Journal of International Development: Vol. 5, No. I, 79-92 (1993)

OBSTACLES TO TRADE LIBERALIZATION AND ECONOMIC

COOPERATION AMONG WEST AFRICAN STATES

YILMA GEBREMARIAM Department of Economics and Finance, Southern Connecticut State University, USA

Abstract: Does the formation of a customs union reduce and eventually eliminate tariffs among member countries to provide mechanisms or regional institutions for social, economic and political development? The literature examined suggests that, although many problems of trade liberalization continue to occur, greater benefits could be obtained by reducing tariffs on a non-discriminatory basis, or by removing protection from domestic enterprises altogether, and by importing domestic requirements of the products of displaced industries from outside at world market prices. The literature also provides a valid case for protecting certain activities in ECOWAS - particularly trade and industrial enterprises - either for the purpose of increasing income or the rate of economic growth, or in order to achieve certain non-economic objectives. The implica- tions of economic integration in these terms can best be examined within a broader theoretical framework of developmental theory of trade liberalization.

1 INTRODUCTION

During the past two and a half decades, questions of cooperation in trade and development among the less developed countries have generated a growing body of analysis and prescription. One approach to formulate a broader framework of developmental theory of integration is its explicit recognition of trade and coopera- tion, through the development of adequate systems of transportation and communi- cation networks, industrialization and the structural transformation of economies of member countries of ECOWAS. This entails that the benefits from integration of each of the above sectors must be exploited on a mutual basis, by the exchange of market and non-market activities within a free trade area (FTA) or common market or some other preferential mechanisms, so that they can be achieved without endangering the structural developmental objectives of individual member countries of ECOWAS. This paper develops an argument on the relevance of trade liberalization (hereafter abbreviated as TL) policies which are currently promulgated as a means to measure economic development through integration among the participating states.

0954- 1748/93/010079- 14$12.00 0 1993 by John Wiley & Sons, Ltd.

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2 THE BASIS FOR TRADE LIBERALIZATION POLICIES IN ECOWAS

The problems and prospects of trade liberalization policies and their limitations within the ECOWAS subregion and outside of the union are recurring problems. In an attempt to understand these problems a number of issues will be analyzed, including: (1) Why trade liberalization? (2) Can the movement to free trade area (FTA) yield benefits to the whole of West Africa? (3) How can this be implemented?

Trade and development are seen as two sides of the same coin, which means that trade brings development, and development in turn promotes or boosts trade. Consequently, the patterns of production consumption and trade have a very important but varying impact (for example, inward-looking trade policies) on the questions of trade liberalization for development and regional integration and cooperation in West Africa. Ezenwe, in ‘Trade and growth in West Africa in the 1980s’, echoes the more generally accepted view which suggests that development through trade is partly the result of internal as well as external factors as follows:

For West Africa, the internal and external factors have combined to thwart recent efforts at trade expansion and growth. On the domestic front, the structural problems associated with over-extended and insufficient public-sector institutions, the neglect of export-oriented industries, the continuing biases in the incentive systems against agriculture, and the improper mix of economic policies have militated against modernization. Similarly, an unusual ‘bunching’ of unfortunate events in the external sector which started in 1973 with the oil-price increases, seriously hampered the post-independence drive towards consolida- tion and transformation (Ezenwe, 1982: 305-322).

One salient characteristic of the production and trade patterns of West African countries is that the levels of exports and imports and the relative position of the member countries of ECOWAS in over-all subregional trade vary widely. By and large, this variation can be attributed to their past colonial legacy as well as their current relationships.

Onyemelukwe (1984: 133-138) in particular, and a significant amount of the trade literature in general, suggest that it is this export-oriented development together with other associated problems of low-capacity-to-import, a structural but intractable phenomenon among African countries, which impose excruciating constraints on trade liberalization policies and the coordination of trade and development activities within the subregion. One of the major obstacles has been attributed to the effects of colonial rule with direct and indirect control of the exports and imports of the dependencies in a manner that tended to perpetuate dependency relations in favour of the colonial powers (Onyemelukwe, 1984: 133). Onyemelukwe’s empirical study indicates the dire profiles of the intra-regional trade that exists today. More specifically, Onyemelukwe observes the following:

Two forms of international or external trade are engaged in by West African countries. One is trade with countries outside the African continent; the other is with other African countries. While the former has over the years developed on a very large scale and has been the economic nerve centre of each West African country, the latter has been on a very small scale. In 1970, for instance, only 5.5 percent of Africa’s international trade was intra-African. By 1975 the percentage had declined to 4.3 percent which can be compared with 10 percent internal trade

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in Latin America and 18.3 percent in Asia over the same period. A considerable part of this intra-African trade has been in crude oil. The bulk of the remainder comprises trade between land-locked countries and their coastal neighbours. The main reason for low-level intra-African trade is the generally poor state of the industrial (manufacturing) economy in most of Black Africa, particularly West Africa (Onyemelukwe, 1984: 131).

Aside from the preceding, intra-regional and subregional trades have one more characteristic. The West African countries are not major trade partners. In fact, during the 1980s the degree of trade interaction between them has not increased in any significant way. Using the International Monetary Fund’s publications, Direction of Trade Statistics (1980-90, various pages), a simple calculation suggests that the share of their mutual trade in total external trade is insignificant, a mere 4.0 per cent for the subregion as a whole since independence. It is argued that the forces that have conditioned the patterns of intra-regional and subregional trade are mainly of two types: (1) traditional, that is, climatically induced specialization in the production of tropical foodstuffs and certain agricultural products; and (2) the existence of preference systems and monetary arrangements (that is, between the Anglophone and the Francophone) among groups of West African countries (Ezenwe, 1983: 28). Such arrangements primarily serve as sources of raw materials for the factories of the various metropolitan centres of Western Europe (Rodney, 1973: 165-181). The attainment of political independence by the West African countries since the early 1960s has not considerably altered their production and trade patterns.

The geographic and economic structure of contemporary West African countries is also shaped by two sets of additional factors that are responsible for the comparati- vely low level of subregional trade interactions. The first includes factors that currently act as a resistance to subregional trade. These include the non-complemen- tary production structures of the member countries of ECOWAS. The literature examined provides three broad categories of impediments to intra-ECOWAS trade: structural rigidities; administrative restrictions; and inadequate financing (Owo- sekun, 1986: 162-169). While all of these classifications are considered to be important factors in the making of trade liberalization policies, it is worth mentioning that some elements of structural rigidities as relate to this paper. Owosekun observes that:

Perhaps the most important significant determinant of the low level of intra- ECOWAS trade is the production profile of the countries in the subregion - the high dependence on one or a few primary exports and the lack of manufactured exports. Closely related to this factor is the difference in the consumption patterns in the various countries in the subregion - a situation which leaves very little scope for complementarity in production and consumption. Whereas in the southern zone of the subregion, the diet is based principally on starchy root and tuber crops, in the northern zone, the diet comprises mainly cereals. The result is that food produced in each zone either must be consumed locally or must be exported outside the region. This aspect of the economies of the countries in the subregion has to a very large extent constrained ECOWAS member countries from reaping the benefits of economic integration (Owosekun, 1986: 162- 169).

As indicated earlier, the economies of the subregion are heavily concentrated in the production of primary products which constitute a significant part of member country’s exports. The absence of complementarity between the products of each

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member country suggest that they are highly competitive even for foreign markets, and the effective demand for each other’s primary products within the subregion is limited. A free trade agreement such as in ECOWAS can begin to reap the benefits of integration only when the member countries are making headway in the development of a complementary production structure. For example, labour-intensive production may be instituted in Niger or Mauritania and more complex, research-intensive production may be instituted in Nigeria or Ghana to give investors the choice to move to the location deemed efficient for the production contemplated and still give assurance of access to the combined market.

Second, the most formidable factor that has limited the intra-regional and subregional trade development has been the inadequacy of transportation and communication networks. The pre-eminence of trade relations between ECOWAS member countries and the advanced countries of Western Europe and North America during the past three decades has increased interest in the efficiency and effectiveness of the transportation and communication systems between Western Europe and ECOWAS member countries. However, the transportation and communication systems within the subregion of ECOWAS have been, by and large, ignored until very recently. One of the goals of the Community’s trade liberalization process is to promote cooperation and development of schemes or projects for joint ventures in transport, communication, energy and other infrastructural facilities as well as the evolution of a common policy in these fields, evident in the ECOWAS Treaty with its protocols enshrined in Articles 40-47. What has slowed down the integration process is the absence of political will to drive home its ‘collective intention’ to achieve these various goals. Apart from the sovereign character of member-countries, the obvious division of the subregion into French- and English-speaking zones, an offshoot of past colonial domination, continues to pose major constraints. Many researchers, includ- ing this one, emphasize that in the absence of such infrastructural networks the efforts of trade liberalization for economic development of the subregion remain a mockery.

Even if these major impediments were mitigated, there is still another set of factors that will be more significant as disincentives to intra-regional as well as subregional production, consumption and trade. This includes trade barriers such as tariffs, export taxes, and quantitative restrictions. Although the main thrust of trade liberalization policy of ECOWAS has been towards the lessening of this problem and the removal of internal barriers to trade in such areas as capital and labour mobility within a customs union, rather than joint planning and implementation of regional projects, the level of economic integration achieved is limited, and already has given rise to political tensions between unequal partners of the subregion (West Africa, 30 June 1987: 1427).

There is still another impediment to the removal of internal trade barriers. Most member countries of ECOWAS, as is the case in most LDCs, depend heavily on customs receipts as a source of government revenues or fiscal expediency (Owosekun, 1986: 163-164; Asante, 1985: 98-99). Clearly, then, when the government is imposing high tariffs to generate revenues, among other reasons, it must take into account a number of potential effects: (a) the change in the quantity of imports (the import effect); (b) the revenue per unit - a high tariff may generate a significant amount of revenue per unit, but if the government allows fewer imports to enter the country, then little revenue will be generated (the revenue effect). This, combined with the desire to protect domestic industries, results in significantly high levels of tariffs. However, according to the literature (Cooper, in Finger and Olechowski, 1987: 25) examined,

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there is ‘a conflict of objectives between a revenue duty, where it is acceptable that domestic demand for imports be inelastic, and a protective duty, where the purpose is to substitute domestic production for foreign goods in the domestic markets’. In both situations there are associated costs: the distortion of consumption decisions that arises from having protected import-competing goods to expensive (consumption cost); (production cost) the distortion of production decisions that arises from having the production of protected goods too remunerative (Bhagwati, in Finger and Olechowski, 1987: 29). Until alternative sources of government revenue are found within the subregion the current tariff structure of each member country is unlikely to provide a special incentive to import from other member countries. Therefore, the task of ECOWAS as an institutional force in operation must be to reduce or possibly remove the conditions of dependencies to stimulate not only subregional trade but also intra-regional and international trade. Promoting intra-ECOWAS trade will depend on two factors: (1) the extent to which the process of industrialization in the Community is facilitated, and (2) policy measures or policies undertaken to redirect the pattern of trade and remove economic and non-economic barriers to free movement of products and factors. While the first strategy is a topic for another research project, the second strategy will be investigated at some length in the following section.

Problems and Prospects of TL

The difficulty of establishing the necessary trade liberalization mechanisms has been one of the major stumbling blocks to a harmonious development of groupings in LDCs. In West Africa, trade liberalization embodies a significant aspect of the subregional economic groupings. Article 12 of the ECOWAS Treaty provided a 15- year timetable for the Community to eliminate all trade- and development-hampering barriers. However, setting in motion this timetable contained in the Treaty for liberalization of trade of products originating within the group and the establishment of a common external tariff was first postponed by 2 years, from 1977 to 1979 (Robson, 1983: 114-116). There has been very little evidence that trade and develop- ment barriers have been reduced since the protocol’s rescheduling. Obstacles to harmonious trade liberalization most frequently discussed in the literature (Krasner, 1983: 276-296; Barnouin, 1982: 26) can be divided into three major issues.

The first issue is whether the elimination of trade-hampering forces should be confined to a reduction of tariff and non-tariff barriers or whether it should also encompass direct measures of trade promotion, such as long-term supply and purchase covenants that would avail importers with guaranteed supplies and ex- porters with commodity markets. Because trading activities are done predominantly on the state level, LDCs insist on a long-term supply approach.

A second issue holds a pre-eminent position in the North-South debate. Should tariffs be reduced product by product or across the board? Many favour an equivalent across-the-board tariff reduction for all products and all countries, because it has been suggested that it promotes efficiency while product-by-product trade tariff would not (Finger and Olechowski, 1987: 19). ECOWAS’s annual negotiations on tariff reduc- tions, carried out item by item (that is, discriminatory trade policies), have caused intra-ECOWAS trade liberalization to sustain only marginally, at best, and have

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made any forward move impossible. Barnouin (1982: 24-27) also points out that, because of the LDCs’ deliberate and concerted efforts for industrialization policies via the development of consumer product enterprises, protection is high in those products which are the most susceptible to be exchanged or traded among LDCs, and low or non-existent for intermediate and capital goods for which the LDCs are yet to develop the capacity to compete in international markets. Consequently, an across-the-board reduction of tariffs among LDCs would not alter considerably the current situation for intermediate and capital goods, but it is hoped that intra-Third World trade or exchange in consumer products can be significantly enhanced.

A third delicate problem is how to manage tariff preferences that LDCs have adopted in their respective regional groupings. It is strongly argued that if individual members of any such groupings extend preferences to the outside world (that is, non- member LDCs in particular) the effect could minimize the groups’ ability to derive benefits from trade liberalization activities within the Union. To avoid such a predicament, Barnouin (1982: 24-27) argues that the regional and subregional groupings would need to increase group preferences within the general trade liberalization frameworks. What kind of preferences? Balassa and Stoutjesdijk hint as follows:

There is a case for establishing common tariffs on extra-area imports. This is because the maintenance of national tariffs lead to distortions in intra-area trade and affects distribution of the benefits and costs from integration.. . . Countries with relatively low tariffs on imported materials and intermediate products will enjoy artificial cost advantages in intra-area trade in finished goods and the extent of preferences granted to partner country supplement will be greater the higher are national tariffs.. . . With continued differences in national tariffs and the possibilities for unilateral changes in those tariffs, then, the process of integration may be jeopardized (Balassa and Stoutjesdijk, 1975 : 42-43).

Moreover, as the discussion below suggests, the bringing of diverse sovereign states into a unified free trade area (FTA) has encountered a number of obstacles (that is, tariff and non-tariff barriers), thus hampering the strengthening of existing regional and subregional trade and development arrangements.

Policies and Strategies for TL

It is in the context of the problems discussed above that trade liberalization has become a very sensitive issue, subject to perennial negotiations, in the regional integration and cooperation (RIC) scheme of ECOWAS. ECOWAS’s effort is to institute a comprehensive trade liberalization and promotion programme with the intention of establishing a FTA as a guiding principle for the ultimate realization of an economic union (EU). To date, the establishment and implementation of the FTA protocols is far from reality.

The realization of the objective of trade liberalization imposes a considerable task on participating countries. To be sure, the willingness of each member country must go beyond mere lip service at annual summit conferences, and must be able to envision the long-term effects on the Community as a whole. For example, the establishment of a common tariff upon imports of products from third countries and

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the harmonization of other tariff policies influencing imports and exports will remove distortions (for example, deliberate diversions of trade activities from the subregion) in competitiveness among the participating countries provided exchange rates are allowed to adjust. Such policy instruments or arrangements also provide some protection to ‘infant industries’ within the enlarged Community at the same time that a FTA among ECOWAS member countries is gradually approximated.

Trade strategies in most African governments base their arguments on the basis of international political non-alignment and geopolitical neutrality. However, nearly every country on the continent is firmly in the Western economic sphere. For example, during 1984 and 1985 70 per cent of Africa’s exports went to the industrially advance countries of Western Europe and North America (with the US having commanded the largest share). During the same period Africa’s imports (71 per cent) came primarily from these countries, with France being the largest supplier (IMF, 1980-90). As a whole the arguments for and against African customs unions, such as the ECOWAS and the Southern African Development Coordination Conference (SADCC), have become arguments for and against protection of African industries against imports, although African countries have had very few industries to protect compared to, say, Latin America or Southeast Asian countries (Bienin, 1990: 714).

Individual countries in the subregion have often wished to protect new industrial or economic activities in their territories, and they have looked fervently, at least in principle, at schemes for regional customs union (e.g. CEAO or ECOWAS). But simultaneously, they have sought free or preferential access for their exports to the markets of their trading partners in Western Europe. To a considerable extent these apparently inconsistent or dualistic objectives have proved harmonious. The reasons lie in the nature and scope of the subregion’s exports, which are mostly non- competitive with European production, and the readiness of the West European governments to allow breaches in, and finally respondence of, the principle of reciprocity in their trade agreements with Africa.

It is in the light of the foregoing that proponents of the European Economic Community and the African-Caribbean and Pacific (EEC-ACP) countries associa- tion argue that the effects of trade arrangements since 1958 between the EEC and West African countries have been trade-creating for the latter. Proponents further argue that the effects in EEC member countries have conceivably been trade-diverting at the expense of non-ACP LDCs. The extent to which the effects in EEC can be trade- creating in the future will essentially depend upon how effectively the Lome 111 provisions (mainly on human rights issues) are implemented. Lome IV focused on debt and structural adjustment problems. Nevertheless, it has already been stated that the preferential trading arrangements between the EEC and the West African countries have been formally in accord with efforts economically to bring the West African countries together as a customs union since early 1959. But the EEC- ECOWAS relationships raise some fundamental questions. For instance, can such relationships facilitate (or stimulate) the realization of the objectives of ECOWAS’ strategy of collective self-reliance, or its goal to function as an independent suprana- tional entity? To what extent does the present relationship constrain the transforma- tion of ECOWAS in the long run? What can we expect from the EEC as its members form a single European Market in 1992? These are questions to be noted by leaders of the West African countries as they negotiate multilaterally and bilaterally with the EEC and EEC member countries respectively.

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Potential Benefits from TL

The ultimate objective of the Treaty of ECOWAS was to establish an economic union in the West African region. However, as was said earlier, the major benefits expected lie in trade diversion to the benefits of new industrial activities, particularly large-scale enterprises, which would be protected by common external tariff. For now, at least, a common external tariffs mechanism has not been operationalized, and there have been no fundamental departures from the basic framework (Oyewumi, 1991: 132). Although member states began removing trade barriers on 1 January 1990 (Wesi Africa, 27 May-2 June 1991: 849), anticipated benefits from integration may not be realized in any measurable degree in the foreseeable future. When the transportation networks are fully developed, however, benefits will occur on several dimensions besides the simple reduction of transport costs (usually affected by energy costs). In addition to transportation costs, such transport service attributes as travel or shipment time, dependability and frequency of service, safety and comfort, among others, are important benefits from transport improvements. In many cases these other dimensions of transport services are relatively more important than the transport cost itself, because they provide some elements of efficiency in the mobiliza- tion of resources. Other benefits accrue in broader economic development of the West African subregion. One is through the benefits provided at the microlevel (for example, sectoral level) to transport system users as a result of system improvements. The other is through the transport service sector’s upstream links to the transport equipment sector and beyond, to other more basic industrial sectors. Occurring primarily at the sector-wide level, these linkages can be instrumental in stimulating broader industrial development to penetrate new export markets for some of the ECOWAS member countries for products such as steel, rubber products and transport equipment. These industrial products are also necessary inputs for the development and expansion of transportation. The role of these backward linkages (potential and existing) cannot be discounted in planning regional integration or cooperation. Potentially, there are several benefits to be derived from such coopera- tive economic and political activities.

Most clearly, then, an effective trade liberalization scheme has several potential benefits. They are: first, a common tariff policy instrument will facilitate the full utilization of the resources of the Community, thus culminating in specialization in productive activities among the countries within the enlarged market. Second, it is equally beneficial that the establishment of a common customs tariff will reduce illegal market transactions, such as smuggling across national boundaries. Third, trade liberalization is likely to enhance cooperation among member countries. It is less likely to propagate elements of political dispute. The fourth benefit is that trade liberalization policies will stimulate development by providing enlarged markets for firms or enterprises, and enabling member countries to obtain commodities at lower cost from the union market resulting from reduced transportation costs. The effect of trade liberalization policies can give valuable stimulus to investment, cooperation in production, and generally assist to expansion in trade and development. Such developmental cooperation is likely to facilitate the development of transportation and communication networks so that the expected major shifts in trade patterns and volumes can be accommodated effectively. Fifth, if trade liberalization policies are effectively implemented, developmental benefits in the form of new expanded agricul- tural and industrial production, new technologies via research and development,

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additional employment, and further infrastructural improvements can be realized. This is likely to stimulate greater trade and development. Greater trade will encourage greater interaction amongst the member countries. Finally, the establishment of an effective trade liberalization scheme is likely to encourage member countries to progressively fuse or complement their national economies for the creation of a common market (CU) and consequently to harmonize their social policies.

Problems of Implementation

It is in the light of the above potential benefits that many gruelling negotiations have taken place among the West African countries since the inception of ECOWAS as a subregional institution under the Lagos Treaty of 1975, providing a detailed pro- gramme for trade liberalization. The final agreement between ECOWAS member countries was officially approved in May 1980 in conformity with Articles 12 and 13 of the Treaty which became operational on 28 May 1981, in order to establish a FTA in West Africa by May 1989, which was later postponed for 1 January 1990 (West Africa, 7 June 1982: 1493). This Treaty envisaged, in Article 2, subsection 2 and its relevant protocols, that the Community shall ensure the elimination of all tariff and non-tariff barriers on all Community originating products and the compensation of actual revenue losses by member countries due to tariff reductions. These general objectives of the ECOWAS Treaty are explained in a rather detailed and programmatic form in the Third Chapter of the Treaty, which lays down a 15-year timetable for liberaliza- tion of intra-Community trade and the formation of the customs union (CU).

According to this agreement among the 16-member countries, all tariff and non- tariff barriers were to be eliminated without any compensation to any member country which is considered as industrially advanced in the subregion (Asante, 1986: 81-92). As expected, it is with respect to industrial products that a number of difficulties or impediments had to be contended with in order to minimize any delay in the implementation process of the Treaty’s provisions. Hence, a list of priority industrial products was developed by the ECOWAS ministers in November 1981 (with reservations from three of the CEAO members) (West Africa, 6 July 1982: 1493). Consequently, the following two momentous decisions were made by the ECOWAS ministers to facilitate the trade liberalization objectives of the Community:

1. It was decided that the Community-designated priority products imported into the four more industrially advanced member countries of Ghana, Cote d’Ivore (Ivory Coast), Nigeria and Senegal be completely liberalized over a 4-year period starting 28 May 1981. Tariffs on such products imported into the remaining 12 less industrially advanced member countries were to be completely removed over 6 years, commencing on 28 May 1981.

2. It was decided, also, that tariffs on all other industrial products imported into the four more industrially advanced member countries be completely removed over a 6-year period beginning on 28 May 1981; and for the less advanced member countries an 8-year period, starting from 28 May 1981 (Asante, 1986: 95-96).

The implementation of the above objectives was intended to facilitate the pace of tariff reduction and to allow variations based on the priority established to industrial products and the country into which such products were being imported. If a member

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country is said to be industrially advanced and is accorded with higher priority, then it is expected that the tariff elimination process would be faster.

Perhaps the most momentous Community decision on trade liberalization has been a call for elimination of non-tariff barriers to subregional trade in light of one of the most complicated geopolitical patchwork patterns of colonization and legacy of borders in all of Africa. It has been argued that the non-tariff barriers must precede the tariff barriers if the latter were to be effective. There are various reasons enumerated in the literature, such as non-economic centrifugal forces operating on the sociocultural spheres which are undermining the cooperative efforts of the West African subregion. Ezenwe has viewed these forces as follows:

The African languages spoken in West Africa are as many as 150. Religions too are numerous, and nationalism (or what Western writers refer to as tribalism) is strong in the larger communities. Customs differ widely within each country and among countries, while the level of literacy varies in the same vein. Political systems pretend to Western-oriented liberal democracy, but they are still ‘unpolished’ and undergoing an evolutionary process. Needless to say, the political stability of some of the regimes in the subregion, specially the military juntas, is very uncertain. English or French is spoken by the literate West Africans, but inter-personal and inter-country contacts, despite some marked improvements since the formation of ECOWAS, are still hampered by the Anglo- French cultural divide bequeathed by the colonial system (Ezenwe, 1983: 41).

The strains and stresses arising out of these non-economic factors, while not insurmountable, have tended to reinforce the economic obstacles to integration via trade liberalization strategies. This is further compounded by another obstacle, namely, the problems of currency convertibility within the enlarged market. The Community determined that foreign exchange restrictions on current transactions shall only be eliminated after non-economic forces are reconciled among all members. In its sixth Summit (West Africa, 6 June 1983: 1332-1333) meeting of 28 May 1983, the Community further introduced a much more politically and strategically sensitive decision (that is, in some or most member countries the ownership of major manufacturing enterprises is foreign) that relates to the implementation of a single trade liberalization scheme for industrial products originating from ECOWAS member countries. In accordance with this decision the Community reaffirmed the basic spirit of the 1975 Treaty, such that all ECOWAS member countries must work towards the creation of a CU.

Conditions for Implementation

A successful implementation of this enterprising programme during the 1 O-year timetable (May 1979-January 1991) had been expected to complete the first stage of economic integration, namely the creation of the FTA of the subregion, providing a market for over 150 million consumers within the West African Community. The success of any measure of trade liberalization in the subregion depends upon how the various other institutions respond. Most significantly, the prospects of implementing TL policies and their attended stability impacts of these policies will depend upon the nature of coalitions that form in different countries with the state and between states

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and non-state actors (Bienin, 1990: 723-747). Currently in West Africa there are over 30 intra-governmental organizations, operating side by side with ECOWAS. The most significant are the most political ones - the Communaute Economique de 1’Afrique de 1’Ouest (CEAO), the Mano River Union (MRU), the Council of Entente, the Senegambian Confederation. Adebayo Adedeji, the Secretary of the Economic Commission for Africa, warned that the threat posed to integration efforts by this multiplicity of institutions, unless justified, may undermine the very existence of ECOWAS. Professor Adedeji sees little or no movement towards unity (West Africa, 20 July 1987 and 27 July 1987: 1380 and 1427 respectively). ECOWAS’s trade liberalization efforts which were scheduled to start (by stages) in 1981 have never materialized, and the source of blockage is said to reside in the CEAO. The above initiatives call for the CEAO in particular to merge its objectives and aspirations with those of ECOWAS, so as to avoid duplications of efforts.

Another recent article reminded ECOWAS policy-makers that the predicament confronting the West African integration process goes far beyond trade liberalization efforts. More specifically, the article observed that:

West Africa, far from moving toward the formation of a homogeneous economic grouping, leans toward consolidation of historically conflicting interests. Econ- omic powers outside Africa whose respective interests have split the region into many economically non-viable states, do not appear to be prepared to allow their client-states to move toward an economic union which might further the economic and social advancement of the countries involved or improve the standard of living of the peoples of the region (West Africa, 30 June 1986: 1366).

Hence, for ECOWAS to endure and achieve its stated objectives the member countries must show some political determination to transform the Community from a relationship of ‘dependency’ to a relationship of ‘interdependence’ with their European economic powers. Accordingly, ECOWAS ministers went a step further in the trade liberalization process by adopting the following three important decisions.

First is the decision which relates to the ‘Rule of Origin for Community Trade’ (Lancaster, 1985: 71; West Africa, 7 June 1982: 1369). This defines the products originating from member countries that qualify for trade liberalization within the subregion. Although the ECOWAS Treaty has no provision with respect to the origins of input for the manufacturing of a product, the protocol had an amendment governing national participation. This is, without a doubt, an important aspect of any regional or subregional integration and cooperation scheme, primarily in facilitating the process of indigenization of the ownership of productive resources in each of the member countries.

The second decision is concerned with the determination of appropriate levels of national participation in the equity capital of industrial enterprises whose products benefit from preferential duties. In other words, the products eligible for free trade within ECOWAS must be produced in enterprises or firms which by 1989 have 51 per cent national ownership of capital (Lancaster, 1985: 71). While there are considerable advantages to be derived by Nigerian business owners, the disadvantages will be absorbed by businesses in Francophone member countries, since many of these are largely French-owned.

The third decision is concerned with a plan for compensation for revenue loss resulting from policy implementation of the trade liberalization programme.

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The implementation of this scheme will involve extensive cooperation among the ECOWAS countries, since it requires an improvement in the quality of trade and fiscal data from member countries. Briefly, the mechanism states, among other things, that compensation for any losses due to tariff reduction will be paid from the ECOWAS Fund only to those industrial products originating within the subregion.

3 CONCLUSIONS

The preceding analysis indicates that success stories on ECOWAS’s trade pro- grammes are far from complete. However, the Community has been building the institutional framework essential for the creation of a CU. The nature and scope of obstacles that ECOWAS is likely to encounter in the implementation of its trade liberalization programmes will require some level of trade-offs between nationalism (that is, sovereignty) and subregional development.

The study also suggests that effective implementation of trade liberalization programmes are said to generate a greater incentive for investment as well as policy measures for greater cooperation in subregional and intra-regional coordinated activities which ultimately tends to lead to the development of other measures to expand economic activities in the subregion. This is likely to depend, significantly, on the development and implementation of parallel measures to expand industrial production, and to improve distribution through the realignment or improved transportation and communication systems.

This study has identified a number of trade liberalization problems which may be illuminating to summarize some of the major obstacles facing ECOWAS. First, in a strictly national context, the tariff is a form of taxation which enables national governments of each member country to obtain revenues to and allocate them on the basis of national priorities. However, regional cooperation imposes an element of constraint on the freedom of action by each respective government, since the ECOWAS Treaty on common tariff is established by agreements of the member countries, implying that any modifications to this common agreement can only be by common persuasion and understanding. The second major obstacle is the existence of differences in significance and structure of tariffs and quantitative restrictions among ECOWAS member countries before the signing of the Treaty. Here, again, national differences act as an impediment and prohibitive influence upon the decision-making process of ECOWAS. The extent of these national differences is greatly influenced by the level of economic development of each member country. For example, it is argued that a rich country such as Nigeria relies less on tariffs and import restrictions, import charges, and fiscal taxes than the poorest member countries, say, Burkina Faso or Mali.

In conclusion, one thing must be profoundly clear from the above analysis. That is, member countries of ECOWAS must be evaluated or judged in light of the obstacles discussed above; but on the whole, the ‘lack of a uniform Community system of customs and internal direct taxes’, as well as the ‘lack of a clear distinction in the tax systems of several ECOWAS member countries between import duties and internal indirect taxes’, have severely constrained the adoption and implementation process of the trade liberalization progamme (Robson, 1983: 116). While the obstacles facing ECOWAS are great, the pace of implementation of the Community’s policies guiding

Obstacles to Trade Liberalization and Economic Cooperation 9 1

the trade liberalization programme also leave much to be desired. Hence, greater political commitment by member countries is a requisite for ECOWAS to succeed.

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