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Comesa censures EAC over trade deal with EU

Business Daily (Nairobi) | 18 December 2007

Comesa Censures EAC Over Trade Deal With EU

By Steve Mbogo

East Africa’s signing of an interim trade pact with Europe has come under heavy criticism for dividing Africa as well as undermining the continent’s integration efforts.

The Common Market for Eastern and Southern Africa (Comesa) Secretary- General Erastus Mwencha speaks to the Business Daily on the sticking issues.

Q: What problem does the rest of Africa have with East Africa Community’s signing of a separate interim agreement with EU?

It is not good for Africa’s unity. Africa must stay focused on regional integration. We at Comesa had refused to negotiate individually preferring to do so as a bigger bloc or even the entire continent.

Negotiating as a bloc enables Africa to pool the necessary expertise and do it from an advantaged position. But the EU has instead chosen to apply a divide and conquer tactic where you call the small countries one by one, offer them sweets and then capture them.

What the EAC signed is only a trade agreement. Access to the EU was not the main problem. The catch was in development financing. We understand that Kenya needed this agreement.

All we are saying is that the manner in which it was signed is detrimental to ongoing efforts at regional integration.

Q: What benefits will accrue to Kenya from the interim trade agreement with the European Union ?

Any reference to benefits must be alive to the fact that Kenya was in a fix. It had to sign a new EPA to continue accessing the European market under the current favourable terms.

Our hope has been that the European Union (EU) would approach the trade negotiations in good faith. That I must report has been lacking. What we have been looking for is a stable trade agreement that is transparent.

The trade agreement under which we have been exporting to Europe has preferential provisions that are not tenable in a liberalising world. It cannot continue to exist because such arrangements have been ruled out by the World Trade Organisation (WTO).

Q: Should Kenya diversify its trade beyond the EU market?

Kenya should in fact focus on trade with its Africa partners. For instance Comesa is the top destination for Kenyan goods and that’s where the focus should be.

Most of the exports to EU are of primary products which the country cannot continue relying on in the long term. Intra-regional regional trade has defined development in the EU, United States and Asia.

Q: What options do other blocs have?

All blocs are halfway through the negotiations. Let’s assume we are in a half time. We need to go to the dressing room, talk to each other and correct what went wrong. We should look at the glass as half full.

For Africa, the focus in the negotiations for a new EPA should be on regional integration, infrastructure development and better market access. We have identified programmes that need to be supported across the ESA to enable us compete effectively in the future.

Our total budget to bring our infrastructure to a level where we can compete effectively is about $200 billion (Sh13 trillion) but we have prioritised this and found that we need $27 billion (Sh1.7 trillion) in the next five years. EU Development Fund has committed Sh325 billion.

Q: What do you plan to do upon leaving Comesa in June 2008?

My name has been proposed as one of the candidates for the Africa Union’s vice chairmanship. That offers me an opportunity to continue with the agenda of integration in Africa.

Africa is the least integrated continent in the world, yet it has the most to achieve through integration especially in infrastructure, trade, and governance to realise a sustainable level of economic growth

Q: What factors will define economic growth within Comesa in the next five years?

It’s the market. Comesa has a market of 400 million people and gross domestic product of $300 billion (Sh19.5 trillion). This is what investors will look at.

This is what is driving economic growth in countries such as India and China. We need to have in place a genuine free trade area and a functioning customs union that facilitates free movement of goods and people.

Q: What trade policies should a country like Kenya pursue?

Kenya should position itself as the region’s growth pole because it has the human capital and is strategically located to offer services such as port, air transport.

It can concentrate on trade in services such as telecommunications, banking, medical, education, tourism and insurance. This is where the future is.

Besides, the country should use the Japanese model of importing raw material for its manufacturing sector, add high value and export the finished products.

Q: What is your assessment of Africa’s capacity for trade negotiations?

We believe that the process of negotiating Comesa free trade area has been a major launching pad for capacity enhancement in the region. We are happy that member states are using this experience to negotiate at WTO and the EU.

We need to advance this and involve think tanks, professional bodies, NGO’s and universities. We need to go beyond the confines of the Ministry of Trade and develop a curriculum that captures all the negotiating skills.