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Leaders urge review of EAC-EU trade deal

Saturday July 23 2016
flower

The region exports agricultural produce to European Union countries. PHOTO | FILE | NATION MEDIA GROUP

Tanzania’s concern early this month over the impact of Brexit on the East African Community has now turned into an opportunity for leaders and trade negotiation experts to demand a review of the Economic Partnership Agreement between the regional bloc and the European Union that was due for signing next month.

The experts want the aspect of liberalisation in the EAC-EU EPA renegotiated, with open-ended time because the agreement currently contains a number of provisions that are prejudicial and bound to constrain EAC’s development.

They also want a review of the nomenclature for classification of countries such as Kenya — the only developing country in the EAC — whose exports to EU, unlike those from least developed countries, will face a stringent entry regime if the EPA is not signed.

The EPA is a trade and development deal that has been under negotiation between the EU and countries in Africa, Caribbean and Pacific since 2002 — it was to succeed the 2000 Cotonou Agreement.

The 2007 Framework Economic Partnership Agreement would pave the way for a free trade area between the EU and these regions.

Nathan Irumba, chief executive director of regional trade negotiations institute Seatini Uganda, said the EAC might be hounded into signing because of the unique situation Kenya finds itself in, yet there are options around it.

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“If the negotiations are between blocs, why doesn’t the EU treat EAC as an lesser developed country (LDC)?” asks Mr Irumba.

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Mr Irumba, who was Uganda’s chief negotiator at the World Trade Organisation between 1996 and 2004 at the United Nations office in Geneva, said a developing country from a region like the EAC — where most partners states are deemed LDCs — can manufacture under a compulsory license on behalf of that region.

“In this context, Kenya can qualify to produce and export goods as an LDC. One of the objectives of EPAs is to encourage regional integration. And the African Union looked at countries in EAC, and asked the EU to treat this region as an LDC, to avoid breaking it up,” added Mr Irumba.

Uganda’s President Yoweri Museveni, who during this year’s Bastille Day celebrations in Kampala on July 14, also faulted certain articles of the EAC-EU EPA, which he said should be reviewed by the heads of state before the deal is signed.

Aziz Mlima, the Permanent Secretary in Tanzania’s Ministry of Foreign Affairs said in early July that his country would not sign because of the turmoil that the EU is experiencing following Britain’s exit.

Dr Mlima’s remarks echoed strong criticism of the pact by former President Benjamin Mkapa who warned the EAC not to rush into signing the pact because it was designed to kill the local manufacturing sector.

The Permanent Secretary in Uganda’s Ministry of Trade Julius Onen told The EastAfrican that the region will not sign as the contentious issues are still unresolved.

“We must first harmonise and have a common position on all the issues. As EAC, we maintain solidarity with Tanzania and want to move together as a common market,” said Mr Onen.

Experts are critical of sections in the agreement that require the EAC to surpass the current 65.4 per cent trade liberalisation and offer market access of 82 per cent by 2033.

“This is extensive liberalisation, and in trade terms, 2033 is a very short time. The EAC first needs to industrialise,” said Jane Nalunga, the country director of Seatini Uganda.

In the deal, a copy of which The EastAfrican has seen, the EU is pushing the EAC to introduce export taxes, which are applied on products before they are exported. This would limit how much EAC countries can export to Europe and the duties are also incompatible with WTO rules. 

The EU also wants the EAC to sign the “rendezvous clause,” which will force the bloc to immediately start negotiations on the so-called “21st century issues.” These are investment, government procurement, intellectual property rights and services, which must be concluded within five years. 

Uganda, Tanzania, Rwanda and Burundi are not in a hurry to sign the EPA considering that they have the Everything But Arms (EBA) trade regime under which their products, which are mainly agricultural, can continue to access the EU market.

But Kenya fears that without a deal, it would be the biggest loser as its exports would be subjected to stringent entry rules. 

Kenyan flowers for instance, account for 38 per cent of all cut flower imports into the EU, according to Kenya Flower Council and since 2012 they have been accessing the EU market duty free and quota free under the EBA.

The KFC chief executive officer Jane Ngige told The EastAfrican that the industry could export under Generalised System of Preferences rate but would lose Ksh2.6 billion ($26 million) annually or could use the Most Favoured Nation clause and lose Ksh4.2 billion ($42 million) annually.

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