Ghana's Costly Wait for Trade Deal

Ghana's Costly Wait for UK Trade Deal

As the UK finally approved its trade agreement with the European Union (EU) on 30th December, it transpired that trade deals between the UK and some countries had not been finalised in time for Britain exiting the EU the following day.

What does this mean for Ghana?

Ghana is one of the countries still hoping to finalise a free trade agreement, and is operating under interim terms as negotiations take place. While they wait, their exports will be categorised under Britain's Generalised Scheme of Preferences, which means they do face import fees, albeit at a reduced rate as a developing country.  Under these requirements, Fairtrade bananas will now carry tariffs equivalent to 9.5p/kg, where previously no tariff applied.  

How can this be resolved?

The Ghanaian government is asking for the country’s main exports such as bananas, pineapples, and cocoa, to continue the tariff-free conditions in place when Britain was a member of the EU.  

Ghana and the UK issued a joint statement to say that ‘both sides had reached a consensus on the major elements of a trade agreement, and that both sides are committed to making the gap in preferences as short as possible.’  You can read the statement here

According to www.gov.uk, ‘Bridging mechanisms are an alternative means to ensure continuity of trade, where the UK or treaty partners are unable to fully ratify or provisionally apply an agreement.

Rt. Hon Liz Truss MP, UK Secretary of State for International Trade said: “We re-affirm our shared ambition to further strengthen our partnership in the future and to work with West African partners to make progress towards a regional agreement.”

How will Ghana cope in the meantime?

The Fairtrade Foundation said that though this was promising, the lack of a signed deal meant that tariffs would apply to goods such as Ghanaian bananas and processed cocoa products, which would likely be passed to the farmers and workers.

Shared Interest Lending Manager in West Africa said: “We hope that a deal will be finalised soon.  The first Fairtrade product to be shipped into the UK from Ghana following Brexit, arrived in early January.  The shipment contained 185 metric tonnes of bananas and the   tariff amounted to more than £17,500.”

Shared Interest Managing Director Patricia Alexander said: “It is encouraging to hear that we are close to a trade agreement being confirmed as Ghana imports a high percentage of its goods into the UK.  Official data shows that this equalled trade to the value of £498m in 2019, which was mostly cocoa and fruit.  Our main concern is that producers have built business models that rely significantly on tariff-free export operations, and they will not be able to survive the current duties imposed. In fact, this intermediary phase may see the country’s farmers priced out of the British market completely.”