Cameroon slashes EU import tariffs by 70% under APE deal

In a bold move aligning with the Economic Partnership Agreement (APE) between Cameroon, the European Union (EU), and the United Kingdom, Finance Minister Louis Paul Motazé has announced a sweeping reduction in import duties. The decision targets the third category of goods, deemed vital for state revenue due to their substantial contribution to customs receipts. The phased approach involves an annual tariff cut of 10%, culminating in the complete elimination of duties by 2030.

The revised policy now applies to utility vehicles, fuels, cements, paints, and industrial packaging imported from the EU and the UK. This follows an accelerated schedule for the first two groups of goods. Starting August 4, 2023, items in the second group—including plasters, clinkers, trucks, trailers, and generators—enter Cameroon duty-free. Meanwhile, the first group, which comprises pharmaceuticals, fertilizers, pesticides, computers, gas, and tractors, has enjoyed duty-free entry since August 4, 2019.

Minimal fiscal impact on Cameroon’s revenue

When the APE was first implemented, concerns arose over potential budgetary shortfalls from reduced tariffs. However, the projected financial hemorrhage never materialized. Official data shows customs revenue losses of approximately 103 billion FCFA over a decade, averaging just over 10 billion FCFA annually. While notable, this figure remains manageable within the broader economic context.

Remarkably, Cameroon’s total customs revenue surpassed the 1,000 billion FCFA mark for the first time in 2023. This counterintuitive surge, occurring as EU import tariffs declined, stems from a strategic shift in trade partnerships. Diversification, particularly toward Asian markets, has offset the revenue erosion from Europe by broadening the tax base.

China emerges as an unexpected beneficiary

The APE’s irony lies in its unintended consequences: while preferential tariffs favored European goods, China has emerged as the biggest winner. Since 2013, China has held the top position as both Cameroon’s largest export destination and its primary supplier, a trend that has only intensified. A 2024 report by the Committee on Economic Competitiveness, affiliated with the Ministry of Economy, quantifies this shift.

In the machinery and equipment sector, China’s market share surged from 23.8% in 2016 to 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, recovering slightly to 32.3% in 2024. This decline of nearly 20 points raises questions about the effectiveness of tariff preferences for European industries in the face of China’s aggressive pricing strategies.

Unequal distribution of APE benefits

An analysis of APE beneficiaries reveals structural imbalances. By December 31, 2023, fewer than 5% of the 1,021 companies leveraging APE’s preferential tariffs secured approximately 75% of the tax advantages. The disparity extends to business size, with large enterprises capturing 80% of the benefits, leaving only 20% for small and medium-sized businesses. This gap reflects both Cameroon’s formal import structure and the varying capacities of businesses to navigate preferential customs procedures.

The Committee on Economic Competitiveness notes that « an examination of the top 50 companies utilizing APE’s preferential tariffs highlights a dominance of industrial and commercial sectors ». With full duty elimination slated for 2030, Cameroonian authorities now face a critical choice: maintaining historical ties with Europe or adapting to an economy increasingly dictated by China. This realignment has already sparked discussions about revising the APE framework.