By Bimbola Oyesola
Nigeria, in January 2017, became the 107th member of the World Trade Organisation (WTO) to have ratified the Trade Facilitation Agreement (TFA). The agreement signed on the sideline of the World Economic Forum in Davos, Switzerland, now needs only three more ratifications from members to achieve the two-third threshold to bring the TFA into force.
Vice-President Yemi Osinbajo, who led Nigeria’s delegations including the Minister of Industry, Trade and Investment, Dr. Okey Enelamah, submitted Nigeria’s instrument of acceptance to the WTO, alongside the Minister of Agriculture and Rural Development, Chief Audu Ogbeh. Other officials in attendance were the Minister of Water Resources, Engr. Suleiman Adamu, and the Special Adviser on Economic Matters to the President, Dr Adeyemi Dipeolu.
According to the Minister of industry, “Nigeria’s ratification of the Trade Facilitation Agreement was a reflection of our commitment to the WTO and a rules-based economy. It is evidence of President Muhammadu Buhari’s commitment to rapidly implement his presidential initiative on the creation of an enabling environment for business.”
“Nigeria would like to see a strengthened WTO that reflects the growth principles of developing countries like Nigeria and we praise the effectiveness of WTO Director General, Azevêdo in this regard,” he added.
Background
It could be recalled that Nigeria, had in a similar vein on November 10, 2014, submitted its Category A notification to the WTO outlining which substantive provisions of the TFA it intends to implement upon coming into force of the Agreement.
The TFA will enter into force once two-thirds of the WTO membership has formally accepted the Agreement and ratification, which is a means of expression for a country to be legally bound by a treaty.
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It is also expected to set out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
It further contains provisions for technical assistance and capacity building in this area.
According to a 2015 study carried out by WTO economists, full implementation of the TFA would reduce members’ trade costs by an average of 14.3 per cent, with developing countries having the most to gain.
The TFA, the expert added has the ability to reduce the time to import goods by over a day and a half while also reducing time to export by almost two days, representing a reduction of 47 per cent and 91 per cent respectively over the current average. The TFA also has the potential to increase global merchandise exports by up to $1 trillion.
In addition to Nigeria, some other African countries that have ratified are Botswana, Niger, Togo, Côte d’Ivoire, Kenya, Zambia, Lesotho, Mali, Senegal, Swaziland, Gabon, Ghana and Mozambique.
The TFA broke new ground for developing and least-developed countries in the way it will be implemented. For the first time in WTO history, the requirement to implement the Agreement was directly linked to the capacity of the country to do so.
In addition, the Agreement states that assistance and support should be provided to help them achieve that capacity.
The world body has stated that the Trade Facilitation Agreement Facility (TFAF) was created at the request of developing and least-developed country members to help ensure that they receive the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members.
OPS response
In spite of the advantages which TFA seems to project, the Organised Private Sector (OPS) is less enthusiastic about it bearing in mind what the previous trade agreements had done to the nation’s economy.
The real sector of the economy has been rendered ineffectual with most of the vibrant industrial areas of the country destroyed due to premature closure of the industries. More than 50 percent of companies operating in the country had gone under in the last two decades due to unhindered dumping of goods from other countries as a result of free trade agrements. Textile industry, which in 80s and the early 90s was the highest employer of labour after government has remained comatose despite the several bailouts from government.
Mr Issa Aremu, the Vice President of Industrial and General Secretary of the National Union of Textiles Garments and Tailoring Workers (NUTGTWN) believes that instead of signing a new agreement, it would be appropriate for the Federal Government to review all trade agreements to enable it rebuild the economy.
“It is high time the government reviewed all trade agreements that we have entered which have promoted dumping of goods, closure of factories and destruction of domestic jobs.
“We should review them in the light of rebuilding Nigeria’s economy.
“The labour leader said that promoting more trade agreement when Nigeria was not producing and trading on any goods would impact negatively on the economy.
“We are not opposing trade but you must be a trading country to enter into agreement with World Trade Organisation. What are we trading on, nothing?
“We are not even producing for domestic market, not to talk of exporting. We should not be eager to sign trade deals which are inimical to our economic development.
“This is because some of these agreements are injurious to workers. Let us put Nigeria first and get our priorities right,’’ Aremu said.
He said that the government should ensure that the country should first be a productive economy and produce for domestic market since it has the biggest market in the world and export later.
Aremu lamented that high cost of doing business in Nigeria which cut across, the energy cost, transportation, poor infrastructure, harassment by government officials, multiple taxation would impact negatively on international trade.
“All these add up to high cost of our goods. That is why our goods cannot compete with others from outside. Government should lower the price on the cost of doing business here”, he said.
Recently, Ambassador Chiedu Osakwe, Trade Advisor to the Minister of Industry, Trade and Investment and Chief Trade Negotiator for Nigeria said that government would soon commence a review of trade policy.
Osakwe said that the review would be done to discourage dumping of substandard products and promote the diversification efforts of the government.
However, if the review eventually sails through, it would be the first to be carried out since 2002 when the current trade policy was formulated.
But the Director General of Nigeria Employers Consultative Association (NECA), Olusegun Oshinowo, however noted that the government had undermined the interest of the OPS by signing the trade agreement.
He said, ”We don’t know the content of the Trade Agreement and one would have expected government to involve the OPS on whose behalf it signed the agreement. At least we may have one or two things to say. Even if they are going to tell us now, it’s medicine after death. Government should have done that before putting pen to paper.”
The NECA Director General insisted that it was, unfortunate that government had signed the new trade agreement, but warned that “in future government should carry organised private sector along before doing anything like thiat”
Implication for ailing real sector
The President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, also agreed that there was not enough clarification on the trade facilitation agreement signed by the government in Switzerland.
“I think what it means is that countries should facilitate trade. I don’t think it implies that they must trade across border, what I think is to create environment that will facilitate trade”, he said.
Jacobs said as World Trade Organisation (WTO), it will not want economy of countries to collapse because of trade amongst countries; it should however put the interest of country above trading with the rest of the world.
According to him, “Nigeria should be concerned with trade and businesses, the growth of businesses within our border first before complying with WTO requirement that we must trade with the outside world.
“We cannot be talking about trading with outside countries until we develop our infrastructure to be at par with what we see in the other countries,” he said.
The MAN President said government should be concerned about creating enabling environment, creating the basic infrastructure, creating the environment that will encourage investment.
He said, “Our cost of fund is too high, power situation is bad, road and rail transportation are so poor, there is no way we can compete with the rest of the world. So government should concentrate on addressing these challenges first. When they are addressed and they talk of opening up border, nobody will object it.”
He stated that MAN was concerned about manufacturers competing with the global players in manufacture because of the disadvantage position of the country in view of the operating environment which is very unfriendly and very harsh.
“If we begin to talk about globalisation or liberalising trade across borders of different countries, obviously we are going to be in a disadvantage position”, he said.
He however reasoned that as Nigeria cannot isolate itself from the rest of the world, efforts should be made to improve the operating environment for businesses in the country, so that Nigerian products can compete effectively with other global players.