Business Daily (Nairobi)
Steve Mbogo
26 August 2007
Nairobi — Over the last one year, 19 member countries of the Common Market of Eastern and Southern Africa countries (Comesa) have been racing to beat a deadline to seal a comprehensive trade deal that could make or break their economies by the end of this year.
However, as these countries are now learning the pains and gains of accommodating a difficult neighbour, Tanzania - who joined the trade talks later after failing to get a better deal with a rival trade bloc, they are staring at a sweetheart free trade deal that held their economies together for over a decade come to an end, with little hopes of signing a new pact by January 2008.
Failure to sign an EPA agreement will mean exports from the region will be subjected to duty of between eight and 11 per cent.
The proposed trade agreement will replace the existing arrangement between the EU and 77 African, Caribbean and Pacific (ACP) countries, which allows the latter duty-free access to the EU market until December 2007.
For countries like Kenya that enjoy a market leadership position in the global cut flower and vegetable exports business because of duty free access of its products to the EU market, missing this deadline could have a devastating effect in the price sensitive retail trade.
Locally, losing price competitiveness when the shilling continues to show signs of strengthening could mean a loss of thousands of jobs.
To minimize the cost of a possible fallout from missing the deadline of signing an economic partnership agreement with EU, trade negotiators acting for the Comesa, the regional trade block now want to bite the problem in chunks by phasing out the negotiations with favourable staggered deadlines.
The negotiators hope a piecemeal approach will give them leverage to negotiate a deal that will not result to trade losses for the continent.
Although the Economic Partnership Agreement (EPA) should be coming into effect at the beginning of next year, Comesa Secretary General Erastus Mwencha said the negotiations so far, although intense, will not be wholly completed by the end of December.
He said that regional countries want an assurance from the EU that there will be no disruption of trade even as the negotiations spill over the scheduled deadline.
The delay is being caused by the entry of Tanzania into Eastern and Southern Africa (ESA) negotiating bloc from the Southern Africa Development Community (SADC) and its demand that the negotiations start afresh.
Although this demand has been rejected, the bloc has to accommodate Tanzania's interests that had been agreed upon within the SADC framework, requiring some time for harmonisation.
Another cause of delay is the continuing negotiation on "sensitive issues", mainly those trade products that the region wants the EU to continue allowing tax free into the market.
Already, the EU has allowed Kenyan flowers and horticulture produce to continue enjoying duty free access to their market, according to Richard Sindiga, deputy chief economist at the Ministry of Trade and Industry.
A sticking point, however, is the EU's insistence that it will not allow rice, wheat and sugar from Africa to access its market duty free. The regional negotiators also want the EU to support capacity building in sectors targeting the European market.
"It is supposed to empower this region. It is one thing to say that there is a market and another to provide goods and services to that market," said Mr Sindiga.
The ministry has already written to the EU informing it that negotiations on some issues may go beyond the previously set timetable, saying it wants to ensure a framework for negotiations exists.
"This will enable signing of part of the agreement and continuation with the negotiation process," Mr Sindiga said. Trade negotiators from the region will hold a meeting in Kigali Rwanda next week which is expected to give the way forward on the timeline of the negotiations.
The objective of this trade deal was to reduce poverty in the ACP countries through sustainable development and integrate the ACP bloc into the world economy, but that has not been successful because some ACP countries have failed even to meet their export quotas to the EU.
But EPAs envisage a reciprocal arrangement where Africa will allow agreed products and services duty free access to the local market. The aim is to progressively abolish tariff and non-tariff obstacles to trade over at least a 10-year period.
Trade and development experts warn that the arrangement could have serious repercussions for a continent dominated by weak agricultural production and manufacturing.
Be the first to Write a Comment!
Copyright © 2007 Business Daily. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
