US embassy cable - 05ABUJA2006

UNCLAS ABUJA 002006 
 
SIPDIS 
 
USDOC FOR 3131/ITA/ANESA/OA/KBURRESS 
STATE PASS TO USTR FOR C. HAMILTON 
 
E.O.  12598: N/A 
TAGS: ETRD, ECIN, EINV, NI, AGOA, ECOWAS 
SUBJECT: NIGERIA ECOWAS COMMON EXTERNAL TARIFF UPDATE 
 
1. Summary: Nigeria appears set to implement the ECOWAS 
Common External Tariff (CET), before the end of October 
2005. The CET would harmonize Nigeria's tariffs with those 
of other ECOWAS member states, and make Nigeria's trade 
policies more predictable. Though Nigeria had earlier 
abolished import bans on certain selected goods, mainly raw 
materials, the GON will not completely abolish bans until 
January 2007. End summary. 
 
2. At a press briefing on October 7, the Minister of 
Finance, Dr. Ngozi Okonjo-Iweala announced that Nigeria 
would start implementing the CET soon. She stated the GON 
had reduced Nigeria's tariff bands from twenty to five. The 
five tariff bands are a zero duty on capital goods, 
machinery, and medicines such as anti-retroviral drugs and 
other medicines not produced in the country; 5 % duty on 
imported raw materials; 10 % duty on intermediate goods; 
20% duty on finished goods; and 50% duty on goods in 
industries that the GON wants to protect. She said the GON 
would rescind all bans in January 2007.  In an October 10 
meeting to introduce the new UNDP representative, attended 
by USAID, she said the implementation of the CET would be 
phased in. 
 
3. Minister Okonjo-Iweala announced that though the GON 
reduced the tariff on rice and cigarettes from 110% and 150% 
respectively to 50% each in conformity with the CET, the GON 
also imposed an additional "special tariff" of 50% and 100% 
on rice and cigarettes, respectively, bringing their total 
tariff to 100% and 150%.  The additional tariffs were 
imposed on rice and cigarettes to encourage local production 
of rice, and reduce cigarette consumption. 
 
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Has the Implementation of the CET Commenced? 
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4. As of October 12, the CET was yet to be implemented 
because the "Green Book", i.e., a compendium of items and 
their associated tariff was yet to be published, though a 
draft copy had been approved by the Federal Executive 
Council (the Cabinet), according to Mrs. Esther Oyero of the 
Budget Office of the Federation.  She said the Nigeria 
Customs Service (NCS) would not begin implementing the CET 
until it gets a copy of the "Green Book" via a circular. She 
confirmed that discussions between the Minister of Finance 
and NCS was ongoing and would hopefully result in the 
publishing of the Green Book before the end of October. 
 
5. Mrs. Oyero said some imported items that arrived at the 
ports before the announcement of the implementation of the 
CET and were yet to be cleared would benefit from the lower 
CET tariffs. Raw materials imported by bona fide 
manufacturers who were beneficiaries of the recently 
suspended manufacturing incentives would attract the new CET 
tariff.  Consumer items that were yet to be cleared at the 
ports, however, would be cleared at the pre-CET tariff 
rates. 
 
Domestic Industry Reaction 
-------------------------- 
 
6. Though the Manufacturers Association of Nigeria (MAN) had 
earlier complained that implementing the CET would adversely 
affect their businesses because infrastructure deficiencies 
in Nigeria increase the cost of doing business far above 
other ECOWAS countries, Mrs. Oyero said that all the 
complaints have been taken into consideration.  She thought 
MAN would be would be satisfied when manufacturers digested 
the details of the yet to be published "Green Book". 
 
7. Comment:  The GON likely will implement the CET before 
the end of December 2005, because President Obasanjo has 
thrown his political weight behind it. Some might be tempted 
to translate the proposed "phased-in" implementation as slow 
and uneven, with some scope for confusion on what rates 
apply to what items and when.