Rwanda eyes more exports, investment ties from EPA deal

Saturday July 16 2016

Rwanda has no issues signing the comprehensive Economic Partnership Agreement (EPA) with the European Union as the country seeks to expand its exports, tap into the EU development funds and boost foreign investments.

Rwanda's exports have been falling over years, and to cushion the economy from further stress on foreign reserves, the country has embarked on an export diversification plan targeting Europe as one of the markets.

However, a last minute objection by Tanzania to sign the draft East African Community (EAC)-European Union (EU) Economic Partnership Agreement (EPA) fearing it could suffocate Tanzania's infant industries stands in Rwanda’s way.

An expert who participated in the trade negotiations on the EAC side described critics who say the draft agreement is skewed in favour of the EU as “insincere.”

“Why at this time after walking the long journey together?" John Bosco Kanyangoga, a regional and international trade consultant at Kigali-based firm Trade and Development Links wondered.

“The draft was jointly initialled, every country contributed to the negotiations before EU and EAC lawyers checked it,” he said before explaining how EAC’s interests were catered for.


The negotiators went ahead to push for a development component in the agreement which EU agreed to finance to help the region's private sector become more competitive.

The EAC negotiators were guided by a theme, "no development no EPA", causing delays with the two blocs taking a decade to reach an agreement.

Finally, in the agreement, the EAC was given 100 per cent duty-free and quota-free access to EAC exports.

Open markets

The EAC also pushed through a three phased gradual opening up of its market lasting a span of 25 years before fully opening up for 82.6 per cent of the market for imports from the EU by in 2028.

But already, according to the EU commission, more than half of the goods are imported duty free, not only from the EU but from the entire world.

The remainder will be progressively liberalised within 15 years from the moment the EPA enters into force.

The EU Commission insists the deal is balanced and fully in line with the EAC Common External Tariff, saying it supports the EAC’s ambitious regional integration project and has what it takes to foster development.

Agricultural policies

The draft EPA bars EU from applying exports subsidies, even in times of market crisis. The two economic blocs are also expected to remain transparent on their domestic agricultural policies.

The chapter on agriculture was introduced to ensure that EAC agricultural products are not out competed by EU.

The parties introduced trade defence provisions by allowing a bloc to introduce duties to protect their economies should any feel disturbed or threatened to disturb.

The EAC did not liberalise the wines, spirits, chemicals, plastics, wood based paper, textiles and clothing, footwear, ceramic products, glassware, articles of base metal and vehicles sectors

“Therefore reasoning that the EAC-EU EPA agreement will distort the market is not true,” said Kanyangoga.

Delay "worrying"

The decision Tanzania has taken is worrying the Kigali authorities who want the region to have a predictable trade regime with the EU instead of unilateral offer experts fear could be withdrawn any time.

“In the EU-EAC-EPA, you cannot talk about one country (signing). Talk about a bloc,” said Rwanda’s Trade and Industry Minister, Francois Kanimba.

READ: No deal with EU as Tanzania, Uganda refuse to sign up

But the delay to sign and ratify the agreement will hurt Rwanda economic interest as the EU is one of the leading trade partner.

The trade value between Rwanda and EU has been growing steadily reaching 254 million Euros ($282 million) in 2015 according to statistics from EU Commission, though Rwanda imports a lot from EU.

Rwanda exports to EU in reached 71 million.

Over half 54 per cent of Rwandan exports to the EU consist of food products, followed by 42 per cent of minerals. A mere 4 per cent of exports come from light manufacturing.