An Evaluation of the ETLS and frieght movement across Aflao Border

AN EVALUATION OF THE ETLS AND

FREIGHT MOVEMENT ACROSS AFLAO

BORDER

ABSTRACT

The study examines the extent to which the ECOWAS Free

Trade Agenda (ECOWAS TRADE AND LIBERILIZATION SCHEME) has

succeeded in eradicating barriers to physical movement of

persons and cargo in transit within West Africa. The

Aflao border was selected as case study. The research

involved the administration of questionnaires, granting

of interviews, and recording observations that were vital

to conclusions about the movement of cargo and persons

across the border. A sample of 36 respondents was drawn

from the population using the sampling procedure. The

study concluded, among other things, that awareness of

the free trade benefits had apparently increased among

the industrial sector in the West Africa region,

particularly in Ghana on account of the result.

Recommendations included that: automation in the

processing of cargo documents should be introduced to

eliminate the current delays suffered by trip makers to

the border; and giving of needed logistics support to the

security agencies, the creation of ECONET (Ecowas

network) to help reduce waiting time. The study concluded

by advocating strong political will on the part of all

the ECOWAS nations to see the ECOWAS Free Trade Agenda

through.

KEYWORDS

Regional trade, ETLS( ECOWAS Trade liberalization

Scheme), FTA(Free Trade Area), Ecowas.

LIST OF ABBREVIATIONS

ETLS: Ecowas Trade Liberalization Scheme

IMF: International Monetary Fund

ECOWAS: Economic countries of West African States

SMT: Small and Medium Scale Enterprise

VAT: Value Added Tax

FDI: Foreign Direct Investment

EEC: European Economic Community

FTA: Free Trade Area

CET: Common External Tariff

CEPT: Common Effective Preferential Tariff

AG: Aggregate Growth

WAEMU: Western African Economic and Monetary Union

MNR: Mano River Union

IGO: Inter-Governmental Organisation

RIA: Regional Integration Agreements

TTFSE: Trade and Transport Facilitation in Southeast

CIF: Cost, Insurance and Freight

CMLV: Cambodia, Laos, Myanmar and Vietnam

UEMOA: Union Economique et Monetaire Ouest Africaine

COMESA: Common Market for Eastern and Sothern Africa

CHAPTER ONE

1.0 INTRODUCTION

Economic community of West African states (ECOWAS), was

established by a treaty of Lagos in 1975 with the

objective of liberalizing trade among member states, the

elimination of tariff and nontariff barriers and

ultimately achieving an economic and monetary union,

after it goes through the process of a free trade area,

custom union and common market (ECOWAS FORUM 2013). Under

the ECOWAS TRADE LIBERALISATION SCHEME (ETLS), goods

traded are being transported through the region duty free

and in some cases without the need for a certificate of

origin. The effective implementation of these protocols

should eliminate tariffs on regionally sourced inputs,

reduce the time and cost of moving products through the

region and harmonize tariffs levels for goods. In line

with its objective of promoting cooperation and

integration and as one step towards the creation of a

common market which, according to the ECOWAS Revised

Treaty, should be established, among others, through “the

liberalization of trade by the abolition, among Member

States, of customs duties levied on imports and exports,

and the abolition among Member States, of non-tariff

barriers in order to establish a free trade area at the

Community Level“1 ECOWAS adopted the ECOWAS Trade

Liberalization Scheme. This was first implemented in 1979

with only agricultural products, handicrafts and crude

products being allowed to benefit from the scheme. In

1990, however, it opened up to include industrial

products. Given the evolution of international trade and

the adoption by the World Trade Organization (which most

ECOWAS Member States are members of) of a new agreement

on rules of origin, it was deemed necessary to comply

with these rules. As a result, ECOWAS and UEMOA adopted

the same origin criteria. The ECOWAS protocol A/P1/1/03

of 31st January 2003 defines the concept of originating

products and origin criteria applicable for the free

circulation of industrial goods.

The Council of Ministers adopted the Regulation:

REG./3/4/02 of 23rd April 2002, which presented new

procedure in order to ease the process for approval of

industrial products.

This new procedure led to the creation in each Member

State of a National Approvals Committee (NAC),

responsible for examining applications for approval of

products. The first step in the process is for NAC’s to

approve companies and products that meet the originating

product criteria. The second step is for the Member

States’ to communicate these to the ECOWAS Commission.

The third step requires the ECOWAS Commission to notify

all Member States of the approved companies and products.

As a result, the approved products can be exported freely

within the region. 39years after the establishment of

ECOWAS, the sub region hasn’t achieved the goals of a

common market, custom union and free trade area. These

could be attributed to inefficiency in the transport

system, minimal investment in upgrade and improvement of

transport infrastructure, poor transport policies and

poor transport network.

Figure 1.1: Ecowas Member States

Logistics can be said to be the management of the flow of

goods / people between the point of origin and the point

of consumption in order to meet customer’s satisfaction

(George Vandyk, 2012). Transportation is a subset of

logistics, and is a very important part of logistics

because it enables the flow of goods and people from

point of origin to point of consumption and if a

transportation system isn’t efficient, it takes a way two

of the seven rights in logistics (right time and Right

cost). The specific purpose freight transportation is to

fulfill the demand for mobility, since freight

transportation can only exist if it moves freight about.

Distance is a core attribute of freight transportation

and can only be represented in variety of ways, ranging

from a straight line between two locations, to what is

termed a logistical distance. A complete set of task

required to be done so that distance can be overcome.

Consequently, any movement of freight must consider its

geographical setting, which in turn is linked to spatial

flows and their patterns (tolley et al turton 1995).

Urbanization, multinational corporations, globalization

and international division of labor are all forces

shaping and taking advantage of transportation

Transport is one of the key sector that plays crucial

roles in achieving economic development, intra-regional

trade, employment, better regional integration, increased

revenue and poverty eradication. Most ECOWAS countries

emphasize on economic will boost the countries revenue,

create jobs and eradicate poverty, yet little or no

emphasis is placed on the improvement of the transport

sector.

Government and businesses in the region are failing to

understand that transport is the link and the factor that

influences development of other sectors of the economy.

Without an efficient transport system, goods wouldn’t be

transported at the right time, right place and right

cost. Transportation can be broken down into 5 main

means, Sea, air, pipeline, rail, and road. Researcher,

logisticians, transportation and the Government place

more priority to seaport, because of the economies of

scale it enjoys, airport for speed of delivery and high

valued goods, rail is almost inexistent and road

transport has been major been prioritized for door to

door service and human movement forgetting the fact the a

border can be said to be the port of the land and is also

an enabler of regional trade, because it accounts for a

certain percentage of trade between nations. From a

transportation point of view, activities at a country’s

border, has a huge influence on transportation cost

1.1 BACKGROUND OF STUDY

Most human activities require, either directly or

indirectly, the production and consumption of certain

quantities of goods and services. Moreover, in almost all

cases, there is a geographical and temporal distance

between the production and the consumption of these goods

and services, distance that increases with the level of

complexity of the human society. Hence, producers require

transportation services to move raw materials and

intermediate products, and to distribute nal goods infi

order to meet customer demands. Shippers, which may be

the producers of the goods or some intermediary rmfi

(e.g., freight forwarders and brokers), thus generate the

demand for transportation. The inherent benefits of fluid

movement of goods and persons have informed the coming

together over the years of contiguous nations into loose

economic unions whose aim is to foster common economic

interest by removing all barriers to trade, which

includes those that pertain to passage across borders,

among other things (Babatunde 2009). Such initiatives

informed the formation of economic groupings like the

European Union Free Trade Area (EU-FTA), the North

American Free Trade Area (NAFTA), the Association of

South East Asian Nations Free Trade Area (ASEAN-FTA) and

the Southern African Development Community (SADC). In

West Africa, the formation of the Economic Community of

West African States (ECOWAS) in 1975 was patterned along

the aforementioned lines of regional integration. One of

the objectives of the ECOWAS is to promote trade and

commerce among member countries. Undoubtedly, there are

barriers to the free movement of people and goods

(including customs checks, immigration procedures, entry

restrictions and so on). In ECOWAS, free trade area has

been created. It has numerous benefits and challenges;

one of which is the free trade agenda. The critical

assessment of this agenda and cargo movement across Aflao

border (as a microcosm of the ECOWAS region) informed

this study (Adepoju, 2007).

The ECOWAS Free Trade Area was officially created on the

30th of April, 2000. The creation of the free trade area

was spearheaded by Nigeria and Ghana in what was referred

to as the “fast track” approach towards the ECOWAS

Integration Process. The adoption of this approach was

borne out of the realization by the two leading countries

that drawbacks towards full integration was attributable

to the lack of commitment on the part of the small, weak

and indigent member-nations of the Community (Federal

Ministry of Cooperation and Integration in Africa, 2002).

After about three decades of existence, the ECOWAS merely

thrived only in the informal trade sector, where small

time entrepreneurs do brisk business across borders in

the most unorganized manner, and without compliance to

any trade policies or regulations spelt out by the

Community. The border routes were notorious for criminal

activities like smuggling and armed banditry, with

attendant losses to goods in transit and sometimes, lives

(British American Tobacco, 2004). According to the

Federal Ministry of Cooperation and Integration in Africa

(2004), in the face of all these challenges, the fast

track approach to integration set out to achieve, among

others:

a) Removal of all physical and non-physical barriers to

facilitate free movement of persons, goods and

services on Community highways,

b) Complete eradication of all rigid border

formalities,

c) Application of the prescribed ECOWAS Customs and

Immigration procedures,

d) Implementation of joint border patrols between

border nations

e) Adoption of a Common External Tariff (CET) for all

imports into the sub-region.

The implementation of the fast track approach officially

commenced in 2000. Some measures had actually been taken

in the area of tariffs with the application of zero

percent (0%) import duty for products in the importing

ECOWAS member states and charging of 0.5% Cost, Insurance

& Freight (C.I.F.) value as ECOWAS Common External Tariff

(CET) - also called ECOWAS Community Levy - for goods

that originate from outside of the ECOWAS region. In the

area of physical movement, attempts were made to

dismantle all visible roadblocks and checkpoints across

borders, especially on the Aflao highway; resident permit

requirement at border points had been abolished while in

its place the uniform ECOWAS Travel Certificate was

introduced with issuance being the responsibility of the

Immigration Service of each member country. The ECOWAS

Brown Card was also introduced to provide insurance cover

for vehicles moving within the region. For the about

fourteen or fifteen years that the ECOWAS Free Trade

agenda has been in operation, the “achievements” so far

recorded have remained a matter of contention

Figure 1.2: MAP AND GOVERNMENT AGENCIES AT AFLAO

SOURCE; GOOGLE IMAGE

1.2 PROBLEM STATEMENT

While the various governments of member-nations,

especially that of Ghana, have claimed near total removal

of physical restrictions to movement of goods and people

across the border (Borderless alliance 2015), operators

at the border (traders, transporters, importers and

exporters, and other trip makers to the border), have

continued to argue otherwise (Federal Ministry of

Cooperation and Integration in Africa 2002) . They cite

problems of extortion by government agencies, payment of

arbitrary levies on goods in transit, suffocating police

road blocks and surprise attacks by criminals as still

prevalent. It is in order to put these contentious issues

in proper perspective that this research work seeks to

appraise the ECOWAS Free Trade Agenda as it affects cargo

and persons‟ movement across the Aflao border.

1.3 RESEARCH OBJECTIVES

The overall aim of this study is to appraise the ECOWAS

free trade agenda as it relates to transporting of

freight and persons across the Aflao border since its

creation. Pursuant to the aim, the following are the

specific objectives of the study:

1. To determine the extent to which the objectives of

the ECOWAS treaty on free movement of goods have been

met in terms duty free and non-tariff barriers with

its effect on time which leads to cost.

2. To establish the emerging problems as well as the

impact and challenges of the Free Trade agenda

1.4 RESEARCH QUESTIONS

The following research questions were set to assist the

study in proffering solutions to the problems that would

be investigated:

1. To what extent have the objectives of the ECOWAS

free trade agenda been met and its effect on

transportation cost?

2. What are the emerging problems, impact and

challenges of the free trade agenda?

1.5 JUSTIFICATION OF STUDY

The study is justified based on the fact there is a

potentially huge market of 16 nations available to be

harnessed by ECOWAS members given proper harmonization

and implementation of the ECOWAS treaty on free movement

of goods. This realization of potential economic benefits

apparently prompted Ghana’s government in the about the

last half decade to commit huge resources in finance,

manpower, logistics and political goodwill to the cause

of the ECOWAS integration process. Therefore, a seamless

ECOWAS market with crises-free trade routes would no

doubt boost Ghana’s trade potential with its neighbors

(and those of the other countries as well) and attract

investment to the sub-region. The vast market, if fully

made operational, also has potentials to provide job

opportunities and trading outposts for small and medium

scale enterprises (SMEs), and hence prompt foreign direct

investment (FDI), thus alleviating poverty and create

jobs. The study would also help in understanding the

extent of the constraints to movement and offer

suggestions from which the free trade initiative could be

made more successful.

1.6 SCOPE OF STUDY

The scope of study covers the transportation processes

and nature of movement of goods and persons in the ECOWAS

Free Trade Area with the Aflao border, Volta region Ghana

as case study.

1.7 METHODOLOGY

Primary and secondary data was collected. The secondary

data will be obtained through news publications,

journals, reviews, magazines and internet. While the

primary data include data collected through field survey

and interviews.

Questionnaires and interviewer’s guide will be

instruments used in the data collection. Furthermore, a

pre-test study was carried out to few respondents with

the questionnaires and the interviewer’s guide to add

validity to the instruments.

Stratified random sampling and purposive sampling

procedures were used to select respondents for the study.

The later was used to select top managerial personnel

from the shippers and at the terminals. People will be

selected by a technique of simple random sampling. In

addition, the data collected from the questionnaires will

be coded and analyzed using Microsoft excels and

presented using descriptive statistical techniques such

as pie and bar chart, frequency tables. The result of the

interview would be cross checked and relevant information

written.

1.8 OPERATIONAL DEFINITION

ETLS: The ECOWAS trade liberalization scheme (ETLS) is

the main ECOWAS operational tool for promoting the West

Africa region as a free trade area. This lies in tandem

with the one objectives of the community which is the

establishment of a common market through “the

liberalization of trade by the abolition of non-tariff

barriers.

FREIGHT TRANSPORT: is the physical process of moving

merchandise, goods or cargo from point of origin to point

of destination, via several modes of transport (air,

road, sea, and rail).

SHIPPERS: The person for whom the owners of a ship agree

to carry goods to a specified destination and at a

specified price, also called consignor. The conditions

under which the transportation is effected are stipulated

in the bill of lading.

REGIONAL INTEGRATION: Regional integration is when a

group of countries get together and develop a formal

agreement regarding how they will conduct trade with each

other.

COMMON EXTERNAL TARIFF: The single tariff rate agreed to

by all members of a customs union on imports of a product

from outside the union.

1.9 ORGANIZATION OF THE STUDY:

The research will be organized into five chapters

CHAPTER ONE: This introductory chapter includes: the

background of the study, statement of the problem,

research questions, and justification of the study, scope

of the study, operational definition and the organization

of chapters.

CHAPTER TWO: This literature review will focus on ECOWAS

trade agenda and freight transport across Aflao boarder,

transport and logistical system in Ghana, development of

freight transport, European Union (EU), trucking to West

Africa, North American free trade agreement (NAFTA),

Association of Southeast Asian Nations (ASEAN) impact of

transport on competiveness of national economy.

CHAPTER THREE: This presents the methods which have been

used for data Collection and data analysis. In addition,

the validity and credibility of data sources and results

are discussed.

CHAPTER FOUR: Presents the outcomes of the distributed

questionnaires, Interviews and the author’s

interpretations of them.

CHAPTER FIVE: This presents the recommendations and

conclusions of the research work.

CHAPTER TWO

LITERATURE REVIEW

2.1 CONCEPTUAL AND THEORETICAL FRAMEWORK

The previous chapter was an introductory chapter, in this

chapter I will be extensively looking at literature

review. To have a full grasp of the major issues under

this study, a number of concepts, models and theories

relevant to the research work have been examined and

deductions made as to their suitability to the study.

2.2 FREIGHT MOVEMENT ACTIVITIES IN THE ECOWAS SUB-REGION

In the ECOWAS sub-region, new principles of forming,

developing and managing national economic systems have

resulted into problems connected with support and

development of transport field and transport corridors,

creation of border passes, customs bodies, formation of

tariff policy (for each state), and other problems have

led to a jump in transport costs and longer transport

process.

Solving these, ECOWAS states have come to a conclusion

that it is necessary to combine the efforts on promotion

of regional trade with further integration to the global

economy.

Some of the trade development factors in the region that

need to be addressed are transport communications and

infrastructure development, harmonized integration into

the global transportation system as well as attracting

new technologies that allow easy acceptance and handling

of goods flow across national borders.

Latest national trade figures indicate an appreciable

gradual rise in intra-region trade and there are

indications that efforts to facilitate free, unhindered

and uninterrupted flow of goods within the region will be

beneficial and in the right direction.

The freight forwarder has often been called the

“architect of transport” because of the essential role

freight forwarders play in international trade through

their proactive involvement in enhancing the management

of the various activities of transportation, customs

clearing, documentation, third party payments and other

elements generally concerned with supply chains. There is

therefore a need now for freight forwarders within the

region to facilitate enhancement of regional trade

through regional cooperation building. In the ECOWAS sub-

region, new principles of forming, developing and

managing national economic systems have resulted into

problems connected with support and development of

transport field and transport corridors, creation of

border passes, customs bodies, formation of tariff policy

(for each state), and other problems have led to a jump

in transport costs and longer transport process.

Solving these, ECOWAS states have come to a conclusion

that it is necessary to combine the efforts on promotion

of regional trade with further integration to the global

economy.

Some of the trade development factors in the region that

need to be addressed are transport communications and

infrastructure development, harmonized integration into

the global transportation system as well as attracting

new technologies that allow easy acceptance and handling

of goods flow across national borders.

Latest national trade figures indicate an appreciable

gradual rise in intra-region trade and there are

indications that efforts to facilitate free, unhindered

and uninterrupted flow of goods within the region will be

beneficial and in the right direction.

The freight forwarder has often been called the

“architect of transport” because of the essential role

freight forwarders play in international trade through

their proactive involvement in enhancing the management

of the various activities of transportation, customs

clearing, documentation, third party payments and other

elements generally concerned with supply chains. There is

therefore a need now for freight forwarders within the

region to facilitate enhancement of regional trade

through regional cooperation building. In the

International Freight forwarding business, the

introduction of Networks apart from managing potential

competition has also created the opportunity for

resources of individuals in a network to be “pooled”,

much like the cargo pooling arrangements available under

the old conference system. Although networks are by

nature voluntary cooperation arrangements, they are now

gradually becoming a “must do” way of doing freight

forwarding business internationally. In the

International Freight forwarding business, the

introduction of Networks apart from managing potential

competition has also created the opportunity for

resources of individuals in a network to be “pooled”,

much like the cargo pooling arrangements available under

the old conference system. Although networks are by

nature voluntary cooperation arrangements, they are now

gradually becoming a “must do” way of doing freight

forwarding business internationally. The road transport

sector in West Africa has been described as

• Higher priced, less efficient, and less reliable

that transport in other regions of Africa and the

world;

• Dominated by older vehicles and small informal

operators; and

• Saddled with policies and regulations that provide

no incentives to become more efficient.

There is a trade-off between, on the one hand, paying

fees for illegal services and, on the other, waiting—

sometimes for weeks—to get cargo and increase the use of

trucking capital. In general, informal sector

transporters find themselves making these payments more

often than formal sector transporters because they have

less negotiating power

2.3 REGIONAL INTEGRATION

Figure 2.1 World Market Share

SOURCE; WORLD TRADE ORGANIZATION 2006

An arrangement for enhancing cooperation through regional

rules and institutions entered into by states of the same

region. Regional integration could have as its objective

political or economic goals or in some cases, a business

initiative aimed at broader security and commercial

purposes. Regional integration could have an

intergovernmental or supranational organization. In the

case of the ECOWAS, it has been observed that the smaller

countries always have the fear of losing their national

identities and good sources of revenue (for example duty

waiver on goods), by conforming to the rules of the

community. As observed by Boyes (2007), some of the

ECOWAS members insist on cargo bonding on freight trucks

for the purpose of charging taxes even when this runs

counter to the objective of free trade in the region.

Cargo moving from Nigeria to Ghana pay taxes and bribes

even to Togo and Benin, which are just transit countries.

The customs check set up for this purpose by such

countries are known to impose severe delays in road

transport and are often an avenue for extortion.

According to George (1998), barriers to regional

integration in developed economies have been reduced

drastically due to their level of development. This is

particularly true of the various integration efforts in

Western Europe. Ogunkola (1993) equally supports this

assertion, and adds that for the developing economies

like the ECOWAS, natural factors in the form of distances

between partner countries, delays in transportation,

bureaucratic inefficiencies, language, border, cultural

and proximity variables, historical ties, transaction

costs, and so on, are significant factors inhibiting

trade among West. In the case of the ECOWAS, it has been

observed that the smaller countries always have the fear

of losing their national identities and good sources of

revenue (for example duty waiver on goods), by conforming

to the rules of the community. As observed by Boyes

(undated), some of the ECOWAS members insist on cargo

bonding on freight trucks for the purpose of charging

taxes even when this runs counter to the objective of

free trade in the region. The customs check set up for

this purpose by such countries are known to impose severe

delays in road transport and are often an avenue for

extortion. According to George (1998), barriers to

regional integration in developed economies have been

reduced drastically due to their level of development.

This is particularly true of the various integration

efforts in Western Europe. Ogunkola (1993) equally

supports this assertion, and adds that for the developing

economies like the ECOWAS, natural factors in the form of

distances between partner countries, delays in

transportation, bureaucratic inefficiencies, language,

border, cultural and proximity variables, historical

ties, transaction costs, and so on, are significant

factors inhibiting trade among West African countries.

The magnitude of intra-ECOWAS trade with the rest of the

world (Tables 2.1 and 2.2).

The comparison suggests that regional integration process

is still far from the ideal in West Africa. According to

research, while more than 40 percent of the European

Union’s total trade happens within the ECOWAS region,

intra-Community trade in ECOWAS remains far less than 15

percent. It is concluded that the existing arrangement

requires intensive reform, and that an area which

requires immediate attention is the dismantling of

existing barriers to intra-regional trade as a basis for

motivating various forms of trade facilitation processes.

Table 2.1: ECOWAS Trade Structure 1996-2001 (as % of

Total ECOWAS Export Value)

Countries &year 1996 1997 1998 1999 2000 2001Intra-Ecowas

10.86 12.66 14.49 10.08 8.40 9.25Other African countries

14.69 16.20 18.53 13.59 9.59 8.70

European Union

41.80 38.47 42.51 31.54 28.81 31.44

Northern America 23.06 25.81 19.47 26.11 36.69 31.00

Asia 8.79 11.16 7.52 19.02 17.12 14.68Source: ECOWAS Handbook of International Trade (2003), cited in

Alaba (2006)

Table 2.2 ECOWAS Trade Structure 1996-2001 (as a % of

Total ECOWAS Import Value)

Countries & 1996 1997 1998 1999 2000 2001

YearsIntra-ECOWAS 11.25 10.93 10.5

412.44

16.79 13.61

Other AfricanCountries

13.94 13.02 13.01 15.29

19.60 Na

European Union 47.73 46.30 50.09 51.68

48.31 45.50

Northern America 12.46 11.77 10.98 11.26

8.73 9.59

Asia 16.23 19.15 17.88 19.19

21.89 20.89

Middle east Na Na Na na na NaSource: ECOWAS Handbook of International Trade (2003), cited in

Alaba (2006)

Table 2.3 Real GDP and merchandise trade volume growth by

region, 2010-12

Figure 2.2: Goods Trade between EU28 and ECOWAS

2.3.1 THE EUROPEAN UNION (EU) FREE TRADE AREA

Figure 2.3 European Union Member States

Source: Google Image 2012

The EU is the world’s biggest trader, accounting for 16%

of the world's imports and exports. Free trade among its

members was one of the EU's founding principles, and it

is committed to liberalizing world trade as well (EU

commission 2014).

Figure 2.4 Trade in goods and commercial services 2013

Source: World Trade Organization 2013

The E.U. has the oldest history in regional economic

integration across the world. Created in 1957 by six

nations – Belgium, France, Italy, Luxembourg, West

Germany and Netherlands, the EU was a metamorphosis from

the European Coal and Steel Community founded by the same

members in 1952. Its membership increased to nine in 1973

with the joining of Denmark, Ireland and United Kingdom

and then it became the European Economic Community (EEC).

Other regional economic groups in Europe like the

European Union Free Trade Association (EU - FTA) that was

established in 1960 as an alternative body to the EEC for

European states that were once denied access or that did

not wish to join the EEC, later joined the EEC to swell

its membership ranks and had its identity changed to the

European Community (EC) (Wikipedia Online Encyclopedia,

2007). The creation of the single market and the

corresponding increase in trade and general economic

activity transformed the EU into a major trading power.

The EU is trying to sustain economic growth by investing

in transport, energy and research, while also seeking to

minimize the environmental impact of further economic

development.

According to the Wikipedia Online, prior to the formation

of the EU, physical, technical and fiscal barriers

existed in the EC which impacted negatively on the

community’s trade relations.

Physical Barriers: These included customs controls,

border stoppages, paperwork and red tape which

represented a hefty penalty for free mobility of goods

within the EC. As a result, intra-EC trade, and

especially the exchange of low value-added and perishable

goods, suffered.

Technical Barriers: These included divergent national

product standards, different technical regulations and

conflicting business laws. The implementation of

incompatible technical regulations and product standards

in a fragmented market led to the establishment of

different electricity systems for home appliances,

different television systems, different telephone

systems, and even to driving on a different side of the

road in different European countries.

Fiscal Barriers: These included lack of fiscal

harmonization; different fiscal regimes within the EC for

individuals and firms, and different rates in indirect

taxes, such as the value-added tax (VAT). The foregoing

obstacles notwithstanding, the tenacious capacity of the

EU countries to turn their economic fortunes around,

using the 1992 internal market arrangement as launch pad,

led to a largely successful removal of the physical,

technical and fiscal barrier to trade in the EU. To this

end, the rigid customs checks and stoppage (roadblocks)

at the borders were eliminated and made to give way to

light random examination of goods in transit; a flexible

and uniform visa entry system was adopted to enable

people move freely in and out of the EU nations; product

standardization based on uniform voltage and other

uniform technical specifications was adopted; the

differential tax system on goods and services was

abolished to pave way for a uniform tax system.

These structural changes, among many others, facilitated

by the adoption of the European Single Currency – the

Euro - led to tremendous gains for the EU member-nations.

First and foremost, trade and foreign direct investment

(FDI) increased. According to the Economist (1999),

exports goods and services rose from levels of 26.8

percent of the EU‟s Gross Domestic Product (GDP) in 1988

to 31.73 percent in 1997, while imports at the same

period increased from 26.06 percent of GDP to 29.25

percent. There was also the advantage of economies of

scale which led to technology transfer among the EU

nations; employment creation, and greater efficiency by

European Companies. Mergers and Acquisitions in the EU

increased by more than 2.5 times between 1987 and 1998:

from 2,775 to 7,600 (The Economist, 1999). The EU

integration efforts also led to increased labor

productivity. As reported by the Cecchini Report (1998),

Spanish productivity which was barely more than one

quarter of that of the U.S. in 1960, rose to levels above

80 percent in the early 1990s. The United Kingdom also

managed to close the productivity gap. Notwithstanding

the recorded achievements, the EU continues to make

futuristic plans on how to optimize the benefits of their

economic integration. New sophisticated transport

networks, especially railways, are being considered

across Europe to facilitate low cost and efficient

movement of people and cargo. According to the CILT

World (2007), an extensive network of high speed rail

system is being planned to be in place across Europe by

2020. This is expected to be a panacea to the increasing

delays in surface access to and from airports, as well as

the growing road congestion, all of which are a result of

increased economic activities, courtesy of the EU

economic integration and vibrant free trade program.

Apart from targeting transport network development, the

EU is continually expanding its market by either

admitting or attempting to admit the smaller economies of

Eastern Europe, Asia and even some of the Caribbean

Island countries into its fold, bypassing geographical

and cultural differences, all in a bid to maximize the

potential benefits of economic integration. A classic

reference is that of Cyprus, which is geographically

Asian but culturally European, but was all the same

admitted to the EU. It is the same for other various

countries that have been slated for admittance into the

EU at various dates in the nearest future, like: Turkey,

Albania, Bosnia & Herzegovina, Montenegro & Serbia and

Croatia, among many. The EU without doubt is master over

the intricacies of regional economic integration.

Figure 2.5 EU28 MERCHANDISE TRADE

SOURCE : EUROPEAN UNION WEBSITE

2.3.2 THE NORTH AMERICAN FREE TRADE AREA (NAFTA)

Figure 2.6; NAFTA MEMBER STATES

The goal of NAFTA was to eliminate barriers to trade and

investment between the U.S., Canada and Mexico. The

implementation of NAFTA on January 1, 1994 brought the

immediate elimination of tariffs on more than one-half of

Mexico's exports to the U.S. and more than one-third of

U.S. exports to Mexico. Within 10 years of the

implementation of the agreement, all U.S.-Mexico tariffs

would be eliminated except for some U.S. agricultural

exports to Mexico that were to be phased out within 15

years. Most U.S.-Canada trade was already duty-free.

NAFTA also seeks to eliminate non-tariff trade barriers

and to protect the intellectual property right of the

products. The NAFTA agreement is trilateral in nature -

that is, the stipulations apply equally to all three

countries in all areas except agriculture which is

negotiable bilaterally (Wikipedia Online Encyclopedia,

2007). Agriculture is considered a sensitive area

especially by the U.S and as such trade agreement on it

is jealously guarded. Results of different studies –

Lederman et al (2004); Weintraub (2004) and has increased

dramatically amongst the three nations since NAFTA.

Between 1993 and 2004, total trade between the United

States and its NAFTA parties increased 129.3 percent

(110.1 percent with Canada and 100.9 percent with

Mexico). Similarly, the Maquiladoras – Mexican factories

which take in imported raw materials and produce goods

for export – were found to have increased real income in

the industrial sector by 15.5 percent from between 1994

to 2004 due to the NAFTA implementation. The automobile

industry in Mexico is also reported to have benefited

from the NAFTA agreement resulting in increased turnover

in revenue hitherto unrecorded prior to NAFTA.

Environmental, labor, energy and legal issues often

remain contentious in the NAFTA, resulting in disputes

that lead to litigations in the different courts and

arbitration panels provided for by the NAFTA Agreement.

Many a time, the United States has been accused of non-

compliance with rulings once such rulings are not in her

favor. Further, a section of the NAFTA agreement which

allows corporations or individuals to sue any of the

member-nations for compensation when actions taken by any

such nation has adversely affected the individual or the

corporation’s investments has been criticized by Mexico

as benefiting the interests of Canadian and American

corporations to the detriment of Mexican businesses. Most

Mexican establishments reportedly lack the resources to

pursue a suit to conclusion against the much wealthier

states (Been, 2003).

With the United States sandwiched between Canada to its

North and Mexico to its South, and with its attraction

for drawing migrants, border restrictions that had

existed prior to NAFTA were not removed, although there

were adjustments made to accommodate the NAFTA

implementation. To this extent, between the United States

and Canada, NAFTA gave mobility rights to only listed

professionals (NAFTA Appendix). As well, the Canada-US

border has been tightened in recent years in response to

concerns about drugs and then terrorism. There is

however provision for the freedom of the mobility to be

suspended or terminated by either government at will.

The United States did not immediately open her borders to

Mexico despite NAFTA, for fear of being overrun by poor

migrants. But in 2000, the then Mexican President Vicente

Fox advocated the idea of free flow of people across the

US-Mexico border as a second phase of NAFTA, which would

be completed in ten years. However, negotiations ceased

after the September 11, 2001 attacks, when debate in the

United States shifted towards an immigration policy with

security as its main goal.

Development in early 2006 brought the Mexican – US border

and United States immigration debate to the center stage

in American politics. On May 17, 2006, the Senate passed

a bill proposing that a 370 mile triple – layered fence

be built along the US-Mexican border to slow down illegal

border crossings. However, illegal immigrants already in

the country would be provided a way forward to stay and

gain American citizenship. The new scheme would also

provide up to 200,000 placements per year for guest

workers (NAFTA website, 2007). Perhaps the greatest

challenge for NAFTA is a further integration into a North

American Community that would encompass more members than

presently are. But the snag, according to analysts, is

that each of the three existing members has pursued

different trade policies with non-NAFTA members (for

example, Mexico has signed free trade agreements with

more than 40 countries in 12 agreements), thus making the

possibility of creating a customs union with a larger

free trade area, difficult to accomplish.

Figure 2.7 US Trade with NAFTA Partners

Source: international trade commission’s interactive tariff and

trade website

2.3.3 THE ASSOCIATION OF SOTHEAST ASIAN NATIONS FREE

TRADE AREA (ASEAN)

Figure 2.8: ASEAN MEMBER STATES

Source: International Monetary Fund, 2012

The ASEAN Free Trade Area (AFTA) agreement was signed on

28th January, 1992 in Singapore with six founding members

namely: Brunei, Indonesia, Malaysia, Philippines,

Singapore and Thailand. Vietnam subsequently joined the

AFTA in 1995; Laos and Myanmar in 1997, and Cambodia in

1999. All ten countries of the ASEAN currently make up

the membership of the AFTA (Wikipedia Online

Encyclopedia, 2007). The ASEAN Free Trade Area has two

peculiar characteristics. First, the countries of the

AFTA are located at the Pacific Rim with some of them

being islands separated one from another by the vast

waters of the Pacific. Secondly, the political and

economic systems operating in the AFTA are not so

uniform. While the Philippines for instance is democratic

and embraces capitalism, Vietnam still has communist

tendencies and leans towards welfare, based on her long

practice of the system. Logically, these geographical and

institutional obstacles would initially suggest that the

region may not be an ideal region for economic and

political integration.

Unlike the EU, ASEAN Free Trade Area (AFTA) does not

apply a common external tariff on imported goods. Each

ASEAN member may impose tariffs on goods entering from

outside ASEAN based on its national schedules. However,

for goods originating within ASEAN, ASEAN members are to

apply a tariff rate of 0-5 %(the more recent members of

Cambodia, Laos, Myanmar and Vietnam, also known as CMLV

countries, were given additional time to implement the

reduced tariff rates). This is known as the Common

Effective Preferential Tariff (CEPT) scheme.

ASEAN members have the option of excluding products from

the CEPT in three cases: 1.) Temporary exclusions; 2.)

Sensitive agricultural products; 3.) General exceptions.

Temporary exclusions refer to products for which tariffs

will ultimately be lowered to 0-5 %, but which are being

protected temporarily by a delay in tariff reductions.

For sensitive agricultural products include commodities

such as rice, ASEAN members have until 2010 to reduce the

tariff levels to 0-5 %.General exceptions refer to

products which an ASEAN member deems necessary for the

protection of national security, public morals, the

protection of human, animal or plant life and health, and

protection of articles of artistic, historic, or

archaeological value. ASEAN members have agreed to enact

zero tariff rates on virtually all imports by 2010 for

the original signatories, and 2015 for the CMLV

countries.

Figure 2.9: SHARE OF ASEAN COUNTRIES EXPORT

SOURCE: IMF 2012

2.3.4 THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

Figure 2.10 SADC MEMBER STATES

The SADC Protocol on Trade (2005), as amended, envisages

the establishment of a Free Trade Area in the SADC Region

by 2008 and its objectives are to further liberalize

intra-regional trade in goods and services; ensure

efficient production; contribute towards the improvement

of the climate for domestic, cross-border and foreign

investment; and enhance economic development,

diversification and industrialization of the region.

Freeing trade in the region will create larger market,

releasing the potential for trade, economic growth and

employment creation. The SADC Free Trade Area seeks to

meet the following needs of the private sector and other

regional stakeholders:

Increased domestic production;

Greater business opportunities

Higher regional imports and exports

Access to cheaper inputs and consumer goods

Greater employment opportunities

More foreign direct investment and joint

ventures

The creation of regional value chains.

Established in 1980, the Southern African Development

Community (SADC) is made up of 14 countries at the

southern belt of Africa, namely: Angola, Botswana,

Democratic Republic of Congo, Lesotho, Malawi, Mauritius,

Mozambique, Namibia, Seychelles, South Africa, Swaziland,

Tanzania, Zambia and Zimbabwe. According to reports

monitored on the SADC website (2007), the main aim of

establishing the SADC was to coordinate development

projects amongst members in order to lessen economic

dependence on the then apartheid South Africa. Hence the

SADC presented a common front for assessing development

aids from foreign donors. So right from inception, the

driving force of the SADC has been socio-political rather

than economic considerations. These notwithstanding, the

countries having realized the potential economic benefits

that free trade can bring to them, have allegedly at

several times over the years, discussed a Southern

African Development Free Trade Agreement (SADC FTA).

The SADC Free Trade Area was achieved in August 2008,

when a phased programme of tariff reductions that had

commenced in 2001 resulted in the attainment of minimum

conditions for the Free Trade Area - 85% of intra-

regional trade amongst the partner states attained zero

duty. While the minimum conditions were met, maximum

tariff liberalization was only attained by January 2012,

when the tariff phase down process for sensitive products

was completed. For countries falling under the Southern

African Customs Union (SACU), this process was completed

in January 2007. For Mozambique, the process will only be

completed in 2015 in respect of imports from South

Africa. Twelve out of fifteen SADC Member States are part

of the Free Trade Area, while Angola, Democratic Republic

of Congo and Seychelles remain outside. Malawi fell

behind with the implementation of its tariff phase-down

schedules since 2004. In December 2010, Malawi undertook

a tariff reform exercise to align its tariff schedule to

the COMESA and SADC tariff regimes. Since this

intervention, the SADC Secretariat is assessing Malawi’s

tariff schedule to determine the level of compliance with

its commitments under the SADC Trade Protocol. Zimbabwe

experienced problems in implementing its tariff

commitments on sensitive products and was allowed to

suspend tariff phase-downs from 2010 until 2012. Annual

reductions will therefore resume in 2012, for completion

in 2014. Although Tanzania was on schedule with its

tariff commitments, the Government applied for derogation

to levy a 25% import duty on sugar and paper products

until 2015 in order for the industries to take measures

to adjust.

The impact of a literarily non-existing free trade

agreement amongst the SADC countries, based on above

reasons, is far-reaching. With the exception of Botswana

and South Africa, which have eliminated bilateral

tariffs, intra-SADC tariff rates remain high, uneven and

selective for various products across the countries in

the sub-region. For instance, on the average, Zimbabwe

charges 12 percent duty against imports from Malawi, and

94 percent against imports from Tanzania. Botswana,

Malawi, Zambia and other SADC countries charge zero

percent duty against imports from Mozambique; Zambia

charges 20 percent duty against imports from Malawi.

Apart from these, South Africa protects its apparel

industry from other SADC countries, charging 13 percent

against apparel imports from Mozambique, and 31 percent

against the rest of the SADC countries. The EU influence

also pervades the export markets of all SADC countries.

For Botswana, 76 percent of its exports – primarily

diamonds – are exported to the EU. Other SADC countries

send between 28 percent and 39 percent of their exports

first to the EU markets before considering other world

markets. The implication of this export traffic is that

most of the SADC countries sell more of their products to

the EU (and at cheaper rates which are mostly determined

by the EU), than they do amongst themselves within the

SADC. This notwithstanding, the EU protects processed

foods, fruits and vegetables from imports from its SADC

trade partners, charging a range of between 29 percent

import duty against Mozambique, to 86 percent against

Botswana. Of course, non-tariff barriers like customs

control, lack of a common currency, entry restrictions at

border posts, exist parallel with the tariff barriers

enumerated above.

With the foregoing rather poor intra-community trade

index practices espoused in the SADC, the prospect of a

true free trade programme taking off in the region may be

difficult in coming. According to an evaluation on the

SADC website, South Africa is not large enough to serve

as a growth pole for the region and because of this,

access to the EU markets would provide substantially

bigger gains for the other SADC countries than access to

South Africa. If this evaluation and the pervading

influence of the EU in the SADC are anything to go by,

then the prospect of free trade in the SADC may remain a

mirage for yet a long time.

Figure 2.11 Share of Total SADC AG GDP

ource : (SADC WEBSITE 2007)

2.3.5 THE ECOWAS TRADE LIBERALIZATION SCHEME (ETLS)

The ECOWAS Trade Liberalization Scheme (ETLS) is the main

scheme designed to further the integration process in the

sub region through trade though as indicated earlier

other forms exits. Since the study is on trans-border

trade it is important to discuss the scheme in relation

to the agenda for sub regional integration. Trade

measures all over the world such as the scheme adopted by

the sub region is a stepping stone towards the main

objective of a customs union as enshrined in Article 12

of the treaty.

The ETLS was launched in 1990 after it was postponed

three times when it was introduced in 1979.The objective

of the scheme is to slowly establish a customs union

among member countries in the sub region over a period of

fifteen years from January 1, 1990. The scheme when

implemented has the effect of gradually removing all

tariff and non-tariff barriers to intraregional trade of

which Ghana and Togo is part and has been seen as

obstacles to the free flow of trade. The first stage of

the implementation process will see tariff and non-tariff

duties being made equal among member countries and having

the same charges of tariffs. Member countries are not

expected to increase or reduce import duties for two

years and must not put in place new charges what so ever.

The existing tariff would not be increased nor be set

new. This regulation serves as the guiding principle on

which member countries will gradually remove tariff until

it eventually ceases to exist. This process has been

there since 1979 and the ETLS is building up on it17.

The second stage is the immediate liberalization of trade

in unprocessed goods and traditional handicrafts. Within

the coverage of the trade liberalization scheme the

products are divided into unprocessed good, traditional

handicraft products and industrial products. The

unprocessed goods are animal, mineral and plant products

that are in their raw state. The traditional handicraft

products are products made by hand without any tool,

instruments or devices that might have been used by the

artisan. The raw materials used should come from the

community of origin18. The third stage is the

liberalization of industrial products within the sub

region. These products that emanate within the sub region

are entitled to limited tariff based on the category of

products and the specific country of origin. These are

both processed and semi processed products emanating from

the country of origin19. It is expected that total tariff

exemption for industrial products is to be achieved after

ten years from 1990.

The fourth stage is the gradual establishment of a Common

External Tariff (CET) for the sub-region. The Common

External Tariff when achieved would lead to the envisaged

idea of a customs union in the sub region. The West

African Economic and Monetary Union (WAEMU) i.e. eight

francophone West African countries excluding Guinea have

already established a CET as the way forward to the

establishment of a customs union. With the support of the

ECOWAS Commission, the non WAEMU countries are urging

closer to the implementation of CET, which would be

merged with that of the WAEMU countries for a single

customs union. This involves the harmonization of fiscal,

monetary and financial policies of member countries. A

new initiative was launched on January 1, 1990, that is,

tariff duties under this programme, would be reduced on

industrial commodities and these industrial commodities

have been grouped into priority and non-priority

commodities. Member countries were subsequently grouped

based on their level of development for the appropriate

tariff to be charged .The first group was the

industrialized countries, thus Ghana, Cote d’ Ivoire,

Nigeria and Senegal. They are required to reduce tariffs

completely on priority and non-priority commodities for

four and six years respectively by 25% and 16.66%

respectively. The second group of countries is Benin,

Guinea, Liberia, Sierra Leone and Togo. They were to

reduce their tariff over a period of six years and eight

years on priority and non-priority commodities by 16.66%

respectively and 12.5 % respectively. The third group is

Burkina Faso, Cape Verde, The Gambia, Guinea Bissau,

Mali, Mauritania and Niger. They were to eliminate their

tariffs in eight years for priority commodities by 12.5%

and ten years for non-priority commodities by 10%20.Since

the launch of the scheme, trade barriers in the West

African sub region have been reduced substantially to a

point. Unprocessed commodities, traditional handicraft

products and industrial products can now move freely

within the sub region. However there are challenges

associated with its implementation. Trade measures in the

world, like the scheme that exists in the sub region

definitely come with the loss of revenue, when there is

variance in the level of development in a region. For the

West African sub region, the least developed countries

were bound to lose a great deal of revenue when the

scheme is implemented due the unavailability of

production structures and dependency on customs duties

for revenue. A compensation fund was established to cater

for the challenge the least developed countries were to

face in the sub region, as they were hesitant in signing

onto the scheme. The fund has been in place but the lack

of contribution by member countries is making the fund

ineffective. Another challenge is the issue of tracing

the origin of the commodity. The Rules of Origin was

established to determine which country the commodity is

coming from before it could enter the ETLS. This proved

difficult stemming from the rule that required the

participation of citizens of the sub region engaged in

this enterprise to be 51 %21.This proved difficult

because tracing the ownership of the enterprise was a

problem due to the issue of privatization and private

foreign investment. Another problem identified was the

lack of production structures and industrial base in the

sub region coupled with the production of similar

commodities in raw materials. Since the production of

industrial commodities is low in the sub region, the

development of production structures will increase intra

community trade but that will be a long term project and

were the commodities have to be diversified. What we now

see is trade restriction instead of the free flow of

commodities across borders, despite the existence of the

ETLS. Member countries also fear that the removal of

trade barriers will collapse their infant industries with

the influx of cheap and inferior goods into their country

eventually leading to retrenchment of employees. The ETLS

has not been effective as there is still low intra

community trade in the sub region though its existence is

expected to enhance intra community trade and for that

matter trans-border trade.

2.4 PROS FROM SUB REGIONAL INTEGRATION IN WEST AFRICA

Since the formation of the West African sub regional

group, there have been tremendous efforts to enhance the

integration process in the areas of trade, physical and

production infrastructure , the maintenance of peace and

security and the need for a common currency among others.

The success story has been mixed with successes in

certain functional areas where as others have not been

accomplished. In an effort to enhance the integration

process in the West African sub region, the ETLS was

introduced and revised both in 1979 and 1990 respectively

that was contingent on some articles including the

protocol of free movement of goods and services, persons

and the right to residence and establishment. Countries

in the sub region have abolished entry visa requirement

and stay permits for citizens and has also introduced the

community passport to aid the integration process.

Citizens in the sub region can move freely to another

member country and settle for ninety days whiles

finalizing his or her stay for an extension of stay.

There is also the right to establishment, where a citizen

of member country can establish a business without

discrimination in another member country. It is without

doubt that there have been improvements when it comes to

infrastructure in the West African sub region. Taking the

road transport, telecommunication and energy for instance

which make up the physical infrastructure, the West

African sub-region has seen major construction over the

last decade. Road transport which is the dominant mode of

transport in the West African sub region accounts for

between eighty to ninety per cent of the sub region’s

passenger and freight transport (ECOWAS report 2007). The

construction of the Trans – coastal and Trans Sahelian

highway is another case in point which when completed

will pass through Lagos to Nouakchott and from Dakar to

Niamey respectively, other inter connecting roads have

been constructed to enhance the road networks in the sub

region which will further the integration process. In

the area of telecommunication, there has also been

improvement when it comes to the facilitation of

communication in the sub region. A case in point is the

introduction of INTELCOM I programme which allows the

direct transmission of calls into the West African sub

region. With the completion of the INTELCOM I in 1995,

came the introduction of INTELCOM II25 programme which

has also been completed since 1997 which had brought

about other services like internet, fax, telefax etc.

There is also now the laying of underground fiber optic

cable in the West African sub region to augment the

efficiency in the telecommunication sector. The energy

sector has also seen the construction of the West African

Gas Pipeline (WAGP). This project is expected to augment

the energy sector in the sub region with the supply of

gas from Nigeria through Benin, Togo and Ghana. The

completion date was set for 2009 after it started in 2005

but due to challenges it has still not met the completion

date. The West African Power Pool (WAPP) is another case

in point which is to connect national electricity grids

with an installed capacity of 10000 megawatts26 to

improve the electricity problems in the sub region by

2015. Added to this is the introduction of a Brown Card

in the sub region to facilitate the movement of vehicles

across states27. This Brown Card also serves as a motor

insurance where there is a third liability insurance for

citizens in the sub region in case of any liabilities.

Another accomplishment in the West African sub region is

the issue of security. This is imperative because as

states depend on each other in a regional integration

arrangement, the possibility of conflict between them is

minimized. Leaders in the West African sub region have

played many roles in bringing peace to some conflict

areas like Liberia, Guinea Bissau, Sierra Leone among

others. For instance, The ECOWAS Peace and Monitoring

Group (ECOMOG) intervened in the Liberian and Sierra

Leonean conflict that broke out in the 1980s.

Having come to the realization that an economic and

monetary cooperation among member states was an essential

element of integration in the West African sub region,

the West African Clearing House was established in 197528

to function alongside the Economic Community of West

African States (ECOWAS) for the much expected single

currency in the sub region in their transaction rather

than the use of foreign currencies. Member countries

among other issues will harmonize their macro- economic

policies leading to a coordinated and compatible policy

Framework (Centre for Regional Integration in Africa;

2012). Generally, it is hoped that economic integration

in the West African sub region will not only usher in

sustainable socio-economic and political development, but

will to a large extend provide a solid platform and a

bigger bargaining power for a united front in

negotiations involving the region and other regions of

the world30. It is expected that economic integration

will alleviate the high poverty rate in the sub region

and Africa as a whole which is in tandem with the

Millennium Development Goals (MDG) 2000.

2.5 CONS OF SUB REGIONAL INTEGRATION IN WEST AFRICA

Despite the numerous calls for integration in the West

African sub region, the integration process has been

rather disappointing. Regional integration in African has

been over burdened with several challenges and

difficulties, even though it has managed some successes

in its operations. A number of challenges outlined below

among others have played an important role in undermining

the efforts of integration in the sub region. Since the

formation of the West African sub regional group,

political instability has been a major problem hindering

the integration process. West Africa has experienced a

lot coup d’ etats and civil wars over the period, which

have to a large extent affected the effort of the sub-

region to integrate. These challenges make it quite

difficult to implement protocols adopted by Heads of

State and Government. Resources that could be used in

championing the course of integration are rather

channeled in solving this problem. More so, the expensive

nature and time consuming nature of reconciliation

exercise also tend to lead to the wastage of resources.

The lack of political will by leaders of the West African

sub region to implement most of the protocols adopted is

also a challenge. The success of the integration process

depends largely on these leaders to implement the

protocols adopted. For instance, the protocol on the

ECOWAS trade liberalization scheme has not been fully

implemented after its subsequent revision in 1990 to make

it more effective, as a result member states have failed

to adopt a common external tariff (CET). Whilst the

UEMOA countries are doing much well in their

implementation process, ECOWAS countries are lagging

behind. A report compiled by the Executive Secretariat in

September, 1998 shows an average of 45% of programmes

have been implemented by the ECOWAS countries and 68.8 %

has been implemented by the UEMOA countries (Asante, S.

K. B., Issues in Africa Integration 2012 ). These figures

have improved in present times for ECOWAS, considering

that there has been improvement in infrastructural

development within the sub-region. Another challenge is

the inadequacy of production structures within the sub

region; this is regarded as one of the top priority

programmes in West Africa. Production in the sub region

is based on raw materials; however, the sub region has

poor production infrastructures to transform these raw

materials into finished or processed goods. Should there

be improvement in production structures, it will help

diversify the raw materials produced to boost intra

community trade and reduced the external dependency.

After more than three decades of the existence of the

group, harmonization of sectorial policies in

agricultural industries, transport and energy is yet to

be finalized (Centre for Regional Integration in Africa;

2012). The issue of rationalizing the existence of inter-

governmental organization (IGO) operating in the sub

region also poses a great deal of a problem to the

integration process in particular to the trade

liberalization programme (THE WAY FORWARD, LECIA, Accra,

2000). These groups in existence are the Mano River Union

(MNR), the Economic Community of West African States

(ECOWAS) and the West African Economic and Monetary Union

(WAEMU). In addition to the above mentioned, is the

inability of member countries in the West Africa sub

region to meet the convergence criteria in achieving the

quest for a common currency. Most countries in the sub

region are faced with the challenge of meeting a number

of the criteria set out by the monetary institution of

the sub region. Some of which are attaining a single

digit inflation, the reduction of budget deficit of not

more than four per cent and the ability to meet the gross

external reserves to cover at least three months of

imports. These inclusion criteria have been identified as

some of the challenges that has inhibited and slowed the

integration process in sub-region. For example, for it to

be possible for the member states to adopt one currency,

member states would have to work to attain a certain

level of economic development as well as strength some of

their economic indicators; for example their reserves and

inflation (Regionalism and Economic Integration in Africa

2006) .Several scholars have indicated the importance of

trade in the sub-regional integration of Africa, hence

the West African sub-region (Topical Economic Issues

Pertinent to the Formulation and Conduct of Foreign

Policy in Ghana, LECIA, Accra,1998 ). Integration have

been identified to be mainly trade induced; in this

respect, trade intensity is considered very important in

the effort to integrate. However, intra-West African

trade was approximately only 14% (‘Regionalism and

Economic Integration in Africa: Challenges and

Prospects’, Lejia, 2006). This disappointment according

to scholars, is one of the reasons why efforts of

regional integration have not yielded the expected

outcomes (Policies for Regional Integration in Africa

2000).

2.6 CONCULSION

The poor regional integration in Ecowas is due to its

inability to implement its laid down protocol on movement

of freight at member states border. According to the

Trade and Transport, Facilitation in Southeast (TTFSE),

the maximum acceptable time according to EU standards for

clearance of vehicles between two border countries is 40

minutes. On the other hand, ECOWAS hasn’t been able to

implement ECOWAS Trade Agenda totally thereby making

movement of freight around member state border time

consuming, according to international transport workers

federation (ITF 2005) waiting time at the border crossing

ranges from 2-5 days, this delay can be attributed to the

process used to clear goods and massive corruption at the

border. From a logistician view point, the time spent at

the border amounts to a cost which can be referred to as

time cost, Furthermore logisticians and private companies

are neglecting the activities, not recognizing that the

border van play a very important role in business

process. There is no doubt that the private sector has

the potential of providing very useful input in the

regional integration process. For example, the sector

could help with regard to, technical issue such providing

ultra-modern production facilities; which could have

quite a severe impact at the firm level. In spite of the

government being one of the major influences of the

regional integration process, there are other

stakeholders such as the private sector whose involvement

has been identified as fostering the process

(Hartzenberg, 2005). Hartzenberg describes the role of

the private sector as the fabric of regional integration.

The author laments the non-involvement of the private

sector in African Regional integration agreements (RIAs)

and describes this as the only exception in African RIAs.

Many other scholars also concur that the potential of the

private sector in fostering regional integration has not

been harnessed (‘Regionalism and Economic Integration in

Africa 2006). The lack of private sector involvement and

participation, both within the planning and

implementation of a conducive policy environment for the

integration processes has achieved a minimum deliberate

input. The private sector has the financial resources and

own productive capacity that could stimulate the

production of finished or semi-finished merchandise.

However, the relegation of private sector in the sub

regional integration process has seen a negative

impartation on trans-border trade that may not aid in the

sustainability of the integration efforts in the region.

One of the major challenges of RIAs in Africa, which has

erupted in recent times, is the external interferences’

of such world organizations such as WTO, EU etc. and

other agreements with other regional block such as the

EPA, HIPC etc. (‘Regionalism and Economic Integration in

Africa 2006).. These agreements has complicated the

integration process and hinders the integration process;

by introducing policies that contradict the RIAs, and

constraints members states from performing their

responsibilities and adhering to the rules of the

Regional integration Agreements. For example; whereas

regional integration does not permit trade liberalization

with the external world (outsiders), it permits the

liberalization of trade among member states; however,

these external organizations compel member states to

consent to policies that establishes trade liberalization

with them. One of the major impediments that have made

realization of the RIAs very insidious has been the

inability of the member states to incorporate integration

agendas into their national plans. Even though, all

member states sign agreement to create and facilitate

intra-regional trade and business, they fail in creating

an enabling environment for such business. Some of the

most problematic factors for doing business in the region

include inefficient government bureaucracy; poor work

ethic towards foreign nationals; poor infrastructure and

lack of access to finance for foreign nationals also

feature as key issues here. The inability of the members

to honor their responsibilities and promises has being a

major reason why much has not been achieved even with

intra-regional trade.

CHAPTER THREE

METHODOLOGY

3.1 INTRODUCTION

This chapter involves various methods used in gathering

data to achieve the purpose of the study. This includes

targeted population and sample size, sampling design and

research design, tools for data collection and the

procedure for data collection.

3.2 TARGET POPULATION AND SAMPLE SIZE:

The research was conducted at the Aflao border, Ghana.

Aflao is located at south ketu district in the Volta

region which borders Togo and Ghana. For the purpose of

this study, the researcher decided to interview 36 truck

drivers, 12 shippers, 2 government agents who are users

and stakeholders at the border.

3.3 SAMPLING PROCEDURE

Data collection was done by picking respondent by a

simple random method. This was done to ensure that all

potential respondents had a fair chance of being sampled.

3.4 RESEARCH DESIGN

Primary study conducted on the Aflao border at the

commencement of the research reveals an energetic

population made up of trip makers with different

purposes – travelers in transit, cargo agents and

transporters, government agents and traders(hawkers, on

spot), most of who patronize the border on a daily basis.

Due to the large and varied population component, without

a commensurate detailed record keeping culture, the exact

population that make daily trip to the border could not

be ascertained. One peculiar character of this population

is their hurried nature of movement, apparently to meet

up with tight commercial schedules. This characteristic

of the population prompted the researcher to adopt the

random sampling procedure for selecting the sampling

frame. Table 3.1 outlines the components of the sample

population, the types of data instruments employed and

the quantities of the instruments that were administered

on each component of the sample.

3.5 DATA COLLECTION METHODS AND TECHNIQUES

Primary and secondary data collection, were used to

collect data.

3.5.1 Primary data

Information from this source included the administration

of questionnaires, granting of interviews, and recording

of certain phenomena (observations) that were considered

relevant to the study. Questionnaires were administered

on transporters and cargo agents at Aflao border. The

basis for this was for the analysis of the processes of

moving cargo across Aflao border and the challenges

encountered by trip makers to the border. Interviews was

fielded by Ghana customs. The interviews dealt on the

respondents‟ perception of the impact of government

agencies‟ activities at the border and its surroundings

in respect to the ETLS. The impact of the activities of

government agencies on the movement of cargo and persons

were rated from “poor” to “excellent”.

3.5.2 Secondary data

Secondary included published and unpublished papers.

Published materials included books, journals, newspaper

articles and bulletins, and the various ECOWAS

publications including the Compendium of ECOWAS Treaties,

Protocols, and Decisions made since the ECOWAS inception.

Unpublished materials included extracts from the records

of the Nigerian Customs time spent and cost of cargo

movement at Aflao border, there was no data given for the

volume of cargo and trade at Aflao border, the customs

officer stated that such document is confidential and

cannot be disclosed. These two set of records provided

data for the study. Other unpublished works included

various postgraduate dissertation theses and seminar

papers, mimeographs and lecture notes. The internet

equally contributed a significant part of the secondary

data source.

3.6 QUESTIONAIRE DISTRIBUTION TECHNIQUE

With the appropriate respondents identified, some of the

questionnaires were enveloped and handed over to the

respondents while some were collected immediately after

completed. In most cases the researcher was asked to come

for the questionnaires on the date fixed by respondents.

Interviews with the high ranked customs officers, freight

forwarders and truck drivers, after they were contacted

to determine the time most suitable for them.

3.7 DATA ANALYSIS AND INTERPRETATION

Confidentiality and personal data protection are duly

observed in this study. The data collected from the

questionnaires will be analyzed using Microsoft excel to

analyze (tables and charts), and presented using

descriptive statistical techniques. In processing the

data collected from the sampled units, responses from the

questionnaires will be obtained, coded, tallied and

grouped. Frequency tables will be constructed and used to

present the findings and conclusions will be drawn based

on the percentages. Bar and pie charts will also be used

to present some of the data. While the audio tapes of

each interview will be transcribed verbatim and relevant

comments will be arranged according to the research

questions they address. The results will be cross checked

with written comments and relevant conclusions will be

made on the facts from the interviewees. Based on the

findings and conclusions drawn, recommendation shall be

3.8 LIMITATION OF THE STUDY

1 Non-cooperation of Government Agents: The middle and

low-cadre officers of the Customs, Immigration and Police

authorities of both countries were not enthusiastic about

completing questionnaires, citing “security reasons” and

“busy schedules”. Apparently, there was suspicion among

them that the researcher could be a government secret

agent disguised as an academic trying to expose

unwholesome practices at the border, even though the

researcher presented evidences that were contrary to

their notion. The researcher had to resort to interview

to elicit responses from them.

2. Language barrier: The multilingual use of both English

and French at the border posed a constraint to the

researcher as he neither speaks nor understands the

French language. Resort had to be made to the use of

interpreters to convey his intentions to the French

speaking respondents. This had a real setback on time.

CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION OF RESULTS

4.1 INTRODUCTION

In this chapter an attempt was made to analyze data and

interpret results based on the various data instruments

employed. The analyses were segmented into

questionnaires, interviews, observations and the test of

hypotheses. Presentations were carried out in Tabular

formats for the purpose of simplicity.

4.2 ANALYSIS ON EDUCATION BACKGROUND

The table 4.1 and bar chart 4.1 below shows the level of

education attained by Ecowas member state and non-

Ecowas, and how they are aware of ETLS as show in table

Table 4.1 Educational level

Nationality Basic

education

Secondary

education

Tertiary

educationEowas

countries

15 11 1

Non-Ecowas

countries

Source: Field survey, 2015

Figure 4.1 Educational level

Ecowas Non-ECOWAS

Chart TitleAgents Non-Agents

The table shows that more Ecowas countries, have higeher

amount of drivers with basic education, higher amount of

drivers who attended high school and a less amount

attended a tertiary institute. Drivers who belong to one

of the non Ecowas countries total the chart in highest

amount of drivers with amount of drivers with tertiary

education.

Awareness of the ETLS

Table 4.2 ETLS AWARENESS ETLS UNAWARE

ETLS aware ETLS unawareEcowas 4 23

Non-Ecowas 5 4Source: Field survey, 2015

Figure 4.2 ECOWAS

ETLS aware15%

ETLS unaware85%

Ecowas

Figure 4.3 Non-ECOWAS

ETLS aware 56%

ETLS unaware44%

Non-Ecowas

Source: Field Survey, 2015

The chart above clearly shows that a greater number of

drivers who transport cargo through the Aflao border are

unaware of the ETLS protocol. The awareness can be

strongly linked to the level of education the respondents

attained

4.3 ANALYSIS OF MOVEMENT OF CARGO ACCORDING TO TYPES

From table 4.3, it is evident that the type and volume of

cargo transported by Ghanaian, Ecowas and Non Ecowas

drivers and agents at Aflao border, vary by nature of

cargo.

Table 4.3: Types of Cargo Transported by Respondents

Transported cargo Ghanian drivers Ecowas countries Non ecowasraw m aterials 1 3 0finished goods 4 5 2work in progress 1 2 6genral cargo 5 6 1

Figure 4.4 Types of Cargo Transported by Respondents

raw materials

finished goods

work in progress

genral cargo

0123456

Ghanian driversEcowas countriesNon ecowas

Table 4.4 Number Of Cargo Transported By Type

Raw m aterials 4Finished goods 11W ork in progress 9General cargo 12

Figure 4.5 Number Of Cargo Transported By Type

Raw materialsFinished goodsWork in progressGeneral cargo

Source:

Field survey, 2015

Survey derived from respondents, shows that out of 100%

of cargo transported, 33% are general cargo, 25% are work

in progress, 31% are finished goods will 11 % are raw

materials. It 64% of goods coming though the Aflao border

are general cargo (General merchandise) and work in

progress (semi-finished) goods.

4.4: TONNAGE OF VEHICLES USED BY RESPONDENTS

Table 4.5 Tonnage Of Vehicle Used By Respondents

Size of vehicle1-4 ton 15-10 tons 611- 20 tons 15above 20 tons 14

Figure 4.6 Tonnage Of Vehicle Used By Respondents

Size of vehicle

1-4 ton 5-10 tons

11- 20 tons

above 20 tons

Series1

4.4.1 ANALYSIS OF CARGO TYPE BY VEHICLE SIZE

Table 4.5 show the type of cargo in relation to size of

the vehicle used to transport the cargo through Aflao

border.

Table 4.6 Cargo Type By Vehicle Size

Size of vehicle Raw m aterials work in progress finished goods general cargo1-4 ton 0 0 0 15-10 tons 0 0 2 411- 20 tons 1 3 6 7above 20 tons 3 6 3 0Source: Field survey, 2015

Figure 4.7 Cargo Type By Vehicle Size

Raw materials

work in progress

finished goods

general cargo

1-4 ton5-10 tons11- 20 tonsabove 20 tons

The above chart shows that only general cargo is

transported by vehicles between 1-4 tons, while it

accounts for the greater number of cargo transported with

vehicle of between 11-20 tons and larger amount of cargo

transported with vehicle of between 5-10 tons

4.5 DOCUMENT PROCESSING THROUGH AGENTS AND WITHOUT

AGENTS

Though it is stated in the legislative instrument 1178

(Customs House Agent Licensing Regulation) of 1978 all

importers with the exception of declarants, to engage the

service the services of licensed Customs House Agents for

clearance of cargo of any freight station in Ghana.

“Processing of cargo documents at the border is very

tedious” quoted one of the drivers. A research on 36

respondents, only 22 of the respondents responded to the

questionnaire. A table of the response of the cargo

driver as shown in table 4.6 and bar chart 4.5, was to

ascertain how many cargo drivers process their documents

through agents and if Nationality has an effect on the

use of agents for clearance of cargo. Processing of

documents, are either import and export, data collected

was obtained from the import section because the people

who were processing export document stated they were

working against time so wouldn’t have time to answer my

questions.

Table 4.7 Agents And Non-Agents By Nationality

Ecowas Non-ECOWAS

Agents 19 3

Non-Agents 0 0

Figure 4.8 Agents And Non-Agents By Nationality

Ecowas Non-ECOWAS

Chart TitleAgents Non-Agents

From data obtained, it is evident that all the drivers

interviewed used agents to process their cargo documents,

stating that it was a norm, reason cause not using of

agents will amount to longer waiting time for papers to

be processed, stating that agents have good rapport with

the customs and other government agencies that enable the

paper processing. Though there is a law making sure a

licensed Customs House Agents clears goods from the

border, most of the driver sited the main reason for use

agents was to facilitate faster cargo clearance.

4.6 CARGO CLEARANCE PROCESSING TIME

From survey conducted, processing of document to be

cleared by the customs depends on the vehicle size and

type of cargo as citied by 1 of the 12 agent. They are

some cargo that require to offloading in other to be

checked by the customs while they are some that will need

to go through scanner .Furthermore, before a vehicle

carrying cargo is cleared, it must undergo 4 stages

before the cargo is cleared namely;

1. Assessment &Valuation

2. Tax & Duty Payment

3. Endorsement

4. Release

The table shows steps in relation to time spent at for at

each stage

Table 4.8 Cargo Clearance Processing Time

Tim e spent Valuation Duty paym ent Endorsm ent ReleaseDriver 1 8 2 1 2Driver 2 9 2 2 1driver3 6 1 1 5Driver 4 10 1 3 2Driver 5 14 1 3 2Driver 6 12 2 7 3Driver 7 24 1 1 1Driver 8 20 3 4 3Driver 9 12 2 6 4Driver 10 9 2 4 3Driver 11 12 2 3 2Driver 12 7 3 4 5Source: Field survey

Figure 4.9 Cargo Clearance Processing Time

Driver 1

driver3

Driver 5

Driver 7

Driver 9

Driver 11

ValuationDuty paymentEndorsmentRelease

Source:

Field survey, 2015

Table 4.8.1 Total time spent by process

Valuation tim e 11.91666667

duty paym ent 1.833333333

endorsm ent 3.25

release 2.75

Sample size of 12 agents could give an accurate time

spent for each process, most time is spent for valuation

of the cargo and less time is spent at payment of duty.

And an average time spent at the border is 19.75 and in

converted to hours and minutes, is 20 hours 25 minutes

which almost the whole day spent to clear goods at Aflao

border.

Figure 4.10 Total Average time spent for clearance

V d endo...

re ave -

Series1

Table 4.8.2 Average Time Spent

average tim e spent 19.75

Source: Field Survey 2015

Table 4.8.3 Total time spent by drivers

The table below shows the total time spent by each driver

for their cargo tuck to be cleared

total tim e spent by driversDriver 1 13Driver 2 14Driver 3 13Driver 4 16Driver 5 20Driver 6 24Driver 7 27Driver 8 30Driver 9 24Driver 10 18Driver 11 19Driver 12 19Source:

Figure 4.11 Total Time Spent By Drivers

0102030

Series1

Source:F

ield survey, 2015

4.7 COST OF IMPORTS

For importation of goods into Ghana, eight types of tax

must be paid and is calculated based on cost insurance

and freight (CIF) value, the eight types of tax are

namely:

Import duty

Value added tax (VAT)

National health insurance levy

ECOWAS levy

EDIF (export development fund)

Examination Fee

Processing fee

Special importation levy

From information I gathered from the customs, a fee is

paid whenever a vehicle enters Aflao border and it differ

from the other taxes paid Ghc 30 of the amount paid is

said to be used for administrative fee and the balance is

used for road funds. The fee varies form size of the

vehicle.

Table 4.9 Cost of entry to Aflao border

Articulator trucks cargo trucks below 20 tonsm ini trucks cars and suvs90 70 60 50

Source: Field survey

Diplomatic missions are exempted from paying these fees,

the most surprise of the exemption of this fee are the

Non-ECOWAS, reason for exemption was that, they acquire

what is called “cane” a form of travelling insurance it

is only signed by the customs officer.

They are other taxes paid apart from the tax stated in

the above table and it is calculated from the percentage

of the value of CIF value, as listed below.

Import duty : Import duty is calculated based on

the value of the goods Ad-valorem or the weight of

the goods on CIF value

Value added Tax: VAT is a flat rate which is 17.5%

of the CIF plus import duty

NHIL: National health insurance levy is 2.5% of CIF

plus import duty

ECOWAS levy: Ecowas levy is 0.5% of CIF, that is

say the value of the import duty will to be added

to the CIF

EDIF: Export development fund is 0.5% of the CIF

Examination fee: These Is the fee paid to the

customs for examination of cargo which is 1% of the

CIF value

Processing fee: these 1% of the CIF value

Special importation levy: 2% of the CIF value.

Before a cargo get is on board inland transport and

other cost before it gets onboard is F.O.B, its

calculated based on F.O.B value free on board, when the

cargo been cleared, it is calculated on C.I.F value,

which is the F.O.B which calculated by the value of the

goods or with. C.I.F is simply F.O.B + insurance (cover

for cargo) + freight (the cost of transporting the cargo

charged by the carrier). Above are the import taxes the

customs officer was sited as the amount collected by

them at the border. My research also shows other forms

of gratification are paid to the customs and other

government agencies at the border were not sited,

“According to shippers (agents), gratification are paid

to the customs, immigration, health officials, health

officials, standard board and national security to

facilitate cargo movement at Aflao border 17 of the 36

respondent gave an exact figure give to each

governmental agency.

Table 4.10 Gratification paid to government agencies

Respondents Custom s Im m igration Public health1 100 20 102 120 15 203 75 30 204 50 40 205 50 35 106 50 20 307 50 30 508 100 40 409 150 20 1010 300 30 2011 200 20 3012 30 40 4013 50 30 3014 120 50 2015 130 20 1016 100 30 4017 80 20 10

Figure 4.12 Gratification Paid To Governmental Agency

Amount in Ghana cedis

1 2 3 4 5 6 7 8 9 10111213141516170

CustomsImmigrationPublic health

Table 4.8.2 Average amount paid to government agencies

avg cutom s 103.24

avg im m igration 28.82

avg health 24.12

total aflao 156.18 Source: Field survey, 2015

Figure 4.13 SHARE OF GRATIFICATION PAID

avg cutoms avg immigration avg health

The data shows that an average of GHC 103.24 (66%) is

spent in addition to the taxes paid at the customs point

while GHC 28.82 (18%) and GHC 24.12 (15%) were spent at

the immigration and health officials at Aflao border.

That is to say on average, the total of GHC 156.18 is

being collected at the border as a form of

gratification. Some respondent argued that fact saying

the money spent as gratification is usually more than

the stated amount because the process of checking of

cargo involves some other governmental agencies like

(standard board, National security and so on), and

sometimes goods are offload at the shippers cost and

storage of goods also comes with a charge which non

could state the specific amount and agents charge are

also inclusive and varies pending on the agent used to

clear goods.

4.8 INTERPRETATION OF CUSTMER OFFICER’S INTERVIEW

An interview was granted to me by a high ranked customs

officer, who was a formerly an examination officer and

presently a vehicle registering officer. Vehicles go

through Aflao border are tagged inbound and outbound,

inbound are those vehicles coming into the country,

while outbound are those leaving the country, and are

required to possess the following documents

International certificate

Ecowas brown card

International driver’s license

And the documents are required from vehicles emanating

from Ecowas sub-region, if the vehicle isn’t for the

driver of the vehicle, he is required to produce an

authorization from the owner of the vehicle with a

photocopy of passport or identification card, before the

documents can be processed by the customs.

4.8.1 PAYMENT OF FEES

Fees are paid accord to the size of the vehicle, trucks

above 20tons (articulator trucks) pay Ghc 90, trucks

below 20 tons pay Ghc 70, mini vans pay Ghc 60, cars pay

Ghc 50 and it is paid only by ECOWAS and comprises of

the road fund which is the balance of the Ghc 30 for

administrative fund, paid by only inbound vehicles with

the exemption of diplomatic missions. Non Ecowas

countries don’t pay this fee because they have what is

called three trip caane, which is a form of insurance

that is sign by the customs officer.

4.8.2 Documents Required to Transport Cargo

For inbound cargo to come through the Aflao border,

certain documents are required from the transporter or

the shipper

Waybill

Packing list: its show the type of item, quantity

and specification of cargo

Certificate of origin: This states were the cargo

is coming from

Profomer invoice: a temporal invoice given by the

suppler stating the value of the goods

Attested invoice: Stating the true value of the

The value of the goods is also sent to a company

destination inspection company which checks for the

value of the cargo and if it conforms with the value

stated on the invoice.

4.8.3 Fees and Taxes Paid to the Customs

Goods and vehicle originating from Ecowas countries was

said to exempted from Import duty to encourage trade

within the regional through the Ecowas Trade and

Liberalization Scheme. Fees and taxes paid as stated in

Ecowas countries are exempted from paying import duty,

sometimes import duty are invaded the certificate of

origin is tampered with through the use of fabricating

labels and stating the certificate are originated from

Ecowas countries.

4.8.4 Inspection of cargo

Cargo are inspected by the customs through the use of

laboratory specialist employed by the customs, food and

drug board, inspection committee, National security and

Examination destination company are all involved in the

inspection of the cargo. Sometimes some of the other

agencies involved in the inspection of the cargo do not

arrive for inspection, which causes conflict of interest

and might lead to delay

4.8.5 Time Taken for Cargo Clearance

Clearance of the cargo truck clearance time varies, and

it is highly dependent on the agent, if the truck has all

its document intact, it will take have a day. If a driver

refuses to use an agent, it will be very difficult and

will take 1 day to 2 days. It is for only inbound cargo

but outbound cargo takes 2 to 3 hours. For transit cargo,

a tracking device is put in the vehicle to monitor the

vehicle movement to make sure it doesn’t divert and is

been done by the GCNET operatives and it takes 5hours to

be cleared

4.8.6 Checking of Goods

It is done via two means, through a scanner or being

checked by the customs officer, should there be any

discrepancies the good will be offloaded and sometimes

stored at the expense of the shipper because the customs

have nothing at stack.

4.8.7 Volume of Import and Export Data at Aflao Border

Such document was termed classified and cannot be issued

by the customs to an individual. It is forwarded to the

Ministry of Trade and Industry.

4.9 SWOT ANALYSIS ON ETLS

Strength: Ecowas trade liberalization scheme that

promotes intra-regional trade, and enables easy movement

of cargo within member country’s border, visa free access

to member countries and the waiver of Import duty for

member states

Weakness: The implementation of the protocol has been a

bone of contention between member countries because a

legislative instrument hasn’t been put in place to

enforce the protocol as adopted.

Opportunity: An 80% implementation of the ETLS has the

ability to boost trade within the region. As complement

to multilateral efforts, there is a scope to develop

improved access to selected markets on bilateral basis.

This will lead to increased export opportunities and

cheaper imports of inputs for local production.

Threat: Smuggling, racketeering, taxes paid and criminal

activities has a major influence on the implementation of

the ETLS protocol and leads to the high cost of final

product.

4.10 Analysis on the impact of the ETLS on cost

This is an analysis on if the ETLS implementation affects

cost of moving freight across Aflao border and visa-

versa.

Frequency of movement of cargo by ton. Out of the 36

respondents, 31 gave how frequent they access the Aflao

border and 5 were not certain of how often they access

the Aflao, citing it depends on the availability of cargo

FIGURE 4.14 Movement of Cargo by TONNAGE

twice a m onth once a m onth once in two m onths1-4 tons 1 0 05-10 tons 2 1 311-20 tons 1 8 6above 20 tons 2 4 3

total twice 6

total once m onth 13

total once two m onths 12 Sou

rce: FIELD STUDY

4.10.1 Cost of non- Implementation of ETLS and

Implementation ETLS

Non-implementation of the ETLS means all taxes stipulated

by the customs, as stated in figure 4.8.3 will be paid

and will include gratification and cost of entry .

Average total gratification + cost of entry + taxes

Example

A 30 ton cargo truck transporting cameras through Aflao

border valued at Ghc 100000, how much will if much I will

take the cargo truck to be clear by the customs.

FIGURE 4.15 PERCENTAGE OF TAXES

Import duty 5%VAT 17.5%NHIL 2.5%ECOW AS levy 0.5%EDIF 0.5%Exam ination fee 1%Processing fee 1%Special Im portation levy 2%

Cost of entry

FIGURE 4.16 Total average cost paid

Import duty 5,000.00GHC VAT 18,375.00GHC NHIL 2,625.00GHC ECOW AS levy 500.00GHC EDIF 500.00GHC Exam ination fee 1,000.00GHC Processing fee 1,000.00GHC Special Im portation levy 2,000.00GHC

Value of cargo 100,000.00GHC

total taxes 31,000.00GHC

cost of entry 90.00GHC

Total average gratification 156.18GHC

total Average cost 31,246.18GHC

It takes an average of GHC 31,246.18 to move GHC100000

value of cargo across Aflao border.

If the ETLS is fully implemented, Import duty,

gratification and cost of entry will be minus from the

total average cost.

ETLS Implementation: 156.18 + 90 + 5000 = 5,246.18

Actual cost 31,246.18 - 5,246.18 =

26,000

Table 4.11: Total Average Amount Paid at Aflao border

4.11 INTERPRETATION OF CARDINAL CARGO LIMITED MANAGER

INTERVIEW

An interview of granted to me by the clearing manager of

cardinal cargo limited at Aflao border, he is responsible

for customs clearance and haulage of goods coming and

leaving Ghana via Aflao border. He stated that, Exports

and Imports in Ghana are controlled by the Exports and

Imports Act 1995 (503). Export procedures for purposes of

export documentation; exports are classified into two

broad categories namely traditional and non-traditional.

Traditional exports are gold, diamonds, bauxite,

manganese, cocoa beans, coffee, timber and electricity.

Non-traditional export items include processed forms of

the above products and all other products. Exporters of

traditional commodities have to complete the Exchange

Control A2 Form, endorsed by the exporter's bankers and

presented to the Customs Examination Officer at the time

of shipment.

Exporters of non-traditional products have to complete a

Ghana Export Form (from the Banks or Port/border of Exit)

and present it to Customs at the time of export. Exports

of antiques, wildlife, live plant, and pet require

permits from Ghana Museums and Monuments Board,

Department of Game and Wildlife and the Plant Protection

and Regulatory Service of the Ministry of Food and

Agriculture respectively.

4.11.1 Export Incentive for Exporters

According to the manager, the Ghana Export Promotion

Council in close collaboration with the Ministry of Trade

and Industry plays a crusading role in the establishment

of incentive schemes for exporters namely;

An Export Proceeds Retention Scheme in operation allows

exporters to exchange all (i.e. 100%) foreign exchange

proceeds from non-traditional exports into cedis at

competitive rates negotiated with the exporter's bankers

or keep them in their foreign exchange accounts.

• A Corporate Tax Rebate, which allows any manufacturer

or any person, engaged in agricultural production,

exporting part or all of his production to claim tax

rebate between 40% and 75% of his tax liability.

• A Custom Duty Drawback that allows manufacturers to

draw back up to 100% of duties paid on material imported

to produce goods for export.

• A Bonded Warehousing that allows manufacturers to seek

Customs license to hold imported raw materials intended

for manufacturing for export in secured places without

payment of duty.

• Up-Front Duty Examination, which operates alongside the

duty drawback system enables exporters, enjoy 100% duty

exemption on imports intended to go into production for

export.

4.11.2 CHALLENGES FACED AT AFLAO BORDER

As stated by the manager, they are numerous problems

faced at Aflao border, the ETLS is non-existent at the

border. Although the ECOWAS Protocols have

abolished tariff with regards to exports to other

ECOWAS States of goods that are substantially produced in

any ECOWAS member state, customs, immigration and other

security agencies and officials continue to put a lot of

obstacles in the way of free trade within the sub-region.

Generally, immigration and security officials do not

deal with tariff issues but certain illegal fees

and extortions become drawback to the Protocol.

CHAPTER FIVE

SUMMARY, RECOMMENDATION AND CONCLUSION

5.0 INTRODUCTION

The previous chapter presented the analysis and findings

revealed in the study. This concluding chapter provides a

summary of the research, summary of major findings,

conclusion and recommendation as deduced from the

findings of the study.

5.1 SUMMARY OF THE STUDY

In the past decade, several issues have arisen about the

need for the implementation of the integration plans and

policies, especially within the West African sub-region.

In view of this, several discussions have been held in

attempt to integrate the currencies of the member states,

which is an effort to facilitate trade, particularly in

the sub-region and among regional members. This goes to

prove the role and contribution of trade in the process

of integration, of which, much has been in the informal

sector in the past. Several scholars, including Ogunkola

and Longo and Sekkat have assessed the impact of ETLS on

trade and have presented empirical evidence suggesting

that regional integration agreements had little or no

impact on intraregional trade because of it not being

adhered by member states. In view of this, the current

study is seeking to assess rather the contribution of the

ETLS on freight movement at Aflao border. With regards to

this study, Drivers, Agents and a Customs officer at the

Aflao border were used as the unit of analysis.

5.2 SUMMARY OF FINDINGS

Findings from the analysis performed from the study have

been discussed in relation to the objectives of the

study.

1. Cargo traffic at Aflao border was dominated by

general cargo which accounts for 33% while finished

goods accounted for 31% while work in progress and

raw materials accounted for 25% AND 11%

respectively.

2. The volume of cargo in transit determines the

capacity of vehicle size used to transport it. The

lower the volume of cargo, the smaller the vehicle

size and the larger the vehicle size.

3. The level of awareness of respondents about the

free trade status of the border with its attendant

benefits is rather low. This obviously makes the

uninformed majority easy targets of extortion and

harassment by unscrupulous government agents and

touts around the area are some of the anomalies at

Aflao border.

4. Semi-automated way of processing of cargo documents

results in queues and delays in moving cargo across

the border.

5. Payment of gratification is norm at Aflao border,

the system in which cargo is cleared encourages

bribe and other forms of gratification to

government agencies.

6. High cost of commodity sold to end users can be

associated to time and cost of transporting the

commodity.

5.3 CONCLUSION

The findings of this study show that the Ecowas free

trade agenda has not been totally implemented,

member countries are more focused on a morbid

competition which isn’t promoting intra-regional

trade, to boost local production and reduce

commodity cost, due to the reduced cost of

transportation. The implementation of the ETLS is

plagued by,

• Absence of a Legal Status: In spite of the

numerous benefits accruing from the ETLS, the scheme

has been marred by obvious lack of legal backing at

the national level, hence the charging of full

duties by custom authorities in disregard of the

regional laws and policies. As it is now, ETLS does

not provide any mechanism where traders in the

region who have been molested or extorted could

establish any redress just as it is in the EU.

• Lack of Adequate Awareness and Sensitization on

the Scheme: Many eligible companies are unable to

tap fully the opportunities under the Scheme because

of a lack of awareness of the purport and content of

the Scheme. Rejection of some products by member

states from total tariff exemption even after

admission of companies to the scheme is still yet

another dimension of this problem.

• Issue of sovereignty: Another challenge which has

actually impacted negatively on the effectiveness of

the ETLS is the sovereignty of member states. This

is a problem that underlies every case of none

observance of ETLS rules by member states, as member

states have continued to hide under the cloak of

state sovereignty, having not agreed to submit their

sovereignty to any regional authority. Accordingly,

member states are technically at liberty to observe

or not to observe the ETLS. It is a fact, that the

success of any integration effort remains a function

of not only economic, but also of political

bargaining and compromise (www oup.com/uk, 2007).

Such compromise and political will, is what is

herewith advocated to ensure the realization of the

objectives of the ECOWAS free trade Agenda, which is

free, unhindered movement of people and goods that

would facilitate trade and commerce, and ultimately

economic growth and development of the West Africa

region. Although increasing efforts are being made

by private sector operators towards ensuring the

actualization of the ETLS, trade experts have been

worried that irrespective of regional backing the

Scheme enjoys, its aspirations have not been

achieved at all as divergences in member states

custom tariffs continue to exist across the region

(NANTS Regional Trade Advocacy 2013).

From a logistics point of view, movement of freight

across Aflao border can be said to be inefficient,

it takes an average time 20 hours 15 minutes for

goods to be cleared by the customs, and it excludes

time spent at other government agencies at the

border. According to borderless alliance,

Transporting cargo from Aflao border to Tema port is

plagued by high number of barriers and checkpoints

which comes at a cost excluding the average cost of

Ghc156.18 spent on clearance of cargo by the customs

at Aflao border, because it is a norm to pay

gratification at the barrier’s met in order to

reduce transit time. This doesn’t encourage trade in

the sub-region, the cost paid during transit is paid

by the end user, it can be said to be the cause of

the high price of goods. ETLS protocol encourages

trade so measures should be put in place to ensure

its total implantation.

5.4 RECOMMENDATIONS

From the findings of the study, it is quite clear that

there are challenges facing the process of movement of

cargo and persons across the border, which need to be

addressed. Towards improving the existing situation

therefore, the following recommendations

There should also be an intense sensitization of

nationals or shippers engaged in trans-border trade

on ECOWAS, the ECOWAS Trade Liberalization Scheme

and the ECOWAS compensation scheme. The

sensitization of shippers/drivers will make them

aware of the approved products that are to cross

borders and the incentives attached. As the

research has shown, most of the respondents know

nothing about what ECOWAS is, what it does and the

trade Liberalization Scheme. Government should make

it a point in disseminating information on new

procedures at the border in order not to eliminate

the discomfort shippers/drivers go through when

accessing the border for trade.

The full implementation of a common external tariff

(CET) through the removal of tariff and non-tariff

barriers to boost intra-regional trade starting

with Ghana and Togo who share same border and

eventually the ECOWAS members would go a long way

in enhancing trans-border trade. Therefore, i will

recommend the government to prioritize the ECOWAS

Liberalization Scheme.

Reduce corruption, inefficiencies and the long

bureaucratic procedures in customs documentation and

customs revenue generation, by outsourcing the

valuation and duty collection unit of the customs,

will the customs also audit the firm to reduce

corruption. From research am average of 20 hours 15

minutes is spent at the border this can be related

to the whole process of clearing of goods done by

government agencies, which is known for its

inefficient. If a part of the clearance of cargo can

be done by private entity, it will save time at the

border and can pave way for concession of the border

In this 21st century, automation of documentation

processing in international transactions has become

more of the norm than the exception. It is therefore

time that the ECOWAS nations jettisoned the

cumbersome manual paper processing system being

currently used across their international borders

and replaced it with an automated system that would

save time, minimize cost and eliminate the current

inconveniencies by trying to adopt some of the

processes of clearance by the EU.

Creation a IT system called Econet (Ecowas Network),

which will give access to all cargo originating from

Ecowas countries to register travel documents and

cargo documents in a single database that can be

accessed by all Ecowas member states. Every product

has a unique number called bar code, the shipper

will key in the bar code to the proposed ECONET,

that will give a description of the goods and its

origin. These system will ensure a uniform process

of clearing of goods in all ECOWAS member states.

Creation of separate entry points in respect to

cargo type and tonnage of truck to save clearance

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APPENDIX

QUESTIONNAIRE

1 Nationalitya Ghanianb Ecowas countryc Non-Ecowas country

2 Level of Educationa primary or basicb high school degreec Tertiary Education

3 Status of Vehicle Ownershipa Own Vehicleb hired vehiclec company's ownership

4 Years of operating at the boardera 1-2 yearsb 3-5 yearsc above 5 years

5 Frequently transported goodsa raw materialsb work in progressc finished goodsd General cargo

6 size of vehiclea 1-4 tonsb 5-10 tonsc 11-20 tonsd above 20 tons

7 if yes how oftena once a monthb once in two monthsc more than once a month

8 do you process cargo documents by yourself orthrough the use of an agentyesno

9 What is the average processing time of documentat the border (specify)1-6 hours7-12 hours24 hoursmore than 24 hoursmore than 48 hoursit depends

10 Have you ever paid gratification to governmentagents at Aflao boarder( specify amount)YesNo

11 if yes, for what purpose was the gratification paidforincomplete documentfasten documentation processit Is a norm to pay gratificationGoodwill

12 what is the penalty given for not payinggratification

13 do you also pay gratification at Togo side of theboarderYesNo

14 for what purposea normto quicken documentation processGoodwill

15 Are you aware of the Ecowas trade liberalizationschemeYes

CUSTOMS OFFICER INTERVIEW QUESTION

What are the documents required for import and

export at Aflao border

On an Average, how much is paid to enter and exit

Aflao border

What are the documents required

Fees and taxes required to be paid for goods to be

cleared

How long does it take for cargo to be cleared

What is the annual trade volume of import and

export at Aflao border

An Evaluation of the ETLS and frieght movement across Aflao Border

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