Reasons Behind The Ban of Palm Oil and Other Agricultural Products by EU

                                            By Hamisu Muhammad, Francis Arinze Iloani & Philip Clement Shimnom
 http://www.dailytrust.com.ng/news/business/what-nigeria-needs-to-woo-eu-market-trade-envoy/110921.html

Filippo Amato is the Head of Trade and Economics Section of the European Union Delegation to Nigeria and the Economic Community of West African States (ECOWAS). In this exclusive interview with Daily Trust business team, he clarifies the issues surrounding the recent ban imposed on Nigeria by the EU.
He also looks at EU’s interventions and grants to Nigeria and gains recorded.

Why did the EU impose ban on some selected imports from Nigeria?

First of all I would like to clarify that the EU has not banned the import of several agricultural products from Nigeria, as wrongly stated in a number of national newspapers. Although it is true that there are a number of food products (such as melon seeds, dried meat, palm oil) imported from Nigeria that are sometimes rejected at the EU border because they are found to contain dangerous substances for human health, the import suspension measure adopted by the EU only concerns dried beans.  It is actually worrying that wrong information circulates in the national media, as this creates a lot of uncertainty and confusion for exporters of several other goods, which can continue to be exported to the EU provided they comply with the applicable standards. The reason for the import suspension measure of dried beans is that since January 2013 more than 50 rejections have been recorded at the EU border in relation to this product originating from Nigeria, nearly all of them reporting the presence of the unauthorised pesticide dichlorvos at levels largely exceeding the acute reference dose tentatively established by the European Food Safety Authority. Only in the first semester of 2015, the UK rejected 10 shipments of dried beans coming from Nigeria for excessive content of this pesticide. This represents a rate of rejections of more than 70 percent of dried beans coming from Nigeria in the last two and a half years.  In order to allow the time necessary for Nigeria to provide feedback and to consider the appropriate risk management measures, the suspension of imports of dried beans applies until 30 June,2016.

What is expected from Nigeria for the ban to be lifted and how to prevent a recurrence? 

To lift the ban, the Nigerian authorities must provide an export control plan to assure that the beans exported to the EU comply with the EU Minimal Risk Levels for Hazardous Substances. Export control programmes normally include the following elements: control of farmers and certification to Good Agricultural Practice (farmers trained in safe use of pesticides, keeping records of pesticide applications etc.), traceability of exported consignments to certified farmers, and sampling and analysis in accredited laboratories. In particular the residues of the highly toxic pesticide dichlorvos are of concern for the EU. 

What is the current state of business relations between Nigeria and the EU?

The European Union is Nigeria’s major trading partner, as confirmed by the most recent figures released by the Nigerian Bureau of Statistics.  Actually the EU is already the largest importer of non-oil products from Nigeria. However, it is a fact that exports of Crude Oil represent about 96 percent of all exports from Nigeria to the EU. This means that Nigeria exports of non-oil products represent less than 5 percent of its overall exports to Europe.  For instance, in 2014, the overall value of Nigerian exports to the EU was about 28 billion EUR of which less than 1 billion accounted for by non-oil products. The key to economic development is not protectionism, but a good mix of policy measures and reforms capable to increase the competitiveness of all sectors of the economy and consequently Nigeria’s trade relations with the rest of the world.  We get such statements all the time from exporters that would like to be able to invest further in their current businesses. Let’s take for instance the recent measure adopted by the CBN that has restricted access to foreign exchange for the import of more than 41 categories of products.  One of the intended objectives of the measure is to stimulate the internal supply of these goods. But artificially limiting the imports cannot alone achieve the objective to increase productivity.  One tool that would considerably enhance trade relations, and increase the potential to diversify the exports from Nigeria to the EU, is the Economic Partnership Agreement (EPA) between the EU and ECOWAS. The criticism raised in Nigeria against this agreement is often due to an emotional and misconceived perception of the agreement. The agreement provides for the immediate removal of all tariffs on imports from West Africa to the EU, while it provides for a gradual reduction of tariffs on imports from the EU to West Africa over a period of 20 years and only for machineries, intermediate and capital goods, while allowing West Africa to maintain tariff protection over its agricultural products and consumer goods.  

What are EU’s major trade interventions and grants to Nigeria?

In support of Nigeria to improve competitiveness, EU has provided €19m (N3.9B) grants to Nigeria through the National Planning Commission for the diversification of the economy from oil to non-oil. This grant is implemented through the Nigerian Private Sector Competitiveness Support Programme.  The programme aims to improve the Nigerian business and investment climate through the improvement and implementation of regulatory reforms especially in the areas of competition policy, land titling and business licensing with pilots in Kano state. The successes achieved in Kano will be replicated in other states. As part of the programme, the EU is helping Nigeria to establish the National Quality Infrastructure. In this, the EU is working closely with Standard Organization of Nigeria, NAFDAC, CPC and other stakeholders to improve the quality of products manufactured, exported and exchanged in the Nigerian market and to protect consumer rights.  In these projects, the EU is partnering with GIZ, DFID and UNIDO. As you are aware, Nigeria in terms of population and economy is over 60 percent of ECOWAS. The EU combined support to ECOWAS and Nigeria in the areas of Trade and Economic Development is over €1.3billion between 2008 and 2014. In energy, our current 10th EDF (European Development Fund) intervention is the Nigeria Energy Support Programme, that started in May 2014 and will finish in September 2017, with a 15.5 million euro funding from our the EU and being implemented by GIZ. The project focuses on renewable energy, energy efficiency, rural electrification and technical skills development issues. 

How can exporters in Nigeria leverage on opportunities in the EU to increase value and volume of exports?

As I explained, the EU is already supporting through a number of projects the improvement of the business environment and the competitiveness and quality of Nigerian products. To the extent that Nigerian products comply with EU standards, any exporter can take advantage of these programmes to increase exports towards the EU. I think it is important for exporters to know that the EU has set up a website which helps them to get information on the requirements to export to the EU. This is called the Export Helpdesk.
On the issue of Trade Partnership Agreement, some Nigerian authorities feel they are not preferred. How is the partnership faring contrary to what these authorities are thinking? The trade agreement is not a tradition, but it only tries to find the best deal to sell products. The EU is providing unilateral free access to market ideas for several years but then it was found that it was incompatible with WTO and so solution was found with the dichotomy agreement. Solution was found together with dialogue with ACP countries including West African countries, was to negotiate regional bilateral agreement reciprocal agreements but not completely reciprocal agreement but will allow for a second opening of the  ACP countries so that will constitute a sort of regional agreements which is compatible with WTO. Negotiations were carried for several years and we perfectly understood that we have to continue our development cooperation with the ACP countries and we never tried to transform our relations into normal sympatriate relations. The whole objective of the agreement was to continue with our development cooperation objectives but we use trade as an instrument to improve the development of the ACP countries including West Africa. 

Some European nations have been doubtful of investing in Nigeria due to insecurity. Now that we are seeing progress, have you started communicating with them that the condition has improved?

I don’t think we need to communicate to them because it was news in the media all over the world especially the smooth transition of power from former administration and to me it has given an enormous beneficial signal to the business community that things are improving. Business, of course, will have a net because we understand that this administration is also putting everything in place to address important problems like corruption but of course there has to be a new government in place for business to be comfortable to understand what the new policy is. But I think in terms of security, this is a good method and from what we are hearing from the news, insurgency in the northeast seems to be gradually solving.

With the EU economic crisis such as unemployment recently, do you think it will affect the future of the EU?

I think the problem has been overcome and Greece is still in the EU and after long negotiation. Everything is over and I think all European member states are doing everything possible to improve their economy.

What is your take on the recent migrants trooping into Europe?  Will the crisis not add more stress to the internal economy?
I am not sure because sometimes there are a lot of opportunities for employment. Certainly, there are a lot of migrants in Europe for economic reasons and there are some conditions for migrants indicating whether they are migrating just for economic reasons or otherwise and with the EPA, there are better opportunities for migrants and in the case of war, we cannot close our doors on them.