In a bold move aligning with the Economic Partnership Agreement (EPA) between Cameroon, the European Union (EU), and the United Kingdom, the country’s Ministry of Finance, led by Minister Louis Paul Motazé, has announced a 70% reduction in customs duties on European imports. This adjustment targets the third category of goods, deemed critical for public revenue due to their significant contributions to the national treasury. The phased reduction, set at 10% annually, will culminate in the complete elimination of tariffs by 2030.
The new tariff cuts apply to essential imports such as commercial vehicles, fuels, cements, paints, and industrial packaging originating from both the EU and the UK. This follows an accelerated timeline for the first two categories. Since August 4, 2023, goods in the second category—including gypsum, clinkers, trucks, trailers, and generators—have entered Cameroon duty-free. Meanwhile, the first category, encompassing pharmaceuticals, fertilizers, pesticides, computers, liquefied petroleum gas, and tractors, has enjoyed the same exemption since August 4, 2019.
Limited fiscal impact despite early concerns
When the EPA was first introduced, critics warned of a looming budgetary shortfall due to reduced tariffs. However, the projected financial hemorrhage has not materialized as feared. Official data shows that customs revenue losses over the past decade total approximately 103 billion CFA francs, averaging just over 10 billion per year. While substantial, this figure remains manageable within the broader economic context.
Surprisingly, Cameroon’s total customs revenue surpassed the 1,000 billion CFA francs mark for the first time in 2023, defying expectations amid declining European import tariffs. This counterintuitive growth stems from a strategic shift in trade flows, particularly toward Asia. Diversifying trade partnerships has offset the revenue loss from European imports by broadening the tax base.
China emerges as unexpected beneficiary of Cameroon’s tariff reductions
The irony of the EPA’s design lies in its unintended consequences: while preferential tariffs favored European goods, China has emerged as the dominant player in Cameroon’s trade landscape. Since 2013, Beijing has held the top position as both Cameroon’s largest client and supplier, a trend that continues to strengthen. The 2024 Competitiveness Report by Cameroon’s Ministry of Economy highlights these shifts in stark terms.
In the machinery and equipment sector, China’s market share surged from 23.8% in 2016 to a commanding 52.5% in 2024, a gain of 28.7 percentage points over eight years. During the same period, the EU’s share plummeted from 50.1% to 29.3% in 2023 before partially recovering to 32.3% in 2024—a decline of nearly 20 points. This dramatic reversal raises questions about the effectiveness of preferential tariffs for European industries against China’s aggressive pricing strategies.
Benefits skewed toward large corporations
An analysis of EPA beneficiaries reveals another structural flaw in the agreement. As of December 31, 2023, fewer than 5% of the 1,021 companies utilizing the EPA’s preferential tariffs captured roughly 75% of the fiscal advantages. The disparity extends to company size, with large enterprises securing 80% of the gains, leaving just 20% for small and medium-sized businesses. This imbalance reflects both the structure of formal imports in Cameroon and the unequal capacity of businesses to navigate preferential customs procedures.
The Competitiveness Committee also noted that “the top 50 companies leveraging EPA’s preferential tariffs are predominantly concentrated in industrial and commercial sectors.” With full tariff elimination slated for 2030, policymakers now face a pivotal decision: balancing Cameroon’s historical European ties with the realities of an economy increasingly shaped by China’s dominance. Debates on revising the EPA’s terms have already begun, driven by this evolving trade dynamic.
