The Minister of Communication: Benefits Of Ratifying ACP-EU Stepping Agreement

The Minister of Communication, Issa Tchiroma Bakary, granted a press briefing in Yaounde on July 15, 2014.

The Minister of Economy, Planning and Regional Development,

The Secretary General of the Ministry of Justice,

The Secretary General of the Ministry of Communication,

The Inspector General,

Technical Advisers,

Distinguished Inspectors,

Distinguished Directors and Head of Divisions,

Distinguished Collaborators,

Fellow Journalists,

Distinguished Guests,

Ladies and Gentlemen,

It is with a renewed pleasure that I welcome you, once again, in this conference hall of my Ministry, to exchange, in all conviviality and openness, on a latest issue regarding the economic life of our nation, and therefore the well-being of our populations.

We are talking about the bill passed by the Parliament during its last ordinary sessions, to authorize the President of the Republic to ratify the Stepping Agreement toward an Economic Partnership Agreement between the European Community and its member State on the one hand, and the Central African part on the other hand; this agreement was signed by Cameroon on 15 January 2009.

But allow me first of all to particularly appreciate, the presence here, next to me, of His Excellency the Minister of Economy, Planning and Regional Development, who kindly accepted to sacrifice some of his precious time, to join us on the occasion of this press briefing.

This testifies of the importance the Government gives to the present communication.

Mister Minister, you are warmly Welcomed to the Ministry of Communication.

Allow me also to take this opportunity to wish you all, fellow journalists, a warm welcome in this conference hall, and to thank you all, for your prompt reaction to the invitation I sent to you today.

Dear Guests,

Fellow Journalists

The Parliament of our country just authorized the President of the Republic, in conformity with the Constitution, to ratify the Stepping Agreement toward an economic partnership between the European Union and all its member States on the one hand, and on the other hand, Central African States.

Allow me to first of all state few words about the economic context which prevails in our country, at the time this bill has just been passed.

The growth rate of Cameroon, which constitutes the utmost indicator of the economic vitality of a country, is in constant progression.

In fact, in 2013, our economy witnessed a growth of 5,5% against 4,6% in 2012 and 4,1% in 2011. The forecasts for the year 2014 will probably go beyond the growth rate of the year 2013.

This means that the Gross Domestic Product per inhabitant has moved, within the same period, from francs CFA 631 in 2011 to francs CFA 663 in 2012, and to francs CFA 696 in 2013.

Regarding the Public Investment Budget, which constitutes one of the major factor in the increasing of the growth rate, it neared, in 2014, francs CFA 1 000 billion, against francs CFA 957 billion, with an increase of 4,5% on this period.

This budget alone represents, more than 30% of the whole State budget.

This brief recall gives the opportunity to give a clear indication on the efficient dynamic of our economy, from which one has to situate, on the one hand, the question of looking for opportunities for our internal production towards external markets, and on the other hand, the competitiveness of our economic fabric.

To understand the logic surrounding the movement of our country towards an Economy Partnership Agreement with all the strategic partners within the European Union, one should then integrate such questioning, without which no emergence perspective could be seriously considered in the middle or in the long term.

We should therefore understand that such questioning is not new, because it is after the African independence, precisely on 02 July 1963, that the first Convention, known as the Yaoundé First Convention, was signed, and this convention provided a financial and commercial aid of the States of the European Economic Community States (in French CEE), to the 18 former European colonies in Africa.   

A second convention, known as the Yaoundé II convention, was signed on 29 July 1969, and this convention focused on the financing of major projects in these countries with a dominance of Black Africa.

thereafter, the oil crisis of the seventies, the increase of the prices of raw material, as well as the improvement of the North-South dialogue lead to the signing of the Lomé I to Lomé IV Conventions, whose main characteristics dealt with the equality between the different partners, the contractual nature of their relationships and a combination of help and commercial dispositions, in a long run view.

The said agreement, known as the Lomé IV Convention, signed in 1989, was meant for ten years. It has been reviewed, mid-way, in 1995.

While the Lomé I and Lomé II Conventions, signed for the 1975 to 1985 period, was giving priority to the industrial and rural development, thereby creating notably the Fund for the stabilisation of export revenues on agricultural products, known in French as STABEX and the Fund for the stabilisation of export revenues on mineral products, known in French as SYSMIN, to compensate the fluctuations on export revenues of primary products, the Lomé III Convention stressed on food security and environment.

Regarding the Lomé IV convention, signed for the period from 1989 to 2000, it introduced, for the first time, an explicit link between the promotion of Human Rights and development.

It is on 23 June 2000 that a new, broader cooperation framework between the African Caribbean and Pacific States and the European Union, came out, with, this time, an explicit option for the setting up on a free-exchange zone between them.

Therefore, the Cotonou agreement then represented a new cooperation phase between the ACP States and the European Union, while abandoning the Trade Preferential System which, until then, prevailed, for the Economic Partnership Agreement, whose one of the main objectives was to support the regional integration initiatives between the ACP States.

This agreement was based on the questioning of the North-South relationship models, on which the Lomé conventions were based, and took into consideration the improvement of the economic context dominated by the globalization of exchanges, as well as the preoccupations of the European Union member states.

Within the framework of this Cotonou Agreement, which was signed, as a recall, in 2000, Cameroon, just like all the other ACP States, was already a party to the negotiation for the conclusion des of the Economic Partnership Agreement between the African regional blocs (Central and West Africa) and the European Union member states.

Negotiations for the direct movement towards the Economic Partnership Agreement with the Regional African Blocs, which stumbled on the divergent interest of the different States, the European Union opted for discussions with individual States, for the conclusion pf bilateral agreements, at least on an interim basis, instead of regional agreement initially forecasted.

In the meantime, the Cotonou Agreement coming to an end, Cameroon, as well as many other ACP countries, on its part agreed on 17 December 2007, and signed on 15 January 2009 a stepping Agreement, to preserve a preferential access of its exportations into the European Union market, avoiding thereby a disturbance of its exportations towards this economic zone, prior for its external trade.

The stepping Agreement signed by Cameroon and the European Union, and which green light for its ratification by the Head of State has just been given by the Parliament, covers basically the trade of goods.

It has already enabled Cameroon, well before its ratification, to keep a preferential access towards the European Union since 2008. By this agreement, Cameroon agrees, in return to this preferential access, to open its market to up to 80% of importations from the European Union.

This liberalisation will spread over fifteen (15) years, with a moratorium period of two (02) years, and will be achieved by group of products.

To this effect, three (03) groups of products have been identified, considering that 20% of products still remain completely excluded from liberalisation, mainly to protect some industries, as well as sensitive agricultural markets, and to minimize, moreover, losses on tax revenues.

The first group of product, known as the « rapid liberalisation group » for the well-being of populations comprises:

The products aimed at the consumption of households up to 30% of the total group, which are basic necessities contributing to alleviate poverty;

Raw materials (19% of the group) and some capital goods (27% of the group), to enable local enterprises to get access to useful inputs for their production process at lower costs. In this group, we are talking about: drugs, books, seeds or animals breeders. the liberalisation of products of this group was foreseen to be achieved within four (04) years, starting from the first liberalization year, in 2010 ;

The second group, known as « slow liberalization group » to encourage the local production, is made up of machines and other capital goods (35%), semi-finished products (39%) and other raw material ment to support the local industry. the liberalisation of this group constitutes a support to investments, paving the way for local enterprises to update their equipment and improve their competitiveness. In this group, we have mechanical machines and equipment (new vehicles, agricultural machines), electrical machines and equipment, new pneumatic. Products included in this group are meant to be liberalized over a period pf seven (07) years, from the second year of liberalization, that is, from 2011.

The third group, known as the « very slow liberalisation Group » to protect the local production and not avoid any interference over the tax revenues, is made up of products with high prices. These are, generally, semi-finished products (12%), finished products which are locally produced and for which a potential offer exists. This group also comprises raw material and other capital goods (34%), which strongly contribute to custom revenues. The particularly slow liberalisation of this group aims at enabling the emergence of a local industrial fabric in the concerned sectors. In this group we count construction material, the clinker, the durum wheat, rubber, wood made products or household products.

Liberalisation of this latter group of products is foreseen to be achieved within a period of ten (10) years, from the fifth liberalization years, that is, from 2014.

Some products, which represent a considerable development potential, despite a current limited production, are excluded from any custom and price liberalisation. This is the case with animal and vegetable raw products. This provision aims at promoting the diversification of our economy, while protecting the local market.

Allow me now to develop the provisions relating to the export taxes, which are also mentioned in this agreement.

In fact, it is stipulated that the parties to this agreement would not be allowed to bring in new taxes or increase the rate of the actual taxes, except in case of notorious difficulties observed in the balance of public finances, or to protect the environment.

This provision being applicable to each of both parties, it is worth mentioning that a perfect balance will be necessary in the tax policy of member States of the European Union vis-à-vis Cameroon, and vice-versa.

Notice should be taken that, following the provisions of the Law 1528/2007 adopted by the Parliament and the European Council, all States which would not have ratified the Stepping Agreements will be automatically set back to the general preferential system. This system, particularly disadvantageous, and capable of leading to the increase of export bills and render our products more expensive and less attractive with direct consequences like the reduction of jobs trend, the slowdown and even the total stop of private investments, and therefore a negative impact on the dynamic of the growth of our entire economy.

To the contrary, the maintaining of Cameroon within the framework prepared by the Stepping Partnership Agreement, directly and positively impacts its external trade, the competitiveness of its economy and the serenity of its public finances.

To accompany the implementation of this agreement, an adaptation plan of the Cameroonian economy has been set up, with the following major axes:

The reinforcement of the offer capacities;

The development of the export capacities;

The institutional and tax reforms.

In addition, an office to update enterprises already operational, prepares the Cameroonian economic fabric, to the improvement of quality and normalisation, as well as to an increase of the offer through the modernization of the production tool and the optimization of leadership and management of enterprises.

The European Union supports this approach through the Economy Competitiveness Improvement Programme, up to an amount of 10 million euros, which corresponds to almost francs CFA 6,5 billion.

The pilot phase of this Programme has already enabled to update fifteen (15) enterprises in different domains, such as steel, metallurgy, textile, agro-food, and tourism, construction, electronic, mechanic, leather and shoes, etc.

Fellow Journalists,

The approach taken by Cameroon to ratify the Stepping Partnership Agreement with the European Union, does not, in any way, contradicts its commitment, at the regional level and notably within the framework of the Monetary and Economic Community of Central Africa – known in             French as CEMAC.

Thus, Cameroon stimulated the resumption of negotiations between, on the one hand, the Central African Region, including CEMAC, the Democratic Republic of the Congo and Sao Tomé and Principe, and on the other hand, the European Union, for the movement towards the final Economic Partnership Agreements.

This negotiating configuration recently met in Kinshasa, later on in Douala and Libreville.

Concerning the ratification by Cameroun of the Stepping Agreement, this should be perceived as a strategic approach translation the ambition of Cameroon to acquire market shares at the international level, and mainly to profit from the diversification of its economy, to modernize it and exploit, to the maximum, the preferential access of its export products on the European market.

While moving into the signature of this Agreement – I mean here the Stepping Agreement – the Head of State, His Excellency Paul BIYA, once again, acts in an approach, anticipating and taking into consideration major challenges as structured at the international economy scale.

His unique concern in this moment, is that of prosperity of our country, and thereby, that of the well-being of all our fellow citizens.

The risks inherent to the application of the economic partnership agreement with the European Union, are then perfectly known and under control.

The expected impact on the alleviation of poverty, the reinforcement of the local economic fabric and the recovery of our commercial balance, is of nature to be fundamentally positive.

In addition, it is established that the economic partnership agreement will create a more favourable climate for economic governance, external trade and investments.

It will open new perspectives of growth and development for our economy, without any threat against the achievements of the regional integration, to which Cameroon remains supportive, in the framework of on-going negotiations within Central Africa. >>>