Let spirit of give and take prevail in EPAs deadline
Business Daily Africa, Kenya
Let spirit of give and take prevail in EPAs deadline
22 March 2012
After breaking several self-imposed deadlines for concluding a binding trade pact with African, Caribbean and Pacific countries, the European Commission is turning to legal means to end what is fast becoming a circus.
A proposal that the commission has sent to the EU Parliament seeks to tie the deadline for concluding Economic Partnership Agreements (EPAs) to December next year. If passed, all the 27 EU countries will begin to levy import taxes of between eight and 18 per cent on goods from any country that will not have signed EPAs by January 2014.
For Kenya, which received equivalent of Sh109 billion in hard currency from the EU countries in 2010, these taxes to kill horticulture industry which directly employs half a million people directly. Fish, coffee and tea industries could also suffer.
But Kenya can only sign EPAs to safeguard 27-member EU market if all EAC partners agree to open the shared custom territory to cheaper goods from these industrialised nations. This is exactly where the crux of this matter lies. And it is encouraging that just before it begins to debate the deadline proposal, the EU Parliament has sent its 8-member representatives to to EAC to identify EAC’s concerns, evaluate the chances of success and expected impact. Let a true give and take spirit prevail even as both parties move to end this uncertainty.
For a start, Uganda, Burundi, Rwanda, and Tanzania are classified as Least Developed Countries (LDCs), which can still export to Europe duty and quota free without reciprocating as EPAs’ legal text demands. While LDC is not a permanent status, these countries remain reluctant to sign EPAs to guarantee preferential relations with Europe in future.
Part of what has hardened the positions of these countries is that even as LDCs, they have not been able to export anything to Europe except primary commodities.
While access to foreign market only makes sense where it stimulates industrialisation back home, it is a matter of common knowledge that few of goods manufactured in the region can meet EU’s restrictive quality thresholds. Therefore, a skewed arrangement that only carts away raw materials is certainly not what the region wants to dangle to the rest of the world as its weapon for fighting challenges on its way to meeting the millennium development goals.
Moreover, one of the controversial clauses EPAs demands that export taxes on minerals and other primary commodities be scrapped for buyers in Europe to get them cheap.
This is why this caution must extend to Kenya where government negotiators appear to agree that EPAs should have been signed by the first deadline which passed in 2007. When EPAs force EAC to open 80 per cent of its market to EU products, highly subsidised agricultural products, wines and spirits, chemicals, plastics, paper, textiles, footwear, and glassware are among the items that will come into the region duty free.
