Uganda: More time needed for EPA negotiations

Inter Press Service | 24 May 2007

TRADE-UGANDA:
More Time Needed for EPA Negotiations

Alexis Okeowo

KAMPALA, May 24 (IPS) — Uganda has made little progress in its economic partnership agreement (EPA) negotiations with the European Union (EU), as government and the private sector say that they need more time before committing to a deal.

The EPAs have been the subject of many a debate in developing states. The EPAs require that the 77 African, Pacific and Caribbean (ACP) countries offer reciprocal market access to their EU trade partners. This will bring trade agreements between the EU and the ACP in line with World Trade Organisation (WTO) rules.

The EPAs will be enforced at the end of the year when the Cotonou Agreement expires. This agreement, signed in 2000, gave the ACP states preferential and non-reciprocal EU market access. WTO member states have allowed the EU and the ACP until the end of this year to renegotiate their trading regime.

The EPA will mean the end to Uganda’s preferential access to EU markets by 2008. Since 2001, Uganda has benefited from the Cotonou Agreement by exporting mainly fish, flowers and agricultural products, while the EU exports consumer goods to Uganda.

Ugandans are wary of the EPA negotiations because they fear unrestrained market competition from EU member countries. Once it has ratified the EPA, Uganda would have to accept relative reciprocity, according to WTO rules, and remove its tariffs on all EU imports.

The EU wants Uganda and the rest of the ACP to sign the trade pact and thereafter negotiate tariff waivers. If Uganda does not sign by December 31, the EU will be under pressure to cease trade relations with the nation. Such an action would cause the small east African country to lose its largest export market, worth over 380 million US dollars as of 2005.

Despite the time constraints, Uganda wants the EPAs to have a clause that gives the country preferential access to the EU for another 10 years.

Uganda needs more time, said Sam Nahamya, permanent secretary in the ministry of tourism, trade and industry. Nahamya added that it is in the interest of the EU to give the country more time to agree on the negotiations.

There is a widespread feeling both within the ministry and the private sector that Uganda will not be ready for the new trade arrangement by the end of December, said Gabriel Hartega, executive director of the Private Sector Foundation of Uganda. At a one-day conference on EPAs organized by the Uganda Programme for Trade Opportunities and Policy in Kampala in January this year, stakeholders expressed concern over the nearing deadline, saying that at least three more years were needed.

Instead, the negotiating team is pushing for an extension of between five and ten years to allow for a transitional period that officials say is necessary.

The executive director of the African Centre for Trade and Development, Elly Twineyo, said that Uganda should first resolve supply side constraints. ‘‘Time is running out. We will be signing the EPA before Ugandan producers, manufacturers and exporters have been told about it. A lot still needs to be done regarding understanding and readiness.’’

The Private Sector Foundation of Uganda has not been adequately included in the EPA negotiations. ‘‘We are of the understanding that once the EPAs are signed, imports from the EU will flood the market and harm our industry,’’ said Hartega.

Hartega said that the private sector should be more involved in the negotiations since it will feel the effects of the EPA most strongly. ‘‘We fear that if the economic shock of the EPAs is not mitigated, Uganda as a country will run into problems and literally have its potential to benefit from trade with the EU wiped out,’’ Hartega said.

Trade analysts say that Uganda’s fears are valid. If Uganda signs the agreement prematurely, richer EU member countries could flood its markets with cheaper products, harming local industries.

Uganda wants assurances that this will not happen, but this guarantee can only be made by the WTO, according to Tom Vens, head of trade at the EU’s mission in Uganda.

The EU insists that the EPAs will establish a timetable for the progressive removal of trade barriers between Uganda and the EU, and that the new agreements will also improve Uganda’s access to the markets of EU member countries.

According to an EU press statement released in February this year, the EPAs will have ‘‘in-built flexibilities’’ in terms of transitional periods and final product coverage, which means that when the EPA is signed, Uganda can designate which EU products will enjoy gradual tariff liberalization.

‘‘Uganda will therefore not be forced to allow all EU products into the country free of duty on January 1, 2008,’’ the statement reads. The EU says that if implemented in time, the EPAs are expected to enhance the production, supply and the trading capacity of ACP countries and their capacity to attract foreign investment.

Nahamya has said blame for the delayed negotiations should also rest on the EU for its slow disbursement of funds for the commissioning of studies to determine the potential impact of the EPAs.

Uganda already belongs to the Common Market for Eastern and Southern Africa, the largest economic grouping in Africa, and the East African Community. Both have customs unions.

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source: IPS