6 August 2012

East Africa: EPA Pacts Will Derail Region - Mkapa

Dar es Salaam Tanzania — The Former President of Tanzania Benjamin William Mkapa has stressed that signing the Economic Partnership between the East African Community would derail the community development and weaken its economy as a result of EU goods entry into the East African market.

The EU negotiations between East Africa Caribbean and Pacific (ACP) countries as a fully reciprocal trade arrangements between EU and ACP commenced in 2002 to replace the previous non reciprocal, preferential trade access of ACP countries to EU markets under the various Lome convention and the cotonou agreements.

Speaking in Dar es salaam at a meeting organized by the Tanzania Private Sector Foundation (TPSF) in collaboration with its members last week, the former President stressed that the EPA agreements being negotiated as a bloc and individual countries in the EAC countries and Africa at large will mean more losses to respective countries in terms of tariff revenue looses and leads to weaken the economy of such countries.

Mkapa noted if the EAC agreed into signing the EPA trade agreements, it would mean also that big and economically stable country like the USA is likely to demand for the same reciprocal agreement with the bloc which will aim at weakening the current community intra-trade agreements.

"Africa is in trouble, its feature is once again on the table, and it is Europe that holds the ace" Mkapa lamented while addressing the TPSF members and its partners adding that it was important for Africa to be allowed latitude to conduct trade, industrial and development policies for its own development and not for the benefit of Europe while the continent remains with no voice and choice."

He explained while Africa Caribbean and Pacific countries have largely rejected EPA negotiations with protests from around 20 countries against the raw deal, it was certain that the EPA agreements were being forced to sail through.

The EPA agreements requires for nations or blocs in the respective African countries to have access to European markets by eliminating tariffs on over 80% of imports from the EU market and in some cases abolish all export duties and taxes in others, introduce new taxes, eliminate all quantity restrictions and meet all kind of instruments that all countries that have industrialized applied to build competitive national economies.

Mkapa said while Tanzania has in recent years enjoyed fairly high levels of growth rates with a GDP growth of between 5-7% per year and the main sectors for the contribution to this growth being mining, construction, communication and the financial sector, the country still remain underdeveloped in the aspect of agriculture which accounts for only 24% of the country's GDP while at the same time undervalued.

He stressed that with this context of agriculture being underdeveloped and undervalued, and both manufacturing and services not providing sufficient opportunities for employment, it was not a good context for negotiating EPA trade agreements with the well modernized bloc like the EU in terms of agriculture, manufacturing and service provisions.

Mkapa said that the ongoing unconcluded EPA negotiations which has been pushed to sometime October next year (2013), has been due to closed and or controversial or what are termed as "contentious" issues which have remained unresolved.

Mkapa stresses that if the entire EAC signs as a bloc, this would mean that Kenya would continue to receive preferences for its flowers, fish, fruits and vegetables export to the EU market while countries like Tanzania facing off with nothing to gain in terms of market access to the EU market but many areas to lose where 90% of Tanzania's tariff on EU's imports will have to be eliminated thereby posing challenge to domestic industries.

The former President also stressed that if Kenya is to sign the EPA trade agreements with the EU that would mean other LDCs countries in East Africa to remain with no benefits on the EU trade agreements, while the refusal of the entire EAC into signing the EPA agreement would mean putting the customs union more intact and eliminating border controls between EAC countries and posing no danger s in terms of EAC countries while trading more with the region and bringing economic development.

He stressed that EPA demands on g high levels of liberalization of duties charges on EU products to be eliminated for two-third the value of imports from EU would not only lead to blow on domestic production and regional trade agreements but would also lead to impact on tariff revenue as well.

He also pointed out that despite opposition to having discipline on exports taxes by many African countries in the context of EPAs the EU continues to insist on eliminating export taxes in order to have access to easy and cheap raw materials for its competitiveness and employment as many of its industries depended on steady supply of raw materials.

"EU refusal to deal with agriculture products on the EPA agreements and subsidies would mean that the EAC would be unable to compete with the highly subsidized EU products" Mkapa said.

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