EAC-EU trade deal signing called off
The New Times | 18 July 2016
EAC-EU trade deal signing called off
By James Karuhanga
In a sudden twist, comprehensive Economic Partnership Agreement (EPA) between the East African Community (EAC) and the European Union (EU) will not be signed today as earlier planned.
Officials who spoke to The New Times over the weekend were non-committal on divulging details pertaining to the sudden change of heart that comes after Tanzania recently decided to halt signing, citing the “turmoil” that the EU is experiencing following Britain’s exit.
The agreement was due to be signed at a meeting in Nairobi, Kenya today.
The East African Business Council (EABC) has been advising partner states to sign the deal earlier than previously agreed as further delay, it argued, would hamper EAC exports to the EU.
“The signing has been called off so whatever issues are contentious should be brought to the table for renegotiation,” EABC chief executive Lilian Awinja said.
Emmanuel Hategeka, the permanent secretary at the Ministry of Trade and Industry, confirmed that both parties agreed to call off the signing.
The five partner states previously proposed that the signing ceremony be held in the first week of August.
Last month, however, the EABC recommended July 18 (today), as the date of signing to coincide with the visit of the EU Commissioner for Trade, who is expected in Nairobi for the United Nations Conference on Trade and Development (UNCTAD).
Hategeka said: “Signing on July 18 on the margins of UNCTAD 14, has been called off by agreement between both parties. In my view, this will allow more time for consultations.”
The EABC expectations were that all EAC partner states’ ministers for trade would attend the conference and, therefore, sign the agreement on the same date to project the region as a functional Customs Union.
It was thought that the recommended July 18 signing would give partner states ample time to ratify the agreement before October 1, the deadline earlier set by the EU.
Failure to meet the EU deadline on ratification, it was noted, could see EAC exports to EU attract import duty, especially for Kenya, the region’s largest economy.
Whereas Burundi, Rwanda, Uganda and Tanzania have an option to rely on the Everything But Arms (EBA) trade arrangement where they have duty-free market access to the EU, Kenya faces a tough choice as the clock ticks toward the deadline for the ratification.
The case is that Kenya,, heavily relies on the EU– which represents 30 per cent of its export market – for selling its cut flowers, tea, vegetables and fish, among others.
Tanzania’s foreign affairs permanent secretary Aziz Mlima last week said: “Our experts have established that the way it has been crafted, the EPA will not benefit lead industries in East Africa, but instead lead to their destruction as developed countries are likely to dominate the market.”
Abubakar Zein Abubakar, a Kenyan representative in the East African Legislative Assembly (EALA), also told The New Times that it is imperative for the Community to listen carefully to the issues Tanzania is raising, and jointly look at “the implications of Brexit” as the region “cannot afford not to act together.”
Was EAC under pressure?
When regional civil society organisations gathered in Uganda last month, they assessed the details of the proposed agreement and noted that the bloc concluded the EPA negotiations after 12 years with the EU “not because it was contented with the provisions of the agreement” but, rather, in order to meet the deadline so that Kenya would not be removed from the list of beneficiaries of the Duty Free Quota Free Market Access to the EU.
The civil society groups stressed that the overall objectives of the EPAs – which include ensuring sustainable development of regional countries and eradicating poverty – were not adequately addressed.
Before the signing was called off, on Friday, John Bosco Kanyangoga, a consultant to the Rwandan government EPA team, said, right from the beginning of the process to the finalisation of the negotiations, some civil society organisations were against it.
“So, because of their defined stand, they tend to over blow the challenges and to put some issues out of context,” Kanyangoga said.
After the deadline as per the regulation, he noted, Kenya would face duty-free and quota restrictions on the EU market and the only solution would be to have a signed and ratified EPA in place for Kenya to continue enjoying Duty-Free Quota-Free Access to the EU market.
He also agrees there could be some kind of pressure for EAC countries to sign.
Kanyangoga added: “Some kind of diplomatic pressure, yes. However, around the period of finalising the negotiations, most of the concerns were dealt with in the agreement and that is actually why we have the rendezvous clause stating that some issues will be negotiated at a later stage.”
If the five partner states do not sign “together as EAC,” he said, it would be “an unfortunate signal that questions the strength of our Customs Union.”
“It could weaken and undermine the Customs Union because we would not have a Common External Tariff as far as our trade as EAC with EU is concerned,” Kanyangoga said.
“It would bring confusion and, I think, we would need to discuss how best we would handle it. For example, how would Tanzania deal with EU goods that come to Kenya duty-free and eventually cross the border to Tanzania?”
On January 1, 2017, Kenya is expected to be removed from the EU’s generalised scheme of preferences trade regime for live plants and floriculture products, thus attracting even more duties under the ‘most-favoured nation’ rates.
Kenyan exporters would be subjected to import duties of between 5 per cent and 8.5 per cent, says EABC.
According to Awinja, UK’s exit from EU should not be a reason for Tanzania to back out as signing with the remaining 27 EU countries presents EAC with immense opportunities for export development.
The EABC chief executive earlier said that, by October 1, if Tanzania will not have finalised ratification of EPA, it will, among others, lose Duty-Free Quota-Free Access to EU market, leaving it with the ‘everything but arms’ option. which is not better as it has more stringent rules of origin requirements.
