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EAC goods to gain better access to larger markets in Africa

Saturday January 02 2016
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Traders from East Africa will be able to sell their goods and products in South Africa, Egypt and Ethiopia. PHOTO | FILE

East African countries will gain better market access in Africa under the Tripartite Free Trade Area (TFTA), to be implemented early next year.

The 26 countries under the TFTA are expected to start implementing the trade framework after its ratification to help countries exchange tariff concessions based on the principle of reciprocity.

The implementation of the TFTA effectively opens the door for EAC goods, which could not easily access markets such as South Africa, Egypt, Ethiopia and Eritrea. 

The trade partnership, which pooled the interests of the EAC, the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (Comesa) and other African countries that have a combined GDP of more than $1 trillion, and a population of 625 million people, was launched last year in Egypt by the 26 heads of state.

“The aim is to liberalise as many goods as possible, effective immediately once the agreement has been ratified,” said Mark Ogot, senior assistant director at Kenya’s Ministry of East African Affairs.

“The deal will come into force upon ratification of the text by two-thirds of the Tripartite FTA member states. A December 2015 deadline was set for ratification by the partner states.”

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The TFTA agreement will, therefore, serve as the basis for the completion of a Continental Free Trade Area by 2017, with the aim of boosting trade within Africa by up to 30 per cent in the next decade, and ultimately establishing an African Economic Community.

As per the agreement, finalisation of negotiations on outstanding TFTA areas, especially with regard to rules of origin (RoOs), trade remedies, and dispute settlement will be introduced following the launch of a post-signature implementation plan.

A total of 16 countries, including the EAC partner states, have signed the TFTA agreement but they are yet to ratify it.

The other signatories are Zimbabwe, Egypt, Sudan, Ethiopia, Malawi, Namibia, Comoros, Seychelles, Mozambique, Angola, Botswana, Democratic Republic of Congo, Djibouti, Lesotho, Eritrea, Madagascar, Mauritius, South Africa, Swaziland and Zambia.

2016 will also see African countries access a larger market in both the developed and developing countries following a surprise deal at the World Trade Organisation meeting in Nairobi in December.

Four issues of interest to Africa: More favourable rules of origin; duty-free quota-free (DFQF) market access; the operationalisation of the services waiver, and elimination of export subsidies were resolved and are expected to be implemented in 2016 as per the WTO rules.

The five East African countries and the EU Commission are expected to sign the Economic Partnership Agreement in early 2016 and ratify it by October.

“If they do not sign the Economic Partnership Agreement and ratify it on time, only Kenyan exporters to the EU will be expected to pay full duty for their products to gain access to the market since Kenya is not classified as a Least Developed Country (LDC) like the other four,” said James Kiiru, an economic and international trade officer in Kenya’s Ministry of Foreign Affairs and Trade. 

Burundi, Rwanda, Uganda and Tanzania can rely on the Everything But Arms trade regime where they have duty-free market access to the EU. However, it is not clear whether Kenya will trade under the less preferential EU generalised system of preferences (GSP), meaning Kenyan exporters would be subjected to import duties of between five per cent and 8.5 per cent.

The US House of Congress also voted to extend the Africa Growth and Opportunity Act (Agoa) by another 10 years to give African countries more time to build their competitive capacity.

READ: Agoa waiver extension approved

The deal accords preferential market access to 39 countries in sub-Saharan Africa to develop their economies and create free markets. The agreement allows African countries to export more than 6,000 products to the US duty-free.

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