EAC-EU trade deal risks flopping again over funds dilemma, litigious clause

JPEG - 43.9 kb
Workers at the Horticulture Crops Development Authority depot. Europe is a key market for Kenya’s horticultural sector. File Photo

The East African | Monday, November 22 2010

EAC-EU trade deal risks flopping again over funds dilemma, litigious clause

By Scola Kamau

The long awaited signing of a trade partnership between East African Community member states and the European Union this month, could flop once again due to a lack of funds to initiate negotiations.

Kenya’s Permanent Secretary in charge of the EAC Ministry, David Nalo says that the secretariat lacks funds to convene member states ahead of the Economic Partnership Agreement negotiations.

It is also emerging that EAC members states are unhappy with some clauses of the partnership, which they say will hinder them from freely trading with other partners.

A document titled Progress on the EAC-EC-EPA Negotiations, seen by The EastAfrican, indicates that among the contentious issues between the two camps is Article 16 of the framework.

Under this clause, the European Commission insists that in the event EAC countries open up more trade under a Free Trade Area with major trading economies, (whom EC defines as countries whose share in total global trade is at least one per cent), same benefits should be passed to the EU.

EPAs experts say the article is a hindrance to economic growth because it locks EAC’s trade with other blocs even where terms are more favourable.

“The clause robs EAC countries of policy space in return for nothing because EC has already opened up 100 per cent of its economy to EAC countries, save for arms and ammunition,” reads part of the document.

EAC’s offer to EU currently stands at 82.6 per cent, which is above World Trade Organisation’s all trade threshold of 80 per cent.

However, EPAs is still termed as a better option compared with bilateral trade because it gives EAC an upper hand in negotiations.

“EPAs give us a forum to say what we want to export as a bloc but when we do it individually, we have no choice, because we meet the partners as countries,” said Mr Nalo.

In June, during the EU-EAC meeting in Tanzania, member states resolved to contribute funds to draft a development matrix highlighting priority areas the member states want funded by EC to be included in the pact.

EAC argues this matrix would put the two countries on the same standards of trade. However, no progress has been seen.

“The contentious issues still exist; we haven’t had funds to hold meetings,” said Mr Nalo.
EU blames the delay to sign a trade pact on EAC’s failure to draw a roadmap of the issues raised in June, it wanted to be part of the EPA.

“It would be in the interest of EAC to draw this roadmap. Unfortunately, the EU has not received a plan,” Harvey Rouse, EU head of delegation said.

The sectoral council had directed the secretariat to convene the initial regional EAC-EC-EPA meeting in the third week of July to enable EPA experts develop the roadmap.

source: East African