East Africa strikes free trade deal with the EU

The agreement, which covers 100 per cent of EU tariff lines and 74 per cent of EAC tariff lines, envisages 100 per cent liberalisation of the EU market with transition periods for rice and sugar.

It also proposes an 82 per cent liberalisation of EAC market (64 per cent in two years, 80 per cent in 15 years, and the remainder in 25 years).

EAC negotiators maintain that opening up to highly competitive goods from EU is likely to kill local infant industries, consigning a large number of their citizens to joblessness and poverty.

In Kenya, the government commissioned the Kenya Institute for Public Policy and Analysis (Kippra) to study the likely impact of trade liberalisation with the EU.

The 2005 study concluded that the government would lose Sh6 billion in tax revenue in case of 100 per cent trade liberalisation and Sh4.8 billion in case of 80 per cent trade liberalisation annually.

“The expected revenue loss of Sh4.98 billion will, however, be counteracted on the other hand by trade creation and consumer welfare estimated at about Sh33 billion and Sh2.4 billion respectively,” said a follow-up study released by the Trade ministry a year later.

Anxiety has been growing among the firms that export products to the EU that faced the prospect of reverting to the less favourable generalised trade pacts that EU countries extend to former colonies.

Trade minister Amos Kimunya reckons that trade with EU has contributed immensely to Kenya’s development, creating more than 1.5 million jobs and Sh70 billion worth of investments in the horticulture and fisheries sectors.

Unlike EPAs, FEPA excludes trade in agricultural products, wines and spirits, chemicals, plastics, wood based paper, textiles and clothing, footwear, glassware, which the EAC has opted to shield from cheap imports.

According to EABC, the region’s private sector still has concerns over EPAs’ non tariff barriers like Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT) and Sanitary and Phyto-sanitary (SPS) measures.

Other concerns revolve around the treatment of agriculture, economic and development co-operation and trade related issues comprising Competition, Intellectual Property Rights, Investment and Private Sector Development, and Transparency in Public Procurement.

“EPA should guarantee EAC Products more access to EU Markets beyond duty free and quota market access by having simple and flexible Rules of Origin; more business friendly TBT & SPS and EU cutting substantially its domestic support and doing away with export subsidy programmes in the agriculture sector.” said Ms Nderitu.