EAC legislators set terms for new trade deal with Europe
Business Daily Africa
EAC legislators set terms for new trade deal with Europe
By Allan Odhiambo
8 June 2010
The East African Legislative Assembly wants member states to delay the signing of new economic partnership deals with Europe until outstanding issues are resolved.
“The Council of ministers should delay the signing of the Economic Partnership Agreement (EPA) framework with a view to urging the European Union to work with EAC partner states to review the framework to include interest of both parties,” the assembly resolved after a meeting in Mombasa on Thursday.
The legislators claimed several issues on investment and government procurement had not been fully addressed in the draft presented by the EU.
“The EAC countries production capacities are not as competitive as EU’s and in terms of trade this may most likely displace EAC products in the market thereby undermining or negatively impacting on the EAC’s industrialisation policy,” EALA further argued.
Countries under the ambit of the African Caribbean and Pacific (ACP), including Kenya and other member states of the EAC are negotiating new EPAs with the European Union (EU).
This is aimed at replacing an arrangement in which trade relations between the ACPs countries and the EU had, since the 1980s, been guided by non-reciprocal preferences that granted nearly all products originating from ACP states duty-free access to the European market.
But even with this preferential treatment, the ACP states have not realised much progress due to a narrow export product range and other challenges with their share of total EU imports falling over the years.
To correct the situation, the two blocs sought to negotiate an alternative trade agreement that took not only north-south trading opportunities into account, but factored in south-south trading and regional co-operation as well.
Despite the pursuit of new pacts with Europe, concerns have been raised over possible negative effects of such pacts to the intra-Africa trade with some critics claiming that the EPAs could erode the competitiveness of the continent.
“We are concerned that the outstanding issues if not resolved and included in the EPAs framework will bind the EAC to poor trading terms on the presumption that these issues will not be discussed during the negotiation of the comprehensive EPAs,” the assembly said.
Target markets
In the case of the EAC bloc, a deal with Europe lies within range except for a few disputes over development assistance and the most favoured nation (MFN) clause.
“Only a few issues on development assistance and the most favoured nation (MFN) clause are holding back consensus,” Mr David Nalo, Permanent Secretary in the EAC Affairs ministry told Business Daily in a recent interview.
The MFN status is granted to one nation by another and offers the recipient nation trading advantages such as low tariffs that others do not enjoy.
The bloc also says the EPA may lock them into a single commercial relationship without room to diversify their target markets when they are deepening integration of their economies with the planned merger of the Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community.
“The draft framework should be subjected to the Parliamentary approval process both in the partner States and at the regional level,” it said in a statement.
