advertisement

Economy

Secrecy clouds proposed EAC trade pact with Europe

Tanzanian president John Magufuli. PHOTO | AFP
Tanzanian president John Magufuli. PHOTO | AFP 

A cloud of secrecy shrouds proposed free trade pact with Europe even as the region’s presidents gather in Dar es Salaam today to make their final decision.

Except for its versions leaked earlier, the details of the final Economic Partnership Agreement (EPA) draft that East African negotiators settled for in July has remained a closely guarded secret of a small clique of government officials.

Kenya and Rwanda signed the deal in Brussels two weeks ago while Uganda is set to confirm its approval today at the extraordinary summit of East African Community (EAC) heads of state.

“The 17th extra-ordinary meeting will be considering the Council of Ministers report on EU-EAC Economic Partnership Agreement,” the EAC secretariat said in a statement.

The ministers’ report had recommended collective signing of the EPA to safeguard EU market that accounted for 32 per cent of Kenya’s Sh581 billion exports in 2015 but Tanzania later pulled out of the deal.

Today, at the summit chaired by President John Magufuli, President Uhuru Kenyatta will most likely push for Tanzania’s signature after Kenya said its 200 firms and four million jobs are at stake.

As the haggling continues, the region’s citizens remain helpless bystanders. A lack of mass participation has relegated public discourse to a two-side showdown between Tanzania — led by former President Benjamin Mkapa — and Kenya (read flower industry).

Mr Mkapa, board chairperson of South Centre, a regional economic think-tank, maintains that, among other things, EAC stands to lose Sh25.1 billion per year in tax revenues if it signs EPA to cushion Kenya from EU taxes totalling Sh10 billion a year.

According to Kenya’s EAC ministry, the EAC states will gradually open up 82.6 per cent of its total trade European Union firms in 25 years under EPA. The previous drafts had proposed a 15-year period for trade liberalisation.

Tanzania

It is also known that after opposing EPA’s most-favoured nation clause for several years, the EAC negotiators eventually embraced the EU position that compels any EAC state to extend any trade concession made to third countries to the European firms.

That means a country such as Tanzania — which belongs to South African Development Community (SADC) — has to treat EU firms the same way it treats those from its southern Africa neighbours.

Tanzania is one of the SADC states which declined to sign EPA in 2014.

Throughout the 14 years of EPA negotiations, export taxes remained a contentious issue. The EU side — which buys mainly unprocessed goods from developing states — had bargained for its elimination while EAC which sees the tax as one way of encouraging industrialisation (by making export of raw materials costly) campaigned for retention.

Only government officials can tell how that issue was resolved.

“The EAC-EU EPA has been negotiated and agreed to by the EAC’s best trade negotiators over a period of 14 years,” argues Kenya’s EAC Integration PS Betty Maina in an opinion piece published in the current edition of the EastAfrican.

Ms Maina has previously lobbied for EPA as chief executive of Kenya Association of Manufacturers. “The negotiations were arduous and thorough,” she said.

Both EAC and EU sides have, however, confirmed that EPA does not liberalise agriculture. They have also agreed on rules of origin that benefit countries depending on their level of development.

Also unclear are details of capacity building, transparency in public projects and good governance which the EAC had opposed.

advertisement