The East African Community has secured a two-year extension to conclude the ongoing trade talks with the European Union.

Europe’s bid to insulate itself against emerging economies like India and China has been cited as the biggest point frustrating the negotiations.

A January 2014 deadline for concluding the decade-old Economic Partnership Agreements (EPAs) talks has been extended to January 2016 by the European Parliament at the request of the African Union.

The extension effectively means EAC member countries can enjoy longer access to the lucrative EU market should the talks fail.

It also means that the EAC states have time to ratify their EPAs before losing the right to duty and quota-free access to the EU that they have been enjoying since 2007.

EAC has been lobbying the EU to drop its demand for deadlines in the ongoing trade talks since July. The EU had threatened to deny the preferential market access terms to countries that had not signed full EPAs by January 2014.

READ: Kenya to be part of EAC bloc in EPAs negotiations

The EU represents an important trade partner for the EAC region, with around $4.8 billion of imports from the EU — mainly oil products, medicines, machinery and mechanical equipment, cars, aircraft and electrical appliances — and around $3.18 billion of exports to the EU —mainly coffee, tea, fresh cut flowers — as per 2010 trade data.

The delay in concluding the talks, negotiators said in Nairobi last week, was occasioned mainly by a dispute over a clause on export tax and most favoured nation treatment (MFN).

READ: EU’s push for MFN clause ‘dangerous’

If signed, the MFN will prevent all the signatories from entering into bilateral talks with other partners on areas where the EU does not enjoy preferential terms. Negotiators said the EU has been keen on the clause to insulate itself against emerging economies like India and China.

“Despite several negotiation sessions at technical and senior official levels, both parties have divergent views on these articles on MFN,” said Kenya’s Trade Permanent Secretary Abdulrazaq Ali.

“EAC negotiators have maintained that they need policy flexibility on issues of export tax to allow value addition and industrial development,” he said adding the MFN clause introduces disincentives for the region to negotiate agreements with other developing countries.

According to Aileen Kwa, trade for development programme co-ordinator at South Centre, an international policy institution, the EU is demanding that 82 per cent or more of trade in the EPAs agreement be liberalised. “This will be a threat to local production and industrial development,” said Ms Kwa.

Some of the sectors where current production will be at risk are processed oil products, chemical products for agriculture, medicines, vaccines and antibiotics.

“EAC should be allowed to liberalise its sector according to its level of development,” she said. The EU is also demanding that developing countries stop levying export taxes on raw materials.

“EAC wants to be able to impose temporary new taxes with regard to revenue, food security or environmental protection. But EU wants to have consultations before this can be done,” noted Ms Kwa.

EPAs negotiations started at ACP level and in 2003, the negotiations were moved to regional level.

Kenya, Rwanda, Burundi and Uganda were negotiating in the East and Southern African configuration under the coordination of Comesa while Tanzania was negotiating under SADC. In 2007, all the EAC partners agreed to negotiate as a bloc.