To free trade enthusiasts, a report commissioned by the East Africa Community on the potential impact of an Economic Partnership Agreement with Europe comes as a setback.
To advocates of cautious integration, the report by the United Nations Economic Commission for Africa (Uneca) offers a timely reality check.
In a nutshell, the report shows that the bloc would gain little from the pact in the absence of substantial safeguards to protect nascent industries and spare countries revenue losses estimated at more than $1 billion a year for the five member states.
Those safeguards, the report says, would include the EU committing substantial funds for development in the region and offering preferential market access beyond the everything-but-arms protocol as it has done with other partners.
The findings of the report contrast sharply with a simulation by the EU in 2014 that painted a rosy picture of the benefits of the partnership for economic growth and poverty alleviation in the EAC. Beyond the numbers, Uneca finds that the agreement would over its 25-year span undermine trade within the EAC, limit the region’s options for industrial development, stifle value addition on commodities presently exported raw to Europe and impose EU values on the EAC as seen with the economic sanctions on Burundi.
The report mirrors our own version of Euro-pessimists – Tanzania and Burundi – as much as it counters the gusto of Euro-optimists (Kenya and Rwanda who have already signed EPAs chiefly to protect their exports).
The report has sharply divided diplomats in the region, with Uganda, which has been pushing for consensus on the matter, pitching the Kenya-Rwanda camp to question the credibility of the Uneca report and whether it should be adopted as an EAC document. At issue are claims that the Secretariat did not secure the blessings of all members when it commissioned the report.
But the region should not be missing the forest for the trees. For a decade now, the EPA has been a fixed feature of the EAC agenda leading to the members initialising it in 2014. It took a change of guard in the Tanzania leadership for the hard questions, valid it must be said, on the agreement to be raised leading to the postponement of the signing on more than three occasions.
The Uneca report suggests the region is back to square one on this divisive subject.
The simple reason for that being that it would not serve the EAC’s strategic interests to gloss over the salient findings of the report, no matter the circumstances under which they came to the table. The consensus route Uganda has been championing over the past two years now seems to have been closed.
Countries going it alone based on their commercial interests as has been suggested in the past may also not augur well for trade dynamics in the region.
The best way out for all players would be to renegotiate the agreement under the provisions of periodic reviews.
For starters, the EU should withdraw its threat to limit access for exports from the region so that the discussions are in good faith. Second, the region must ensure it has the capacity to persuasively bargain for its own interests.