Common external tariff: Stakeholders anticipates revolutionised business environment | Independent Newspapers Limited
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Business, Maritime

Common external tariff: Stakeholders anticipates revolutionised business environment

Posted: Apr 24, 2015 at 4:44 am   /   by   /   comments (0)

By Andrew Airahuobhor

 

Stakeholders in Nigeria’s business community are upbeat. Federal Government’s approval for the implementation of the Economic Community of West African States (ECOWAS) Common External Tariff (CET) 2015-2019 is expected to radically change the face of Nigeria’s business climate.

As CET is going to harmonize trade within the African sub-region, duty rates are expected to crash for certain goods, bring down cost of clearing goods in the ports and discourage importers from diverting cargoes to ports of neighbouring countries, thereby drastically reducing rate of smuggling in the country.

However, for Nigeria to maximally benefit from the CET regime, being import dependent nation, it is incumbent on government to promptly address the significant competitiveness issues suffered by Nigerian manufacturers, which include high energy costs, high costs of funds, high regulatory charges, high ports charges, devaluation of the naira and high cost of logistics, amongst a host of other factors.

The Coordinating Minister for the Economy/Minister of Finance, Dr. Ngozi Okonjo Iweala, conveyed Federal Government’s approval for the implementation of CET 2015-2019 to the Nigeria Customs Service for immediate implementation with effect from April 11, 2015.

The adoption of the CET by the Federal Government puts to rest the over one decade of negotiation by members of the Economic Community of West African States (ECOWAS), who have been embroiled in series of controversies, as members fail to agree on a common position.

With a combined population of more than 300 million people, the CET is seen as a forerunner to the attainment of a regional customs union, which will be predicated on the harmonization of fiscal, monetary and trade policies of the 15-nation economic community for the attainment of economic integration.

In January 2006, in Niamey, the Authority of Heads of State and Government of ECOWAS adopted a decision establishing the ECOWAS-CET, which draws on the basic UEMOA CET composed of four tariff bands, or rates of customs duty, namely: 0 percent for Essential Social Goods, five percent for Goods of Primary Necessity, Raw Materials and Specific Inputs, 10 percent for Intermediate Goods and 20 percent for Final Consumption Goods.

Under the CET, five percent duty is applicable for 2,146 tariff lines under the basic raw materials and capital goods category; 10 percent for the 1,373 tariff lines that qualify as intermediate products category; while 20 percent duty is reserved for the 2,165 tariff lines under final consumer products. Some 5,899-tariff lines are covered under the new tariff regime with the rate ranging between zero to 35 per cent for the 130 tariff lines that fall into the category of specific goods that contribute to the promotion of the region’s economic development.

A frontline freight forwarder and former chairman, Tin Can chapter Association of Nigerian Licensed Customs Agents (ANLCA), Kayode Farinto, said, “We don’t expect customs to have revenue target again and we are expecting the rate of duty to crash. The CET will encourage importers who are in the habit of taking their consignment to neighbouring countries to bring it down to Nigeria.”

He said with this CET, many importers will have to come back home because cost of clearing goods at the ports is expected to come down.

Meanwhile, the National Association of Chambers of Commerce, Mines and Agriculture (NACCIMA) has urged the Federal Government to adhere strictly to the provisions of the newly approved Common External Tariff (CET). Acting Director-General of NACCIMA, Janet Omisore, made the appeal in an interview with the News Agency of Nigeria (NAN) in Lagos.

“It is also a call for our government to look into the issue of power and infrastructure, to boost our manufacturing sector, without this, the CET approval may not favour us,” she said.

Omisore said that the government should make deliberate efforts to monitor trade activities with the take-off of CET, urging the government to make deliberate efforts to monitor the activities of other member countries to ensure they complied with the laid down rules and protocols.

“Another area the government and other stakeholders need to be alert to, is ensuring that the products that would be coming from those countries are really manufactured in them and not pre-packaged. This whole idea is for us to make trade relations easier and cheaper for us, so, dubious activities should not be condoned.”

The president of the Abuja Chamber of Commerce and Industry (ACCI), Tony Ejinkeonye, said CET within ECOWAS region is an important tool which will discourage smuggling and promote regional trade. He however raised concerns that the CET alone will not completely eliminate disparity in price.

He said fear by the Nigerian stakeholders is not farfetched, especially given that the country’s expected transformation is hinged around agriculture and increased focus on local production.

But president of the National Association of Nigerian Traders (NANTS), Ken Ukaoha, who is also a trade policy expert, said the CET would be devastating for Nigerian industries in various dimensions, including further drop in capacity utilisation which presently is very low; dismantling of manufacturing base and setback to Nigerian export efforts, loss of jobs and increase in unemployment.

He said the failure of manufacturing companies would result in their inability to meet their debt  obligations to banks and other lending institutions.

Sir Patrick Osita Chukwu, coordinator of Save Nigeria Freight Forwarders, said CET is long overdue for its implementation, “but we only hope and wish our customs will comply with the convention. We have been clamouring for the ECOWAS CET to take off ever since, but in my own opinion I don’t think the Nigeria Customs will allow it to thrive rather they will frustrate the effort of all other nations within the region just for the sake of revenue collection.”