangoes, cashew nuts, fruit juice and natural rubber. A vibrant economy anchored on a dynamic export base that is competitive in global markets will generate sustainable sources of revenue to Ghana.

Creating a sustainable platform for trade:

The asymmetric and gradual opening of 80% of Ghana's market to EU goods under the iEPA, taking full account of the differences in levels of development between Ghana and EU and provides an innovative, strong and sustainable platform for introducing and managing changes over many years while still protecting sensitive or growing/emerging industries. It encourages processed exports with simpler and improved “Rules of Origin” than the complex General System of Preferences (GSP) and others. The processing industries that will be able to develop under the iEPA umbrella are those that are needed for the diversification of the manufacturing base, economic growth and sustained socioeconomic development.

What can Ghanaian businesses expect from the iEPA?

The iEPA provides considerable benefits to Ghana by giving it immediate duty-free, quota-free access into the EU goods market. This should benefit Ghanaian producers by improving incomes, and provide market access to exporters.

The iEPA seeks to reinforce and secure a more competitive trading relationship between the two counterparts. Without the iEPA, about two-thirds of Ghana’s non-traditional exports would have continued to face high tariffs withthe potential to suffocate Ghana’s fast-growing non-traditional higher value-added exports (NTEs).

The opportunities created by the iEPA for EU and Ghanaian exporters and businesses include

  1. Market Access: Free access to the EU market for all products made in Ghana. Since December 2016, the majority of all imports from Ghana to the EU have enjoyed duty-free quota-free access to the EU market. In addition, European consumers have easier access to products from small-scale, family-run businesses in Ghana. Since the signing of the iEPA at the end of 2016, Ghana exports to the EU almost doubled between 2016 and 2019, increasing from 1.19 billion Euros in 2016 to 2.27 billion Euros in 2019.

2. Supply chain opportunities: flexible rules of origin and cumulation (with ACP countries that have signed an EPA) allow import of better quality and more innovative inputs and give firms more choice when organising their supply chain while still benefitting from duty free access to the EU market. 

4. Greater integration of value chains: enhanced integration of value chains within the subregion will offer opportunities to increase cross border trade between Ghana and neighbouring countries. This is applicable in light of the African Continental Free Trade Agreement (AfCFTA)

4. Platform for dialogue and cooperation: the iEPA provides a platform to discuss reform and find solutions to trade and investment.

5. Cheaper inputs to Ghanaian production: the elimination of tariffs on intermediary goods and machinery from the EU will result in cheaper inputs for Ghanaian products. In addition, the agreement allows locally manufactured goods in Ghana to become more competitive on the export markets.