EAC likely to miss November EU trade deadline
Reuters | Thu Oct 28, 2010
EAC likely to miss November EU trade deadline
By Richard Lough
NAIROBI (Reuters) — The five-nation East African Community will likely miss a November deadline to sign a trade deal with the European Union, the economic bloc’s secretary general said on Thursday.
Juma Mwapachu told Reuters however he was confident an accord will be reached on the Economic Partnership Agreement, which was designed to replace preferential trade deals which the World Trade Organisation has struck down.
"Well I am not sure we will be able to meet the November deadline ... but we hope to be able to finalise everything," Mwapachu said in an interview.
EAC members Kenya, Uganda, Tanzania, Rwanda and Burundi — with a combined gross domestic product of $73.3 billion — have been at loggerheads for months with the EU, after initialing the EPA deal in 2007 and securing access to European markets.
Talking on the sidelines of a regional infrastructure investment conference, Mwapachu said trade and development issues had been the principal stumbling blocks.
"The EAC partner states still feel that what should drive the EPA is how to address (our) supply side constraints. That is the only way you can boost trade between our countries and the European Union, otherwise you don’t have a win-win situation."
A deal was meant to be agreed in July 2009. By refusing to sign the agreement, there are no legally binding commitments on the existing EU market access.
Mwapachu said the negotiations had been held up in part because member states had lacked the finances to fund their intra-bloc technical meetings, but those were expected to resume in mid-November.
The EU said in February it wanted a clear timetable for signing the deal, but Tanzania’s trade minister said at the time the EAC would not shift from its stance until it had received firm commitments on development assistance, in particular for infrastructure.
Mwapachu said Africa faced an annual infrastructure investment deficit of $60 billion, with $93 billion needed annually over the next 10 years to haul the continent’s dilapidated transport and energy sectors into the 21st century.
"Here in the EAC, our railways are completely gone, our roads are still poor. So there are various infrastructure issues that would demand we get some support from the EU."
"We need to sit around the table and tell them that unless we address these infrastructure problems we’ll just end up being a market for the European Union rather than ending up with a win-win situation," Mwapachu told Reuters.
He gave no timeframe for concluding a deal but said he was optimistic the EU was intent on brokering an agreement.
"The EU has really been pushing hard to restart these talks so I believe in that there must be a spirit of give and take, so I see them moving from this rather difficult stance to becoming more accommodating to the development needs of the EAC states."
East Africa’s largest economy, Kenya, stands to lose most if the EU deal is not signed as it is excluded from the classification of a Least Developed Country.
It would miss out on exporting goods to Europe tariff-free under the Everything But Arms initiative, which other EAC members qualify for. Kenya would have to start paying duty of between 8.5 per cent and 15.7 per cent.
