Tanzania: Country in Precarious Position Over Trade Pact
The East African (Nairobi)
July 10, 2006
Jaindi Kisero, the Eastafrican
Tanzania is lagging behind in preparing to sign a deal that will determine how it trades with Europe for a long time to come.
Only a few months remain before the end of negotiations for a new Economic Partnership Agreement (EPA) between the African, Caribbean and Pacific countries and the European Union.
As a member of the Southern African Development Community (SADC), Tanzania’s interests are being negotiated within the South Africa-based economic grouping.
Yet SADC - compared with the Common Market For Eastern and Southern Africa (Comesa) grouping - has moved very slowly in preparing and identifying the interests of its members.
A "framework document" spelling out how the SADC grouping is planning to approach the EPA negotiations was not produced until March this year, while the first ministerial meeting is yet to be held.
This is despite the fact that the second phase of the negotiations for the SADC grouping were launched in Windhoek, Namibia, way back in July 2004.
The negotiations are critical for Tanzania. Once the EPA is signed, the country will have to open its markets to products from the European Union.
There will be potential negative effects for Tanzania such as reduced tariffs, substantial diversion of trade and a possible surge in imports of cheaper European products.
The saving grace is that all these negative effects can be mitigated if the country manages to negotiate appropriate conditions - known in the jargon as "asymmetric arrangements."
Apart from gold, Tanzania’s biggest exports to Europe are fish, coffee and live plants.
Most of these products are subject to restrictions on grounds of strict sanitary and phytosanitary standards set by European countries.
Thus, the EPA negotiations have given Tanzania the opportunity to negotiate better arrangements by pressing Europe to eliminate non-tariff barriers to its exports of food products.
Several factors still stand in the way of Tanzania’s efforts to put its interests on the negotiating table.
Membership of SADC - as opposed to Comesa - is proving disadvantageous to Tanzania’s interests. This is especially so after South Africa decided to join the EPA negotiations.
Initially, South Africa was participating in the discussions as a mere observer, mainly due to the fact that unlike other members of SADC, the country has its own exclusive free trade arrangement with Europe.
Indeed, the arrangement between the EU and South Africa creates more or less a free trade area between two. It has a highly open tariff structure, which by 2010 should eliminate 90 per cent of all trade barriers between South Africa and Europe. Tanzania and other SADC members now find themselves at a disadvantage because South Africa is in no position to drop this deal.
Clearly, countries like Tanzania may be forced by default to adopt positions that may not fully represent their interests.
A key issue for Tanzania and indeed other developing countries will be sequencing of removal of tariffs on imports from the European Union.
According to the arrangement, developing countries will be allowed to compile a list of sensitive products that will be protected in the initial stages to mitigate possible shocks.
Thus, Tanzania must in the coming months come up with a "negotiable basket" of products for which liberalisation will be deferred to near the end of the transition period, when countries will be expected to open up their markets completely.