East African Community lawmakers have raised the red flag over a most favoured nation (MFN) clause in the Economic Partnership Agreement (EPA) with the European Union, terming it dangerous as it could hurt trade.

(Read: EU trade deal places East Africa in a fix)

The European Union in negotiating EPAs with the region has been pushing for a MFN clause to be included, with an eye on limiting the bloc from making deals with emerging economies like Asia.

A MFN clause, if included in an EPA, would require the East African Community to extend to the EU the same preferences it grants to third parties under future trade agreements.

EAC MPs who met in Arusha last week said the clause could severely undermine South-South trade as it introduces disincentives for the region to negotiate agreements with other developing countries.

James Ndahiro, Rwanda’s representative to the East African Legislative Assembly, said that the MFN clause should be removed or modified to restrict its application to agreements with more developed economies.

“We are concerned that the outstanding issues, if not resolved and if included in the EPA framework, will bind the EAC to poor trading terms,” said Dr Ndahiro.

It is understood that the EU will be the biggest beneficiary of the MFN clause as it seeks to insulate itself against emerging economies like India and China.
In a joint statement, the MPs of the national parliaments of the EAC Partner States, the EALA and the European Parliament said that the integration of EAC economies into a global economic system must take into account the need for south-to-south integration. 

The MPs further called on the EAC to maintain a common position and ensure that no single EAC Member State signs the EPA independent of the rest.

(Read: Kenya to be part of EAC bloc in EPAs negotiations)

They also urged the EAC to review and negotiate issues contained in the EPA that may impair the region’s interests and its integration and development efforts.

These include, but are not limited to the MFN clause; the extent and time frame for the liberalisation of trade between the two regional blocs; the proposals on elimination of export taxes; the safeguards for agricultural products; rules of origin and the chapter on development.

Musikari Kombo, co-president of the African, Caribbean, Pacific-European Union (ACP) joint parliamentary, said: “The EU negotiates as a bloc but ACP countries are divided into seven regions, which sometimes do not match the regional integration arrangements.”