Economic Partnership Agreements (EPA) and the Unequal Treatment of Companies in the Cameroonian Market
By Mr. Egoh Aziz &Dr. Louis-Marie Kakdeu(Pdf Version)
Economic partnership agreements are accords contracted by two or more countries to promote the free flow of goods and services between the parties. These accords can be bi-lateral or multi-lateral and carry along with certain advantages. For example, the elimination of trade barriers such as tariffs and quotas. Economic agreements act as conduits to the establishment of new markets for businesses, ease the manufacture of high-quality goods, and foster economic growth. As the volume of trade increases due to trading agreements, favourable conditions are created pushing businesses in the member countries to have a greater incentive to venture into new markets. This article aims to discuss the Economic Partnership Agreements (EPA) Cameroon have signed, and the unequal treatment of Companies existing in the Cameroonian Market.
Some Trade Agreements Contracted by Cameroon
Cameroon is exposed to international trade. It is a party to the Economic Community of Central African States (ECCAS), a member of the Economic and Monetary Community of Central Africa (CEMAC), and a member of the Common Wealth. Besides, Cameroon has signed the African Intercontinental Free Trade Agreement. Cameroon opted for a market economy on July 28, 1989, by law No. 89/01. It had approved the Marrakech treaty instituting the World Trade Organization (WTO) by decree n°5/194 of September 26, 1995, and had introduced competition by law No. 98/13 of July 14, 1998. On July 18, 2014, Cameroon’s Parliament approved law No. 2014/013 permitting the approval of the Economic Partnership Agreement with the European Union. This had been done by presidential decree No. 2014/267 of July 22, 2014. This treaty entered into force on August 04, 2014, and the dismantling of tariffs started on August 04, 2016. Further, Cameroon has trade agreements with countries such as Nigeria, Tunisia, and China. The country has signed the accord creating the World Intellectual Property Organization (WIPO). Generally, the market is uncluttered and the configurations of starting a business with the security of Intellectual Property is in place .
Being a member of the CEMAC which consists of Congo, Gabon, Equatorial Guinea, Central African Republic, and Chad, Cameroon pays custom duties and taxes set according to the Common External Tariff (CET). The appropriate customs charges are contingent on the group to which the imported commodity belongs:
- Basic goods: group I, 0%
- Raw materials and capital goods: group II, 10%
- Transitional and miscellaneous goods: group III, 20%
- Daily consumer goods: group IV, 30%.
The question is to know if all the companies have equal treatment in the market.
The answer is no, the reason being that trade arrangements are unfair and inequitable.
Imbalance of the trade accords
Gaps do exist between the EPA as formulated today and the principles of free trade (Kakdeu, 2016). Therefore, if the free trade agreement is allowed, it must operate within the ambit of its philosophy and its values. Conversely, the trade policy implemented by many foreign countries is quite similar to commercialism that intends to enhance nations via a foreign trade partially systematized to dumb its goods on the Cameroonian market while retaining domestic protectionist measures. Free trade is not viewed as an issue of power or a zero-sum game in which the benefit accrued by one agent is at the detriment of the other. It is rather a positive-sum game in which each partner freely develops its comparative advantage. For example, in the EPA with the European Countries, Europe wins the equipment market in which it overtakes Cameroon and reduces the effect of Cameroon’s comparative advantage in agriculture, through non-tariff barriers (sanitary and phytosanitary standards, environmental, labor; the rule of origin, size of products, etc.) and subsidies.
In a book titled “Economics and World History; Myths and Paradoxes,” by Paul Bairoch published in 1995, he elaborated on the imbalance of trade agreements that the western world “is an ocean of protectionism.” He differentiated between free trade and mercantilism in that the former is conducive to competition and merit, while the latter promotes the dominations of multinationals and trade barriers.
Free trade is not an «economic war» between nations. It does not consider only the specific interests of a few industries to the disadvantage of the rest. For example, the EU used to provide 90 million euros (around CFAF 60 billion) annually in the poultry sector for the export of lucrative chicken to a few multinationals to the disadvantage of the rest of the market actors. The EPA agreement does not disregard these subventions generously granted to European companies and so, signifies a danger to free trade in Cameroon as it leads to partial competition and dumping practices. Besides, EPA’s are stimulated by the external comparative advantage which by its inert nature could defend the prohibition of exchanges in the absence of an advantage to be asserted at a specific period. Thus, when the EPAs spot Europe in the equipment market, it assumes that companies that produce equipment cannot grow in Cameroon. Rather, Cameroon should be motivated by an internal view of comparative advantage which presumes the expansion of competitiveness through a trial-and-error learning process. The option is to engage in the practice for perfection to follow[Ibid].
Besides, free trade entails equal treatment in the market. Cameroon has also signed some agreements with other trading partners, including China and Nigeria, the country’s largest and second-largest suppliers, respectively. For example, Cameroon and Nigeria signed a trade agreement on April 11, 2014, full of all non-tariff barriers and advantageous for cross-border trade (nearly CFAF 500 billion in trade volume in 2013). This makes the EPA deal, a kind of «fiscal dumping». In reality, free trade can only survive when transparency and free competition are inherent in the market.
In conclusion, economic partnership agreements are accords signed by two or more countries to promote the free flow of goods and services between the members. Such Agreements can only guarantee a shared advantage when it perceives the doctrines of free trade and uses transparent and fair approaches in its implementation, which suggests reforming the governance of these agreements. Cameroon, on its part, should undertake reforms (rule of law, fight against corruption and rent-seeking, improvement of the business climate, etc.).The basis for economic partnership agreements is to encourage free trade. Free trade makes it more profitable for people of one nation to produce goods and services for people of another nation than to dominate them.