Monrovia – In December 2015, the Revised Liberia Code of Laws or Executive Law Section 29 empowers the Ministry of Commerce and Industry to regulate trade standards including imports and exports of commodities into the Commerce of the republic.
Report by Rodney D. Sieh, [email protected]
“We cannot eliminate poverty in this country with so many of our people taking their hard-earned money and going to far off lands to buy plastic hairs, bleaching cream, fake electronics and mixed goods that often times end up in our waterways as trash.
We have to help them, work with them to get into production in the real sector” – Axel Addy, Minister of Commerce and Industry, Liberia
The Ministry over the years has used several trade policy tools to regulate such trade flows. One of such is the use of Import Permits Declarations (IPDs) or Export Permit Declarations (EPDs).
However, the Ministry has been working to eliminate the number of categories requiring IPDs and EPDs.
It has reduced the categories of commodities from 27 to 11 over the last three years and is working towards total elimination of these tools in their current form once the Single Window automated platform comes online.
The current regulation of IPD and EPD outlines the process and requirements for approvals.
However, since the regulation came into effect, a lot of local businesses unfamiliar with the regulation, have taken the ministry to task and accusing Minister Axel Addy and some members of his staff of strangulating some businesses while giving others a free pass.
Businesses Circumventing Loopholes
Among the items listed to fall in that category include: fresh or frozen meat, meat products, including poultry, fresh and frozen fish and crustaceans, alcoholic and non-alcoholic beverages, including bottled water, products of the milling industry and poultry, including rice, flour, eggs and starches, prescription medicines/pharmaceuticals and biological substances, inorganic and organic products of the chemical industry, chemical elements, acids, and chemicals, petroleum products, including crude and redefined oil and petroleum gases, explosives, pyrotechnics, fireworks, and combustible liquid or gas preparations, military tanks and weapons and ammunitions and hazardous waste.
Under the regulations, violators can face actions ranging from suspension of business registration certification, imposition of appropriate fines, or closures of business, consistent with the relevant provisions of the General Business Law and the Intellectual Property Law.
Additionally, businesses are cautioned that products listed above which, after testing or analysis, found to be non-compliant with nationally adopted or internationally accepted quality standards, as well as food fortification standards for flour, and other subsequent food fortification regulations, shall be treated as prohibited imports and be subject to confiscation or destruction action by the Ministry of Commerce and Industry and the Liberia Revenue Authority.
“Additionally, any product imported without an English label shall be subject to seizure or destruction action by the Ministry of Commerce and Industry; and the Ministry will also institute fines against both the inspection company and the business.”
Minister Axel Addy, in a recent interview with FrontPageAfrica explained the policy is being misunderstood by a lot of businesses and the Ministry is working with the Chamber of Commerce working to address the issues through the business roundtables and the Trade Facilitation Forum at the Ministry.
He however notes that the Ministry has a responsibility to encourage and protect local production while balancing importation.
But the elimination of IPDs for so many categories has also had an adverse effect with the dumping of substandard fake goods into the country.
Said Minister Addy: “We cannot eliminate poverty in this country with so many of our people taking their hard-earned money and going to far off lands to buy plastic hairs, bleaching cream, fake electronics and mixed goods that often times end up in our waterways as trash.”
“We have to help them, work with them to get into production in the real sector.”
He charged that critics of the policy are being unfair.
“They know the public will not understand and they know with political pressure government will sometimes fold and give in. The truth is, if you lift all IPDs today, you are likely to put some factories out of business and cancel the opportunities for any new one.
So, for cement for example, Cemenco, Primier Milling, Garson Steel, Cocoa Cola all employ a lot of Liberians; If you just allow people to flood the market irresponsibly, you will close many of these factories down. Who will address the number of jobs losses?
Forever the trade has been mostly one way with a limited export basket.
“The way you change that is to diversify your export basket. This does not happen without improving your productive sector; which does not happen without incentivizing domestic production over imports.”
Economy Promoting Poverty
He argued that the structure of the economy today is to promote poverty.
“The banks provide limited products to finance domestic production than they do for imports.
The few who are attempting to take the risk for manufacturing are at risk because importers who import what is being produced locally are mounting tremendous political pressure to ensure the restrictions are not put in place to manage importation over domestic production.”
In a bid to put the plan into action, Minister Addy says the ministry has transformed the Nancy Doe Market top floor for Liberian SMEs and the front for a fruit and vegetable farmers market in the front and 2nd and 4th Saturday of every month.
“We bring farmers, supermarket and restaurant buyers to Nancy Doe Market.”
“For me the joy was the gratitude shown by those women cooperatives who can’t thank us enough.”
“The LMA who benefits from this initiative. We have to do more for our people.”
While critics have been pounding the ministry over the IPD controversy, the minister asserts that the Sirleaf-led government, like governments across the West African sub-region, have several policy instruments to protect and foster domestic production.
“Tariffs and excise duties and taxes are some of them. The ECOWAS Common External Tariff (CET) does this for the region.”
ECOWAS, WTO Deadlines in Jeopardy
In October 2013, The common external tariff (CET) for Economic Community of West African States (ECOWAS) was adopted at a Heads of State Summit.
The goal was to harmonise ECOWAS Member States and strengthening Common Market. Article 3 of the ECOWAS Revised Treaty defines the aims of the community as promoting “co-operation and integration, leading to the establishment of an economic union in West Africa:.
“In order to achieve this, the community is to ensure, in stages, among other means, the establishment of a common market through “the adoption of a common external tariff and a common trade policy vis-à-vis third countries…”
“To this end, the ECOWAS Authority of Heads of State and Government established an ECOWAS Customs Union.”
“A common external tariff with a common nomenclature so that customs procedures are transparent, readily followed and delays at borders decreased, is a key stone in achieving this union.”
Besides the ECOWAS CET conundrum, Minister Addy says Liberia is also lagging behind on the World Trade Organization(WTO) Post Accession plan because a lot of the process requires coordination with other agencies
. “This process can be slow and sometimes a bit political.”
The minister says while he realizes that the commerce ministry is the punching bag now, these changes are necessary to bring about lasting solutions that will begin to change the structure of the economy.
In a bid to address the issue, Minister Addy says he and his staff have been speaking with businesses, but acknowledges that the customs procedure, the exchange rate is driving a lot of the tension.
“One way to help address the tension is to advocate for the New Customs Code law to be passed.
This law will change our GST regime to VAT and the valuation method to international standards based on the invoice value and not the market value like what is happening now.
The impact is that you will no longer have this problem where the duties and taxes on the good is higher that the invoice.
This hurts a lot of the small businesses.”
Minister Addy adds that his ministry is currently working to reduce further to just security related products, but manufacturers are pleading for some protection.
“The team is working on how to do that within international law
What is so funny is that between July and August was the deadline to launch the single window. We have asked the IFC to help us review the technical documents.”
Single Window, Top Priority
He says the Single Window implementation is part of Liberia’s commitment in WTO.
“A single window platform will automate our processes thereby eliminating IPDs and EPDs. The National Investment Commission is leading the procurement process to select an international firm to do that.”
For now, he says, his biggest priorities right now are two – Monrovia Industrial Park to create 2000 new jobs with new manufacturers in the park.
The second is to push the rice and petroleum importers to guarantee 8 months supply without shortage during the election period.
“This is where my energies are focused right now. The exchange rate is making this very hard to achieve because not enough is available to purchase bulk for four months at a time.”
He argues that Liberia is an import based economy and has been a trading post since the 19th century.
Nevertheless he says, balanced two way trade is what is driving development that is inclusive and equitable in many countries.
To improve that, the trade infrastructure must be upgraded in Liberia.
Bringing the single window platform and the verification of conformity which deals with quality, online will improve trade administration and reduce the cost of trade.
They are the permanent solutions the Ministry is working on to address import and export rights and quality.
“We have not invested in the quality infrastructure to address the dumping aspect of fake and substandard goods.
The National Standards Lab that should assist with this is heavily underfunded and so has limited capacity to do product quality assessments.
However the Ministry is working on concluding an MoU with the Ghana Standards Authority to provide technical assistance with this process.
But we encourage the continuing constructive dialogue with the business community and are working on improving the processes to improve the business climate.”
“We have eliminate many categories requiring IPDs and EPDs, and will eliminate the use of these tools once the Single Window platform comes online.”
But the flip side is that since we eliminated it we see a lot of dumping.
“Today we have a case where one group is threatening to sue us and mount pressure on us because they ran to the court and the court reopen their place when we closed them for violating the investment code.
The court says we should go through the administrative process, but they are to remain open. We are going through that process.
However, according to our legal team, they have changed their legal documents but still not provided the rest of the information, which has to do with the investment – the source of the money as the law requires an amount to be invested in that category.
Because of the pending mediation, we have not approved IPDs for them to bring in raw materials.
So now they are running out and now they are paying to mount pressure to approve their IPD. But we cannot until the administrative process is completed by the legal team. We see these challenges in many of the cases we come across.
It has been difficult to enforce the Investment Code because many Liberians are breaking the law meant for their benefit and this is why we are finalizing a regulation to address the gaps in the law so that the issue of fronting can be dealt with.”