Tanzania’s parliament last week voted for the country not sign the Economic Partnership Agreement between the European Union and East African Community.
Nape Nnauye, Minister for Information, said the MPs felt that Tanzania will not benefit from the EPA, thus no need to sign it.
The next step now will be to forward the recommendation to President John Magufuli to announce the decision.
The vote comes just days after President Magufuli visited Kenya, where it was announced that a joint ministerial meeting will be held in Dar es Salaam before the end of the year to discuss the bilateral trade between the two countries. It was hoped that the EPA would be on the agenda and Kenya would use the forum to persuade Dar es Salaam to sign the agreement.
Van de Geer, EU ambassador to Dar es Salaam, told The EastAfrican that President Magufuli could still ignore the MPs’ advice and push for the signing of the EPA.
“In January, there will be an EAC Summit and this issue will be discussed. I hope they will reach a consensus. We cannot go without some countries,” he said.
The EPAs were to be signed last July but Dar es Salaam asked the EU to extend deadline to January 2017 to do a cost-benefit analysis of the deal.
Kenya and Rwanda have already signed the deal.
Tanzania’s reluctance to endorse the EPA, after 10 years of negotiations, is based on two issues — industrialisation and the 2016/17 national budget.
In a Chinese-driven industrialisation plan, Tanzania hopes by 2020 to generate 15 per cent of its GDP from the manufacturing sector, mainly in agroprocessing. The 2016/17 national budget has projected import duty to contribute 13.8 per cent to GDP.
Tanzania was also concerned by Britain’s decision to quit the EU, saying Britain is its main trading partner and it makes no sense to enter into a deal with European bloc without London.
According to the EPA document, EAC countries will have to commit to liberalising trade by 82.6 per cent of all imports from the EU by 2033.
Mr de Geer said Tanzania will soon graduate from Least Developed Nation status to Middle Income and it will not be able to benefit from EPAs.
“Tanzania has to look forward and consider other countries too in the spirit of integration. There is a clause for protection of local industries, so there is no reasonto fear that EPAs will kill local industries,” he said.
He said South Africa has signed the EPA with Europe and the deal is helping the country to industrialise and benefit from a 15 million euro ($17 million) package to help South African winery.
Betty Maina, Principal Secretary in Kenya’s Ministry of EAC Affairs, said Uganda is likely to sign while Burundi has indicated that it is not in a position to sign the EPA because the EU had suspended engagements with the government, but has maintained co-operation with the private sector and civil society.
“Burundi has said that its economy is not capable of taking on the obligations enshrined in the agreement until it is strong enough,” she said.
She said the best option is for the Summit of EAC Heads of State to allow variable geometry, where the partner states will approach the implementation with different timeframes. This will allow the partner states that are ready to sign and implement the EPA to go ahead with the decision.
According to Peter Kiguta, EAC director general of Customs & Trade, if Tanzania doesn’t sign EPA, it is likely to put a strain on EAC integration.
“Kenya’s challenge was about market access on which Nairobi has secured reassurance from the EU that it won’t be withdrawn,” said Mr Kiguta.
Article 37 of the EAC Customs Union Protocol stipulates that partner states should sign the EPA as a bloc.
“If Tanzania doesn’t sign the EPA and others do, this means the EPA cannot be operationalised. EAC countries shall trade with EU under different trade regimes that are unilateral and can be changed by the EU anytime. This is not good for attracting investors to the region who would have liked to take advantage of the EAC preferential market access. In this regard, countries may be tempted to enter into bilateral trade arrangements with the EU, which is harmful to the Customs Union,” said Mr Kiguta.
According to Mr Kiguta, the EAC will look an unreliable and unpredictable partner in trade negotiations. This will discourage other countries or regions interested in entering trade arrangements with EAC.