On 29 June 2021, the House of Lords is due to debate the following motion:
Lord Purvis of Tweed to move that this House takes note of the Interim Trade Partnership Agreement between the United Kingdom and the Republic of Ghana.
Interim Trade Partnership Agreement
On 2 March 2021, the UK Government signed an Interim Trade Partnership Agreement with the Republic of Ghana (the ‘interim agreement’). In a report the Government has published alongside the interim agreement, it stated that it would help to minimise trade disruption between the two countries following the UK’s exit from the European Union:
With our exit from the EU, HM Government has sought to deliver the maximum possible certainty to businesses and consumers through ensuring continuity in the United Kingdom’s existing trade relationships. It is in both Ghana and the United Kingdom’s interests to minimise disruption to trade flows.
To achieve this, HM Government has developed new agreements that replicate, as far as possible, the effects of the EU’s trade arrangements with partner countries, as they applied to the United Kingdom prior to the end of the transition period.
There are, however, also differences between the interim agreement and the previous arrangements, as explored below.
- duty and quota-free access to the UK for goods originating in Ghana;
- a gradual liberalisation of tariffs on UK imports to Ghana—although tariffs are maintained on a small number of, mostly, sensitive agricultural goods;
- safeguards allowing the parties to re-introduce duties or quotas in specified circumstances;
- sanitary and phytosanitary measures; and
- trade facilitation measures.
Trade between the UK and Ghana
Ghana is the United Kingdom’s 75th largest trading partner, accounting for around 0.1% of total trade. Total trade in goods and services between the United Kingdom and Ghana was £1.2 billion in 2019. An overview of trade flows is provided below:
|Trade between countries||Trade in goods||Trade in services||Total trade|
|Our exports to Ghana||421||301||722|
|Our imports from Ghana||291||207||498|
Source: Office for National Statistics, UK total trade: all countries, non-seasonally adjusted, 7 May 2021; and Department for International Trade, Continuing the UK’s trade relationship with Ghana, April 2021.
The Government also provides the following breakdown of trade by specific goods:
|Our top 5 goods exports to Ghana||Value||Our top 5 goods imports from Ghana||Value|
|Worn clothing and other made up textile articles||71||Mineral fuels and oils||136|
|Machinery and mechanical appliances||47||Preparations of meat or fish||45|
|Miscellaneous chemical products||32||Edible fruit and nuts||45|
|Articles of iron or steel||27||Cocoa and cocoa preparations||24|
|Electrical machinery and equipment||24||Edible vegetables||10|
Source: HM Revenue and Customs, HMRC trade statistics by commodity code, accessed 23 December 2020; and Department for International Trade, Continuing the UK’s trade relationship with Ghana, April 2021. Please read the data in accordance with the caveats provided in the original source material.
Differences between the interim agreement and previous arrangements
The precursor to the interim agreement was the EU-Ghana Stepping Stone Economic Partnership Agreement (the EU-Ghana Agreement), which came into effect on 15 December 2016. As noted by the House of Lords International Agreements Committee, this was meant to be a ‘stepping stone’ towards a regional EU-West Africa Economic Partnership Agreement, covering the 15 members of the Economic Community of West African States (ECOWAS) plus Mauritania, though this regional agreement has yet to be brought into effect.
- The [interim] agreement introduces an extended cumulation of origin, allowing both parties to recognise processing in and content from the EU as originating in the UK or Ghana in exports to one another. The extended cumulation of origin, however, does not apply to UK goods or materials exported to the EU, which, subsequently, may be exported to Ghana (or in reverse). This is because the UK-EU Trade and Cooperation Agreement does not provide for UK content to be recognised as EU content in trade with common trade partners. Some UK businesses trading with Ghana may be adversely affected by this.
- The origin quota for tuna, which allows a specified volume to be exported under a more lenient rule of origin, has been resized to reflect the UK’s smaller market size compared to the EU.
- The EU-Ghana Agreement allowed the parties to apply a bilateral safeguard if there was a disturbance in the sugar market. Following a fall in the price of sugar below a certain level, the bilateral safeguard could be triggered. This safeguard has been transitioned, but the parties agreed to suspend the trigger price mechanism for five years, as there are difficulties in determining the appropriate trigger price level at this time. The mechanism will be reviewed once the agreement has entered into force. The parliamentary report notes that the EU has not previously made use of the trigger price mechanism and the Government does not expect the suspension to have any impact.
As part of its scrutiny of the interim agreement, the International Agreements Committee raised several issues. They included a call for the Government to spell out whether it plans to seek a future trade agreement with ECOWAS to support regional integration in west Africa. In addition, the committee recommended that the Government’s explanatory memorandum to the agreement should include information about any significant issues of concern raised by the devolved administrations (and others) and how they have been addressed, or alternatively confirm that no significant concerns have been expressed.
The committee also raised the lack of a bridging mechanism to cover the immediate period following the UK’s exit from the European Union (and the end of the transition period):
We regret the Government’s failure to put in place a bridging mechanism from 1 January until the agreement’s provisional application, which would have avoided costly duties for Ghana’s banana exporters.
The committee concluded by reporting the interim agreement to the House for information.
Scrutiny in the House of Commons
The interim agreement was laid before Parliament on 20 April 2021 and was the subject of a Westminster Hall debate in the House of Commons (along with a similar trade agreement with Cameroon) on 9 June 2021. The MP who secured that debate, Sarah Olney (Liberal Democrat MP for Richmond Park), said that these agreements had been subject to a lack of detailed scrutiny. She also raised the issue of future trade within west Africa:
Ghana and Cameroon are part of the Economic Community of West African States, which is composed largely of least developed countries that have been automatically offered tariff-free access to the UK market under the Everything but Arms scheme. The Conservative Government had previously made it clear that regional trade was one of their major priorities for African economic development through the support of the UK’s aid budget, namely £4 million between 2010 and 2016, yet Ghana’s requests for an approach that would not cut across its ECOWAS commitments were consistently rebuffed. The liberalisation schedule will see Ghana beginning to open its markets to UK goods immediately, on a timetable that is at odds with its neighbours in the ECOWAS customs union. That totally undermines regional trade in west Africa.
Ms Olney also raised the lack of transitional arrangements at the beginning of the year:
Not only have the Government not listened to Ghana, but at the beginning of this year, when roll-over deals had failed to be agreed on time, they imposed tariffs on imports from Ghana and Cameroon. In January, Brexit tariffs were imposed on a shipment of Fairtrade goods from Africa that arrived into Portsmouth, including £17,500 on shipments of bananas from Ghana. The UK has worked hard through the Fairtrade Foundation to ensure that the food coming into this country is of the same standard that we would expect our own producers to sell elsewhere.
The Government refused to waive or reimburse the tariffs, placing huge extra costs on importers, namely Fairtrade fruit and agriculture cooperatives. That totally undermines the efforts of the Ghanaian banana industry to protect the livelihoods of the many thousands of workers and their communities who rely on tariff-free access. It is outrageous that we are penalising developing countries that are improving labour rights, environmental standards and food standards. We should be supporting them.
She raised a number of further issues including the use of so-called rendezvous clauses, the potential impact of the trading arrangements on women’s economic rights, environmental damage and the potential that such deals could undermine developing countries’ ability to create a policy agenda that benefits their citizens. Other members who intervened to speak in the debate, particularly those from the Labour benches, raised similar concerns.
In response, Parliamentary Under Secretary for International Trade Graham Stuart, said that providing tariff-free access to the UK market would provide “a huge boost, encouraging export-led growth as well as supporting and creating jobs in Ghana [and Cameroon]”. Concerning the implementation period, he said:
Our agreement with Ghana was signed on 2 March, restoring trading terms that had applied until the end of 2020. Our department had long sought to conclude an agreement with Ghana. We proposed a deal on the same terms as Ghana had with the EU […] Despite our consistent attempts, Ghana chose not to engage in talks on that basis for over a year. Between the end of the transition period and the agreement’s coming into effect in March, Ghana was instead eligible for preferential tariff rates under our generalised scheme of preferences. The UK made every endeavour to avoid that gap, but doing so was not entirely within our gift.
Responding on the issue of ECOWAS and the level of scrutiny the agreement has received, the minister added:
Since 2016 the EU’s agreement with Ghana has been in place despite Ghana’s existing ECOWAS membership. That is also true of Côte d’Ivoire, another ECOWAS member with a trade agreement with the EU. Although this debate does not concern Côte d’Ivoire, it is worth noting that we have also rolled over that bilateral agreement. We are working closely with its Government to develop our relationship further. The UK’s agreements with both Ghana and Côte d’Ivoire include provisions from the EU agreements on working towards a future trade agreement with the west Africa region. We look forward to discussing this prospect with our west African partners.
On scrutiny, it is important to note that Parliament has already had the opportunity to scrutinise existing EU agreements. As with all continuity agreements, we follow the statutory process of laying agreements under the Constitutional Reform and Governance Act 2010, but in line with this Government’s commitment to transparency, we went well beyond the statutory requirements of CRAG and provided comprehensive information to Parliament to support its scrutiny of our trade policy approach.
He concluded by saying that:
I can assure the House that we remain alert to human rights and environmental concerns at all times […] We will champion free trade around the world that fosters growth, creates jobs, and raises living standards for all.
- Department for International Trade, Continuing the UK’s trade relationship with Ghana, April 2021
- House of Lords International Agreements Committee, Scrutiny of International Agreements: Interim Partnership Agreements with Ghana and Cameroon, 27 May 2021, HL Paper 14 of session 2021–22
Cover image by jorono on Pixabay.