EPA and Fiscal Transition in ECOWAS Countries

Abstract: Negotiations between the European Union (EU) and the African, Caribbean and Pacific (ACP) states on the Economic Partnership Agreements (EPAs) began in 2002. The EPAs are intended to replace the most recent form of partnership framed by the Lomé convention, as it was seen to infringe the rules of the WTO. This study examines trade and fiscal implications of the EPA between the EU and the Economic Community of West African States (ECOWAS). It compares and discusses the evidence from empirical studies trying to assess these effects. In addition, it examines how West African countries prior to the EPA are preparing for the necessary transition of their fiscal regimes. The main conclusions drawn from the study are the following: the EPA will imply significant revenue losses for West African countries and divert trade from extra- and intra-regional suppliers in favour of EU suppliers. It is doubtful whether these countries will be able to compensate entirely for losses in tariff revenue by reforming their fiscal systems. In order to truly profit from the dynamic gains from an EPA, West African countries will need financial and technical assistance provided by the EU. The EPA may not deepen regional integration nor promote South-South trade.