A standoff is looming in Arusha following the East African Community legislature’s refusal to approve the use of $3.48 million in donor funds meant to speed up negotiations for Economic Partnership Agreements with the European Union.

At the 23rd extraordinary meeting of the EAC’s Council of Ministers in Kigali a fortnight ago, EAC ministers and permanent secretaries resolved to petition the East African Legislative Assembly (EALA) to allow the use of the funds donated by the Swedish International Development Agency (Sida) for the EPA talks.

The standoff has been simmering since last December when the Council asked for the funds under a supplementary budget, but the request was turned down on the grounds that using donor money for the EPA talks would erode the bloc’s independence and lead to the region yielding to the demands of the EU.

Last Tuesday, a report was tabled before the House by the council requesting EALA to reconsider its decision and unlock the funds to jumpstart the stalled talks.

EALA Speaker Abdirahin Abdi confirmed the House had received the report and had requested time to study it and prepare a response, and that it would be debated at the May session. 

Apart from concerns that the donor funds would weaken the region’s bargaining position, EALA has raised questions about the benefits of EPAs, saying they would open local markets to international goods, killing off fragile local industries, especially in agriculture.

Mr Abdi said the entire House supported the decision, and needs to be convinced that the EPAs will not leave the region’s economy under siege from cheap imports.

“The reasons given in December for us to allow the money to be used were not convincing,” he said, adding that the revised position is under discussion by the relevant House committee, meaning its contents cannot be divulged.

Long talks

Kenya’s Permanent Secretary in The Ministry of East African Co-operation, David Nalo, however, backed the Council’s position, saying that the assembly’s stand was unfortunate as it stood in the way of concluding the talks, which have dragged on since 2004.

He questioned the rationale of the legislators’ decision, given that most EAC projects were donor-funded anyway.

“The reasons given by EALA for shooting down the expenditure are flawed because Arusha is receiving donor funds for many of its operations, including capacity building and infrastructure. This has not stopped us from thinking independently,” he said.

Mr Abdi maintained that the assembly declined the use of donor funds for EPA negotiations on principle, adding, “Yes, the assembly gets a lot of support from Sida, but it has misgivings about using donor funds for EPA talks.”

Mr Nalo explained that the EAC has a partnership fund that over the past two years has received more than $8.3 million from the EU, the World Bank, Germany, Denmark and the UK; therefore, he said, there is nothing special about the Sida support for EPA.

He added that it was important for EALA members to understand that EPAs are not just about trade, but are an integral part of the integration process, the reason why the EAC is involved as the region seeks a collective bargaining position.

“The objective of negotiating EPA as a bloc is to strengthen regional integration,” he said.

On EALA concerns over the possibility of local markets being flooded with cheap imports, Mr Nalo said a list of sensitive products has been drawn up that protects vital sectors from unfair competition. “This list is strictly followed,” he said.

He added that what the region should strive to achieve is a functioning common external tariff (CET), which was the strongest protection against cheap and substandard products being dumped in local markets.

“It is lack of a watertight CET regime that has led to a proliferation of substandard goods, especially from the Asian economies, with whom we do not have a trade agreement; this has had devastating consequences for industries such as textiles,” Mr Nalo said.

He said the EAC needs to avoid an approach to EPAs that creates the impression that the region is creating trade barriers, because in a globalised world, nobody can close their markets.

“The EU has a choice, we don’t. Therefore, we shouldn’t risk being shut out of the market,” he said.

Mr Nalo also took issue with the argument that because other economic blocs had not signed EPAs, the EAC should not be in a hurry to do so.

Citing the example of the Economic Community of West African States, Ecowas, he said it was largely driven by Nigeria whose economy is based on oil and is thus not affected by lack of an EPA.

The same obtains for the Southern African Development Community, which has mineral rich Mozambique and South Africa.

“East African economies are not favoured by extractive industries, putting us at a disadvantage because the world over, such sectors are growing very fast, while others are either stagnating or fading away” he said.