The Nigerian Office for Trade Negotiations says Nigeria is almost ready to sign the African Continental Free Trade Area Agreement. But this flies in the face of the stiff opposition of the Organised Private Sector (OPS), particularly manufacturers, against the deal. The OPS is worried by what it calls the absence of a study to determine the impact, benefit and downside of the agreement, among others. Assistant Editor CHIKODI OKEREOCHA writes.
His expertise in trade policy and negotiations is widely acclaimed. Prior to his appointment as Director General/Chief Negotiator, Nigerian Office for Trade Negotiations (NOTN), Ambassador Chiedu Osakwe was Trade Adviser at the Ministry of Industry, Trade and Investment, where he provided technical advice on trade policy and structural reforms to the Federal Government.
He was also a diplomat in the Ministry of Foreign Affairs, during which he served at the Permanent Missions of Nigeria to the United Nations (UN) and other international organisations in New York and Geneva.
Educated at the University of Ibadan (Nigeria), Oxford (United Kingdom) and New York University, from where he obtained his PhD, Osakwe is also an Adjunct Professor on a leave of absence from the International University in Geneva on International Trade Policy, Diplomacy and Negotiations.
With such intimidating resume and wealth of experience, Osakwe’s charge at NOTN, where he is expected to coordinate the formulation of a cohesive negotiating strategy for Nigeria especially in the controversial African Continental Free Trade Area (AfCFTA) agreement, ordinarily, should be easy.
But it is doubtful if his efforts at NOTN to harvest interests and concerns of various stakeholders and actors on trade and turn them into technical positions and national agenda at the negotiation tables are enjoying a smooth sail.
Already, there are indications that NOTN, which was established by the Federal Government in May, last year, as the standing negotiating body for Nigeria, may not be on the same page with members of the Organised Private Sector (OPS) especially the Manufacturers Association of Nigeria (MAN) with regards to Nigeria joining the AfCFTA.
The Nation learnt that convincing the OPS to endorse the controversial trade liberalisation deal appears to have remained a hard nut to crack for the renowned international diplomat. The deal may have become a hard sale to the OPS.
AfCFTA, as adopted by the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU) in Addis Ababa, Ethiopia, in January 2012, was designed to create a continental trade bloc of 1.2 billion Africans, with a combined Gross Domestic Product (GDP) of about $3 trillion.
The agreement was seen as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade, which was about 17 per cent, by more than 52 per cent, worth about $35 billion yearly.
AfCFTA commits African countries to phasing out tariffs on 90 per cent of goods, with 10 per cent of “sensitive items” to be phased out incrementally. It will also liberalise trade in services, while also signaling a step towards building strong regional value chains.
Forty four out of 55 African leaders ratified the AfCFTA at an Extra-ordinary Summit of the AU Assembly in Kigali, Rwanda, on March 21. Nine other AU members, including Nigeria and South Africa delayed accent to the treaty.
President Muhammadu Buhari was earlier scheduled to travel to Kigali to ratify the trade deal, which is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994. But he backtracked on the opposition of the OPS who said they were not consulted.
Specifically, the OPS decried poor preparations, lack of consultations, and non-inclusion of inputs by key stakeholders as regards market access and enforcement of rules of origin as major reasons why signing the agreement will jeopardise the nation’s economy.
Consequently, the president, on March 27, set up a committee to review the CFTA framework agreement. The committee has since swung into action to strengthen its consultations with critical stakeholders and determine how various sectors of the economy will benefit from the proposed agreement.
The committee is said to have explained to the various stakeholders the contents of the 250-page document, which some of them did not read. It has also been working assiduously to allay the fears of the private sector, specifically on issues dealing with the particular tariff lines that shall be liberalised.
“What we are doing is to establish a technical working group on goods market access, consisting MAN, Ministry of Finance, National Bureau of Statistics, NACCIMA. We asked MAN to give us the list of products they would like to see in the 10 per cent. They have sent since last May 11.
“In other words, everything MAN asked to be included in the exclusive and sensitive list (10 per cent not for liberalisation) has been done,” Osakwe told reporters, in Abuja.
Manufacturers fault NOTN, renew opposition
However, with regards to its ongoing consultation with critical stakeholders particularly manufacturers, NOTN, which is the institutional framework and foundation for Nigeria’s trade policy infrastructure, appears not to be on the same page with the OPS.
Indications to this emerged at last month’s 51th Annual General Meeting (AGM) of the Ikeja branch of MAN. At the AGM, which held in Lagos with the theme: “African continental free trade agreement: Impact on the Nigerian manufacturing sector.”
At the AGM, Jacobs emphasised that as a concept and in principle, MAN was not against the AfCFTA, reiterating that the association’s original contention was that the NOTN did not undertake adequate consultation with relevant stakeholders.
The MAN president said although, that is being done now, “We still have the big issue of the absence of a country specific study to determine the possible impact, benefit and downside of the Agreement on the Nigerian economy in general and the manufacturing sector in particular.”
Continuing, Jacobs charged: “We hasten to observe that the NOTN version of the outcomes of the stakeholders’ engagement and sensitisation, as reported in the news media, does not adequately reflect the overall proceedings and factual expressions at those meetings.”
He, therefore, said MAN was worried that “This could be misleading and, more importantly, may not put Nigeria in good stead and could inexorably put the nation in a disadvantaged position under the AfCFTA.”
Jacobs in his address at the AGM held on Thursday, July 19, assured that MAN will continue to engage the NOTN and the Federal Government to ensure that the concerns of manufacturers are addressed. “We are adequately represented at the negotiations that may ensure, if and when Nigeria decides to sign on to the AfCFTA,” he said.
He described the theme of the AGM as “Quite apt,” considering the level of high inventory and unemployment in the country and the efforts of real sector operators to reposition themselves in the post-recession era.
Recall that a groundswell of opposition by MAN and other OPS members, such as Nigeria Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMMA), labour movement, particularly the Nigeria Labour Congress (NLC) had trailed the AfCFTA.
Manufacturers have been the most vociferous in the campaign, which has now gained momentum, with Jacobs expressing worries that the agreement will open the floodgate for the influx of the European Union (EU) and other foreign goods into the local market and turn the country into a dumping ground.
According to him, the Rules of Origin (ROO) in the AfCFTA cannot be adequately enforced to guard against the influx of goods into the Nigerian market.
The ROO are used to determine the country of origin of a product for the purpose of international trade. But, Jacobs fears that the ROO cannot be adequately enforced because goods from the EU can find their way into one of the African countries that have bilateral agreement with the EU.
He also said the agreement’s market access was a concern to manufacturers as it leaves low protection to locally produced goods. “The agreement says that 90 per cent of the tariff plan would be liberalised, leaving only 10 per cent to protect manufacturers. That 10 per cent is too low,” Jacobs said.
The alleged lack of inputs of critical stakeholders in the proposed agreement also did not go down well with the OPS. They argued that ordinarily, proponents of the trade document ought to have consulted all relevant stakeholders because of its likely implication on the economy.
While the OPS noted that intra-African trade could bring economic benefits to member states, they insisted that there should be broad consultations and participations in the AfCFTA negotiations. This, according to them, was necessary to avoid “pitfalls of past trade agreements, which turned to be more devastating and negative.”
These were some of the concerns that forced down the hand of President Buhari to boycott the Extra-ordinary Summit of the AU Assembly in Kigali, Rwanda, on March 21, where 44 out of 55 African leaders ratified the AfCFTA.
However, both the committee to review the CFTA framework agreement, and the NOTN to undertake consultations with critical stakeholders, appear not to have been able to convince the OPS on the benefits accruing from the agreement to the economy generally and the manufacturing sector in particular.
The OPS has kicked its heels in, insisting that the NOTN undertake a wider stakeholders’ consultation for a holistic analysis of the impacts of AfCFTA to the Nigerian economy, and to do specific study to determine the possible impacts of the trade liberalisation deal to the economy and the manufacturing sector.
The Nation, however, learnt that beyond the fears expressed by real sector operators, is the more critical issue of lack of infrastructure. The dearth of supportive infrastructure is said to have put fears of competitive disadvantage in the minds of Nigerian manufacturers against their counterparts from other African countries.
At the core of the infrastructure deficit that has put fear in manufacturers is the lack of steady and reliable electricity supply, which is a key factor in the cost of doing business. “We need to intensify efforts in what government is doing across the board to ensure predictable cost effective power supply,” Osakwe said.
He noted that on the enabling environment for business, a lot of progress has been made as registered in the 2017 World Bank report, where Nigeria went up 24 places and in the top 10 reforming countries in the world, “A lot still needs to be done to scale-up, deepen, and intensify.”
Another long-standing issue agitating the minds of members of the OPS was the need for more effective border controls. Some of them insisted that Nigeria should be able to close and open her borders whenever she wants.
While some of the issues and concerns of the OPS are not for NOTN to resolve, what is not in doubt is that there has been significant nationwide support for Nigeria to go ahead with the agreement initiated by the AfCFTA.
However, the consensus of various interest groups is that the pace of work by government, in partnership with the private sector, should be accelerated with regards to this range of long standing issues.