Senate proposes suspension of ECOWAS ETLS and CET

Federal Government releases 2016 Fiscal Policy Measures

The Senate of the Federal Republic of Nigeria, on Tuesday, 29 November 2016, passed a resolution, proposing the suspension of the Economic Community of West African States (ECOWAS) Trade Liberalization Scheme (ETLS) and Common External Tariff (CET).

In a motion moved by the Senate Committee on Customs, the Senate noted that the economy has worsened since the  introduction of the ETLS and CET, particularly in the area of industrialisation. Specifically, the following were listed as some of the reasons for this call:

  • The manufacturing sector has regressed, with some manufacturers moving their plants to neighboring ECOWAS countries to produce goods and ship back to Nigeria at preferential rates
  • Customs revenues are lost and locally manufactured goods stifled when other member states issue origin certificates to non-qualifying goods which are shipped to Nigeria at preferential rates

The ETLS is a free trade scheme that enables ECOWAS originating goods to move freely within the region whilst CET is a common customs tariff imposed by ECOWAS member states on goods originating from non-ECOWAS countries. The primary focus of these schemes is to foster economic integration within the region.

The proposal by the Senate is not surprising, given the current state of the economy i.e. depleting government revenues, rising unemployment levels etc. It would be recalled that similar views are held by the Federal Government around the proposed Economic Partnership Agreement (EPA) between the European Union (EU) and ECOWAS. Nigeria, Gambia and Mauritania are the only ECOWAS countries yet to sign the EPA, since the conclusion of negotiations in June 2014.

It is not clear how the Federal Government would react to the Senate’s proposal, considering its far-reaching consequences on existing and proposed regional relationships. Should Nigeria decide to go forward with this proposal, trade may not be the only implication that Nigeria’s government would have to address with ECOWAS. No matter how patriotic this resolution may be, the ramifications of its adoption must be well and comprehensively thought out.

We would continue to monitor developments on the subject and update you as more information become available.

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