US embassy cable - 04ACCRA1837

UNCLAS SECTION 01 OF 03 ACCRA 001837 
 
SIPDIS 
 
STATE FOR AF/W. AF/EPS (AKUETTEH), EB/TPP/BTA/ANA (WHITAKER) 
COMMERCE FOR ITA (VINEYARD) 
STATE PASS USTR (HAMILTON) 
 
E.O. 12958: N/A 
TAGS: ELAB, ETRD, PHUM, PREL, GH, AGOA 
SUBJECT: GHANA: AGOA ELIGIBILITY REVIEW UPDATE 
 
REF: SECSTATE 168472 
 
1.  PER REFTEL, POST SUBMITS THE FOLLOWING UPDATE ON GHANA'S 
AGOA ELIGIBILITY: 
 
2.  BEGIN TEXT, 
 
TPSC SUBCOMMITTEE ON AGOA IMPLEMENTATION 
2004 COUNTRY ELIGIBILITY RECOMMENDATIONS 
STATE SUBMISSION 
 
 
Country: GHANA 
Current AGOA Status: Eligible 
State recommends continued AGOA eligibility for Ghana. 
 
Country Background Summary: Ghana is a constitutional 
democracy dominated by a strong presidency. President John 
Kufuor has governed since taking power democratically in 
January 2001, succeeding Jerry Rawlings who ruled for 19 
years. Ghana,s population in 2003 was approximately 20.1 
million. 2003 GNI was USD 6.5 billion, and per capita GNI was 
USD 320. Gold, cocoa, and timber are the traditional sources 
of export earnings. The Government of Ghana (GoG) is pursuing 
sound monetary and fiscal policies and completed successful 
IMF and World Bank reviews in September 2003. It has 
succeeded in getting the budget under control and has 
improved transparency and accountability in use of public 
resources. The GoG is on target for revenue collection 
through August 2004, but is unlikely to meet expenditure 
targets due to high oil prices.  Maintaining fiscal 
discipline continues to be is its top economic priority. Real 
GDP growth increased from 4.5 percent in 2002 to 5.2 percent 
in 2003. The cedi has remained relatively stable, 
depreciating by 3.5 percent in 2003.  Favorable external 
markets for cocoa and gold in 2003 supported the stability of 
the cedi and increased foreign exchange reserves. The annual 
inflation rate has declined from 30 percent in April 2003 to 
11.2 percent at the end of May 2004.  Ghana reached HIPC 
completion point in July 2004, paving the way for 
approximately USD 3.5 billion in debt forgiveness. 
 
Comments on Eligibility Requirements 
 
I. Market-based Economy 
 
A. Major Strengths Identified 
Ghana has a market-based economy with few barriers to trade 
and investment. The GoG has made strides in the structural 
reform agenda, particularly in eliminating price controls and 
subsidies. The GoG is expected to fully liberalize crude oil 
imports and cede control of petroleum prices after December 
2004. 
Ghana has enjoyed significant reductions in hard currency 
debt payments since reaching HIPC decision point in 2002. 
Private property rights are protected by law, though disputes 
over land ownership are common. Judicial tribunals, long a 
source of abuse, have been abolished, and High Courts in 
major cities are now automated to expedite review of major 
commercial cases as well as of high-profile corruption cases. 
Encouraging foreign investment is a central part of economic 
policy. Ghana has received nearly USD 250 million in direct 
foreign investment since the beginning of the Kufuor 
Administration in January 2001 
Standard and Poor's issued Ghana a B plus/B sovereign debt 
rating on September 5, 2003 and Fitch Rating Agency issued a 
B rating with positive outlook. Although the GoG does not 
benefit directly from this rating, the private sector already 
has due to easier access to credit and foreign exchange and 
increased foreign and domestic investment flows into Ghana. 
The rating also serves as a useful benchmark to measure 
economic progress in Ghana. 
The GoG passed five of six proposed IPR bills in December of 
2003.  The last -a copywrite bill- is still pending in 
Parliament. 
The World Bank announced in a March 2004 report that Ghana,s 
&Time to Start a Business8 had decreased by 34 percent 
since 2003. 
 
B. Major Issues/Problems Identified 
The GOG faces serious challenges in continuing structural 
reforms. It has privatized 300 of 350 parastatal companies, 
but the GoG has delayed divestitures of Ghana Commercial Bank 
and Ghana Water Company Limited. 
In anticipation of the upcoming presidential election the GOG 
has not raised fuel prices to cost recovery levels.  This is 
causing parastatal losses of USD10 million per month. 
Domestic credit and subsidies to public utilities continue to 
present quasi-fiscal problems. The GoG has yet to resolve the 
management problems and inefficiencies in the state owned 
utility companies. It has accumulated large arrearages in the 
energy sector, which pose a potential threat to macroeconomic 
stability. 
The GoG has cleared the CMS Energy dispute by paying arrears 
and has shown a good faith effort to make scheduled payments. 
Western Wireless' Ghanaian subsidiary Westel was able to meet 
directly with President Kufuor and has agreed to pay a USD 25 
million fine to settle their dispute with the GoG.  The 
matter has been complicated by the application of a 
retroactive spectrum fee of USD 26.5 million.  According to 
the GoG the fee is being applied equally to all wireless 
operators in the country.  Post has no indication the fee has 
not been applied evenhandedly.  Westel contends that their 
license was paid as part of their original agreement with the 
GoG.  Westel has stated their intention to file for 
international arbitration to settle the matter, but holds 
hope that an agreement can still be reached through direct 
negotiation. 
The GoG decided to settle its disputes with U.S. firm Kaiser 
Aluminum by purchasing Kaiser's large Valco facility. 
Unfortunately the sale has yet to close and the GoG and 
Kaiser are engaged in parallel processes of international 
arbitration and direct negotiation to resolve the sale. 
US firms have expressed concerns regarding the lack of 
transparency in government procurement, although there have 
been no formal complaints to the GoG. The concerns are mainly 
related to 1) undefined timeframes for rendering decisions, 
2) unclear bidding requirements, and 3) allegations of 
favoritism. 
 
II. Political Reform/Rule of Law/Anti-Corruption 
 
A. Major Strengths Identified 
The Kufuor Administration has pledged commitment to the rule 
of law and appears to be living up to that ideal.  The 
President has established an Office of Accountability to 
oversee the performance of senior government functionaries. 
Several corruption prosecutions are underway and a former 
minister is now in jail.  Cabinet Ministers recently approved 
&Whistle Blower8 legislation to protect citizens who report 
corruption. 
The GoG worked to reduce the backlog of its courts by 
automating High Courts authorized to hear cases involving 
banks, investors, human rights, electoral petitions, 
government revenue, specified commercial and industrial cases 
and certain criminal cases. The GoG also drafted legislation 
to promote Alternative Dispute Resolution (ADR). 
Presidential elections of 2000 were peaceful, free, and 
transparent. Democracy continues to be vibrant, with the two 
major parties vigorously contesting each other and the press 
enjoying unprecedented freedom. 
 
B. Major Issues/Problems Identified 
The integrity of the legal system is compromised by a severe 
lack of financial, human, and material resources. 
There are serious problems with large numbers of remand 
prisoners detained for three to ten or more years before 
going to trial. 
There continue to be credible reports that members of the 
police beat suspects in custody, and that police and some 
elements of the military arbitrarily arrest and detain 
persons. Police corruption is a problem. 
Prolonged pretrial detention remains a problem. Juvenile 
detainees are housed in separate facilities. Inadequate 
resources and a system vulnerable to political and economic 
influence compromises the integrity of the overburdened 
judicial system. 
At times the Government restricts freedom of assembly, and 
police forcibly disperse some demonstrations. 
Some observers question the GoG,s commitment to an 
evenhanded application of the rule of law given the energetic 
scrutiny and investigation of former government officials on 
corruption charges while comparatively few from Kufuor,s 
party are targeted. 
 
III. Poverty Reduction 
 
A. Major Strengths Identified 
Ghana has a poverty reduction plan.  Key to this is 
increasing growth rates in agriculture through exports of 
processed goods. Ghana plans to take advantage of AGOA 
provisions to boost exports of agricultural products to the 
U.S. 
Ghana has aggressively moved to take full advantage of the 
apparel benefit. Ghana received its textile visa in Mid-2002, 
and, received its Category 9 certification for hand loomed 
rugs, scarves, placemats and tablecloths, effective September 
15, 2003. Ghana-based textile firms already have contracts 
with U.S. distributors and are seeking more. 
Ghana reached its HIPC completion point in July 2004, which 
will result in approximately USD 3.5 billion of debt 
forgiveness from official creditors. 
 
B. Major Issues/Problems Identified 
None 
 
IV. Labor/Child Labor/Human Rights 
 
A. Major Strengths Identified 
Despite some problems in its human rights record, the GoG 
continues to improve its human rights practices. Police 
received training in tactics of non-lethal force and human 
rights protection. 
The GoG has increased its efforts to suppress the trafficking 
in persons through cooperation with NGOs and international 
organizations to identify and return internally trafficked 
children. 
Ghana is a signatory to ILO convention 182 on the worst forms 
of child labor. The GoG has made combating child labor and 
trafficking a high priority. Several Ministries worked 
closely with the ILO to conduct studies on child labor 
exploitation and regional trafficking, including the Ghana 
Statistical Service, which published an ILO-financed survey 
of child labor in Ghana in March 2003. 
NGOs, local and national government participate in West 
Africa Cocoa/Agriculture Project (WACAP), an international, 
public-private effort to eliminate the worst forms of child 
labor from the cocoa industry. 
In conjunction with ILO/IPEC, IOM has successfully freed 
hundreds of children as young as four years old from forced, 
hazardous labor in the Lake Volta fishing industry. 
Ghana is working closely with the U.S. and other donor 
countries to assess the extent of the problem of 
international trafficking in women. The GoG and local NGOs 
are continuing on an extensive public education campaign 
begun last year against domestic violence, contributing to 
public debate about draft domestic violence legislation. The 
GoG also strengthened the Women and Juvenile Unit of the 
Police to combat crimes against women and children and the 
courts increasingly gave longer sentences for those crimes. 
Labor unions enjoy substantial legal protections in Ghana, 
and many operate in both the public and private sectors. 
Various affiliates of the Trade Union Congress are actively 
involved in organizing workers in the informal sector around 
issues of health and safety, hours of work, annual leave, and 
medical care. 
In July 2003, the National Labor Commission, an independent 
body that arbitrates labor disputes, was established to bring 
Ghana,s labor laws into conformity with ILO Convention. 
In October a new union, the Union of Industry, Commercia and 
Financial Workers (UNICOF) was incorporated, representing the 
interests of workers at Ghana Commercial Bank, Standard and 
Chartered Bank, Ghana National Procurement Agency, Ghana 
Airways Pilots Association, and Agricultural Development 
Bank, among others. 
 
B. Major Issues/Problems Identified 
There were reports that the GOG was intolerant of opposing 
views and reacted by bringing dissenters in for questioning 
by the Bureau of National Investigations or the National 
Security Agency. Children as young as four years old are 
forced into dangerous work in the fishing industry via 
arrangements in which their parents get around $180 per year 
for their service.  Aided by international organizations, the 
GoG is working to eliminate this practice, and the incidence 
of this practice is declining, but the GoG still has not 
passed an anti-trafficking law despite drafting a bill for 
well over two years. 
Police use of excessive force resulted in several 
extra-judicial killings as well as injuries. Corruption 
amongst police, who set up barriers to bribe motorists, and 
judicial officials, who accept bribes in exchange for 
expedited or postponed cases or losing records, remained a 
serious problem. 
Child labor was a problem in the informal sector, and forced 
child labor and trafficking in persons were problems. 
Trokosi, a traditional form of ritual servitude, was 
practiced on a limited scale in one region of the country. 
 
V. International Terrorism/U.S. National Security 
 
A. Major Strengths Identified 
The GoG has been explicit in its sympathy with the U.S. over 
September 11, and has since ratified or acceded to all 
international anti-terrorism conventions. 
 
B. Major Issues/Problems Identified 
None 
YATES