VZCZCXYZ0003
PP RUEHWEB

DE RUEHAR #1292/01 3410236
ZNR UUUUU ZZH
P 070236Z DEC 09
FM AMEMBASSY ACCRA
TO SECSTATE WASHDC PRIORITY 8601

UNCLAS ACCRA 001292 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA; STATE PASS TO USTR-GBLUE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN GH
SUBJECT: GHANA'S 2010 TRADE ESTIMATE REPORT 
 
REF: STATE 106353 
 
¶1. SUMMARY: The U.S. goods trade surplus with Ghana was $386 million 
in 2008, an increase of $169 million from 218 million in 2007. U.S. 
goods exports in 2008 were $609 million, up 46.2 percent from the 
previous year.  Corresponding U.S. imports from Ghana were $222 
million, up 11.8 percent.  Ghana is currently the 89th largest 
export market for U.S. goods. (NOTE: Above summary statistics have 
not been updated, per REFTEL instructions.) 
 
¶2. The stock of U.S. foreign direct investment (FDI) in Ghana was 
$306 million in 2006 (latest data available). 
 
¶3. The United States has signed three agreements promoting trade and 
investment between the U.S. and Ghana: the Overseas Private 
Investment Corporation (OPIC) Investment Incentive Agreement, the 
Trade and Investment Framework Agreement (TIFA), and the Open Skies 
air transport agreement. 
 
IMPORT POLICIES 
--------------- 
 
Tariffs: 
 
¶4. Ghana is a Member of the WTO and the Economic Community of West 
African States (ECOWAS).  According to the WTO, Ghana has bound only 
1 percent of tariffs on industrial goods.  Along with other ECOWAS 
countries, Ghana adopted a common external tariff (CET) in 2008 that 
requires members to simplify and harmonize ad valorem tariff rates 
into five bands: zero duty on social goods (e.g., medicine, 
publications); 5 percent on imported raw materials; 10 percent on 
intermediate goods; 20 percent on finished goods; and 35 percent on 
goods in certain sectors.  The fifth band Q proposed by Nigeria Q is 
still under negotiation among member countries.  Ghana currently 
maintains 190 exceptions to the CET, and the highest tariff charged 
is 20 percent.  The tariff rates for the items covered under these 
exceptions will require some changes to align with the CET. 
 
Nontariff Measures: 
 
¶5. Importers are confronted by a variety of fees and charges in 
addition to tariffs.  Ghana levies a 12.5 percent value added tax 
(VAT) plus a 2.5 percent National Health Insurance levy on the 
duty-inclusive value of all imports and locally produced goods, with 
a few selected exemptions.  In addition, Ghana imposes a 0.5 percent 
ECOWAS surcharge on all goods originating from non-ECOWAS countries 
and charges 0.4 percent on the free on board value of goods 
(including VAT) for the use of the automated clearing system, the 
Ghana Community Network (GCNet).  Further, under the Export 
Development and Investment Fund Act, Ghana imposes a 0.5 percent 
duty on all non-petroleum products imported in commercial 
quantities.  Ghana also applies a 1 percent processing fee on all 
duty free imports. 
 
¶6. All imports are subject to destination inspection and an 
inspection fee of 1 percent of cost, insurance and freight (CIF). 
Importers have indicated that they would prefer a flat fee on each 
transaction based on the cost of the services rendered.  The 
destination inspection companies (DIC) licensed by the Ghanaian 
government account for the longest delay in import clearance.  A 
2008 study on port fees revealed that, out of the total transaction 
time of 69 hours for import clearance, destination inspection 
accounts for 45 hours.  Following lobbying from importers, Ghana 
Customs has established a Customs Management System (CMS) to take 
over the valuation and classification of imported goods from the 
DICs.  The new system is intended to reduce the time for import 
clearance through the automation of key steps associated with 
customs entry processing, payments, and clearance. However, 
implementation of the CMS has been delayed due to the extension of 
an agreement with one of the DICs. 
 
¶7. In December 2009, the GOG introduced a bill in Parliament to 
change Ghana's excise tax regime from the current specific excise 
tax to an ad valorem excise tax on "waters, tables including mineral 
waters of all description." Spirits, beers other than indigenous 
beer, and tobacco products are included in the products covered by 
this amendment.  This amendment would equalize the difference in tax 
treatment of malt drinks and carbonated soft drinks introduced in 
¶2007.  The non-alcoholic beverages above would be taxed at 20 
percent of the ex-factory price (i.e. the wholesale price, excluding 
transportation costs).  The bill has not passed Parliament as of 
December 4, 2009. 
 
¶8. An examination fee of 1 percent is applied to imported vehicles. 
Imported used vehicles that are more than 10 years old incur an 
additional tax ranging from 2.5 percent to 50 percent of the CIF 
value.  Ghana Customs maintains a price list that is used to 
determine the value of imported used vehicles for tax purposes. 
There are complaints that this system is not transparent because the 
price list used for valuation is not publicly available. 
 
¶9. Each year, between May and October, there is a temporary ban on 
the importation of fish (exempting canned fish) to protect local 
fishermen during their peak season. 
 
¶10. Certificates are required for agricultural, food, cosmetics, and 
pharmaceutical imports.  The import procedures for these products 
are cumbersome. 
 
¶11. Permits are required for import of poultry and poultry products. 
The permit process is time consuming, and at the time the permit is 
issued, a non-standardized quantity limit is imposed. 
 
¶12. In November 2007, the Ghanaian government imposed a temporary 
ban on the import of tomato paste and concentrates, citing "unfair 
trade practices."  Temporary permits were, however, granted to some 
importers to import the tomato concentrate for canning. 
 
¶13. All communications equipment imports require a clearance letter 
from the National Communications Authority.  Securing a clearance 
letter prior to importation can help avoid delays at the port of 
entry. 
 
EXPORT SUBSIDIES 
---------------- 
 
¶14. The government uses preferential credits and tax incentives to 
promote exports.  The Export Development Investment Fund administers 
financing on preferential terms using an 18 percent interest rate, 
which is below market rates.  Agricultural export subsidies were 
eliminated in the mid-1980s.  The Export Processing Zone (EPZ) Law, 
enacted in 1995, leaves corporate profits untaxed for the first 10 
years of business operation in an EPZ, after which the rate climbs 
to 8 percent (the same rate for non-EPZ companies).  Seventy percent 
of production in the EPZ zones must be exported.  The current 
corporate tax rate for non-exporting companies is 25 percent. 
 
STANDARDS, TESTING, LABELING, AND CERTIFICATION 
--------------------------------------------- -- 
¶15. GhanaQs Conformity Assessment Program (CAP) leaves open the 
possibility for trade disruption, discrimination, and imposition of 
high costs on imported goods. More detail is required from the GOG 
as to whether all products listed require lab certificates, if there 
is risk-based analysis justifying the need for certificates and/or 
testing fees, and if internationally recognized certification marks 
are acceptable.  However, no actual examples of trade discrimination 
under this category have been filed with the USG. 
 
¶16. Ghana has issued its own standards for most products under the 
auspices of its testing authority, the Ghana Standards Board (GSB). 
The GSB has promulgated more than 444 Ghanaian standards and adopted 
more than 1,440 international standards for certification purposes. 
The Food and Drugs Board is responsible for enforcing standards for 
food, drugs, cosmetics, and health items. 
 
¶17. Under GhanaQs Conformity Assessment Program (CAP), some imports 
are classified as "high risk goods" (HRG) that must be inspected by 
GSB officials at the port to ensure they meet Ghanaian standards. 
The GSB has classified the HRG into 20 broad groups, including food 
products, electrical appliances and used goods.  The classification 
of HRG is vague and confusing, and its scope has raised numerous 
questions.  For example, the category of "alcoholic and nonalcoholic 
products" could presumably include beverages, pharmaceuticals, and 
industrial products under the same classification.  The CAP process 
requires prior registration with GSB as an importer of HRG and GSB 
approval to import any listed HRG.  The importer must submit to GSB 
a sample of the HRG, accompanied by a certificate of analysis (COA) 
or a certificate of conformance (COC) from accredited laboratories 
in the country of export.  Most often, the GSB officials conduct a 
physical examination and check labeling and marking requirements and 
ensure that goods are released within 48 hours.  Currently, the fee 
for registering the first three HRG is GHC 50(about $34) and GHC 20 
for each additional product.  Any HRG entering Ghana without a COC 
or COA from an accredited laboratory is detained and subjected to 
testing by the GSB.  The importer is required to pay the testing fee 
based on the number and kinds of parameters tested.  The GSB 
publishes most of its fees on its website.  U.S. companies have 
expressed concern that the standards that the Ghana CAP utilizes are 
difficult to determine and that independent third party 
certifications and marks may not be recognized, resulting in costly 
and redundant testing. 
 
¶18. The GSB requires that all food products carry expiration or 
shelf life dates and requires that the expiration date at the time 
it reaches Ghana should be at least two-thirds the shelf life. 
Goods that do not have two-thirds of their shelf life remaining are 
seized at the port of entry and destroyed. Questions have been 
raised regarding the consistency of this requirement with the Codex 
Alimentarius Commission General Standard for Labeling of 
Pre-packaged Foods. 
 
¶19. Ghana passed provisional biosafety legislation in March 2008 to 
allow the use of agricultural biotechnology pending the passage of a 
larger biosafety regime.  The legislation established the National 
Biosafety Committee as the national focal point on biosafety and 
allows the conduct of field trials and contained use.  It does not 
currently allow the sale or release of biotech products to farmers 
or consumers.  The main biosafety legislation is under review and 
that will establish the National Biosafety Authority, which will be 
the administrative body responsible for all issues related to 
biotechnology in Ghana. 
 
Sanitary and Phytosanitary Measures: 
 
¶20. For human health reasons, Ghana prohibits the importation of 
meat with a fat content by weight greater than 25 percent for beef, 
25 percent for pork, 15 percent for poultry, and 30 percent for 
mutton.  Imported turkeys must have their oil glands removed.  Ghana 
restricts the importation of condensed or evaporated milk with less 
than 8 percent milk fat by weight, and dried milk or milk powder 
containing less than 26 percent by weight of milk fat, with the 
exception of imported skim milk in containers. 
 
¶21. Ghana has lifted its previous restriction on imports of U.S. 
boneQin beef, which was based on concerns regarding Bovine 
Spongiform Encephalopathy (BSE). 
 
GOVERNMENT PROCUREMENT 
---------------------- 
 
¶22. The Public Procurement Authority, established in 2004, 
administers the public procurement law to enhance transparency and 
efficiency in the procurement process.  Individual government 
entities have formed tender committees and tender review boards to 
conduct their own procurement.  Large public procurements are made 
by open tender and foreign firms are allowed to participate.  A 
draft guideline being applied to current tenders gives a margin of 
preference of 7.5 percent to 20 percent to domestic suppliers of 
goods and services in international competitive bidding. 
Notwithstanding the procurement law, companies cannot expect 
complete transparency in locally funded contracts.  Vendor or 
foreign-government subsidized financing arrangements have in some 
cases appeared to be a crucial factor in some Government of Ghana 
procurement actions.  Allegations of corruption in government 
procurement are also fairly common.  Ghana is not a signatory to the 
WTO Agreement on Government Procurement. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
--------------------------------------------- 
 
¶23. IPR protection continues to be a challenge in Ghana, as the lack 
of enforcement discourages foreign investment dependant on IPR 
protections.  Ghana has signed treaties pertaining to the World 
Intellectual Property Organization (WIPO) Copyright Treaty (WCT) and 
WIPO Performances and Phonograms Treaty (WPPT).  The WCT has been 
ratified and is in force, but the WPPT, despite being signed and 
ratified by the GoG in 2006, has not been recognized by WIPO as 
having entered into force due to confusion between the GoG and WIPO 
regarding WIPOQs technical filing procedures in Geneva. 
 
 
¶24. Ghana is a party to the World Intellectual Property Organization 
(WIPO) Convention, the Berne Convention for the Protection of 
Literary and Artistic Works, the Paris Convention for the Protection 
of Industrial Property, the Patent Cooperation Treaty, the WIPO 
Copyright Treaty and the African Regional Industrial Property 
Organization protocols.  Ghana has signed the WIPO Performances and 
Phonograms Treaty and the Patent Law Treaty.  Since December 2003, 
Parliament has passed six bills designed to bring Ghana into 
compliance with the WTO TRIPS Agreement.  The new laws address 
copyright, trademarks, patents, layout-designs (topographies) of 
integrated circuits, geographical indications, and industrial 
designs. Regulations to define the procedures for comprehensive IPR 
protection and enforcement have not been promulgated.  However, 
copyright regulations were passed in July 2008. 
 
¶25. There are incidents of piracy of copyrighted works. Although 
there is no reliable information on the scale of this activity, 
industry estimates range from 40-90 percent for certain sectors such 
as pharmaceuticals and computer software. Holders of intellectual 
property rights have access to local courts for redress of 
grievances, although very few trademark, patent, and copyright 
infringement cases have been filed in Ghana in recent years. 
Companies who have filed cases report prolonged timescales for 
resolution (a possible factor in discouraging other companies from 
filing such cases). 
 
¶26. Government initiated enforcement remains relatively rare but the 
Copyright Office, which is under the Attorney GeneralQs Office, 
periodically initiated raids on markets for pirated works.  The 
Customs Service has collaborated with concerned companies to inspect 
import shipments for specific counterfeit products. 
 
SERVICES BARRIERS 
----------------- 
¶27. GhanaQs investment code precludes foreign investors from 
participating in four economic sectors: petty trading, the operation 
of taxi and car rental services with fleets of fewer than 10 
vehicles, lotteries (excluding soccer pools), and the operation of 
beauty salons and barber shops. 
 
¶28. Ghana allows foreign telecommunications firms to provide basic 
services, but requires that these services be provided through joint 
ventures with Ghanaian nationals.  The National Communications 
Authority has yet to become effective in resolving complaints 
alleging that Ghana Telecom, the state-owned national 
telecommunications operator, is engaging in anticompetitive 
practices. 
 
¶29. In the insurance sector, Ghana limits foreign ownership to 60 
percent, except for auxiliary insurance services, where 100 percent 
foreign ownership is permitted.  Although foreign investors may 
participate in GhanaQs market for banking and other non-insurance 
financial services, discriminatory treatment applies to companies 
owned by non-resident investors.  Specifically, under the central 
bankQs new minimum capital requirement for banks, existing banks 
with Ghanaian majority share ownership (local banks) have until 2012 
to fully increase their capital base to GHC 60 million (about $41 
million) from GHC 7 million.  By contrast, banks with majority 
foreign ownership need to meet the target by 2009. 
 
INVESTMENT BARRIERS 
------------------- 
 
¶30. Foreign investment projects must be registered with the Ghana 
Investment Promotion Center (GIPC), a process that is supposed to 
take no more than five business days but that often takes 
significantly longer.  In an attempt to improve its service, in 2007 
the GIPC introduced an online registration system. 
 
¶31. The following minimum capital contribution requirements apply 
for non-Ghanaians who wish to invest in Ghana: $10,000 for joint 
ventures with a Ghanaian entity; $50,000 for investment in 
enterprises wholly-owned by a non-Ghanaian; and $300,000 for 
investment in trading companies (firms that buy/sell finished goods) 
either wholly or partly owned by non-Ghanaians.  The GIPC has 
proposed increasing the minimum capital contribution for investment 
in trading companies to $1 million.  Trading companies must also 
employ at least 10 Ghanaians. 
 
ELECTRONIC COMMERCE 
------------------- 
 
¶32. Barriers to electronic commerce are mainly related to inadequate 
telecommunications and financial infrastructure.  A proposed legal 
framework for electronic transactions is before Parliament. 
Payments in Ghana are largely cash based.  In June 2008, the 
government established a smart card payment system QE-ZwichQ that 
links banks and financial institutions throughout Ghana and allows 
the use of point of sale and other electronic payments tools, but 
enrollment has been low. 
 
OTHER BARRIERS 
-------------- 
 
¶33. The residual effects of a highly regulated economy and lack of 
transparency in certain government operations create an added 
element of risk for potential investors.  Entrenched local interests 
sometimes have the ability to derail or delay new entrants, and 
securing government approvals may depend upon an applicantQs local 
contacts.  The political leanings of the Ghanaian partners of 
foreign investors are often subject to government scrutiny, and 
ensuring compliance with the U.S. Foreign Corrupt Practices Act 
remains a challenge. 
 
¶34. Foreign investors have experienced sustained difficulties and 
delays in securing required work visas for non-Ghanaian employees. 
The GIPC is unable to guarantee provision of work permits from the 
Ministry of InteriorQs Department of Immigration.  Work permits that 
are generated can unpredictably take several months from application 
to delivery.  At least one company only received a fraction of the 
total number of needed permits, leading to the cancellation of an 
infrastructure project worth more than USD 150 million. 
 
¶35. GhanaQs complex land tenure system creates challenges for 
establishing clear title on real estate. Non-Ghanaians can have 
access to land only on a leasehold basis. 
 
¶36. Port inefficiencies increase import and export costs.  The 
Customs Service phased in an automated customs declaration system 
that was established in the last quarter of 2002 to facilitate 
customs clearance.  Although the new system has reduced the number 
of days for clearing goods through the ports, the desired impact has 
yet to be realized because complementary services from government 
agencies, banks, destination inspection companies, and security 
services have not been established. 
TEITELBAUM