5 February 2017

East Africa: Consolidate Regional Market, Forget About EU Pact- Experts

Photo: Daily Monitor
President Museveni (right) chats with Tanzanian president John Magufuli at the sidelines of the African Union Summit in Addis Ababa, Ethiopia last week. The two are said to be working on salvaging the EAC-EU trade partnership.

Kampala — Uganda and the rest of East African community countries are better off consolidating trade amongst themselves rather than worrying about signing a trade agreement with EU, currently trying to come to terms with Brexit - exit of UK from the EU.

According to the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI-Uganda), the regional countries should prioritise trade amongst themselves instead of trying to surrender its market to the EU through unfair trade agreement.

"It is important to appreciate the fact that while the EU market is important, the EAC market is of paramount importance for all partner states as it constitutes the largest market for the EAC member States and also offers better prospects for industrialisation and development of regional value chains," reads the SEATINI - Uganda statement.

It further read: "While the exports originating from the region to the EU are mostly primary products (for instance coffee, cut flowers, tea, tobacco, fish and vegetables), those traded within the region include value added manufactured products (such as cement, textiles, steel, plastics)."

Growing trade

Uganda Export Promotion Board (UEPB) statistics indicates that trade between the regional partner states is growing in size and value while the trade between the region and the EU is slowly but steadily taking a tumble.

UEPB's intention is to encourage more trade among the regional countries as well as working towards elimination of barriers that hampers this development.

The Economic Partnership Agreement (EPA) text being presented for signing, according to the regional non-governmental organisation advocating for fair trade deals and practices, will compromise the EAC efforts to structurally transform their economies, hence retarding industrialisation.

This will have direct bearing on employment and poverty as it will render the EAC countries impotent in as far as dealing with the mentioned challenges.

Worth noting is that at both Partner State level and EAC level, there are efforts to promote structural transformation through several policies and frameworks, but once the deal between the EU and the EAC is signed the much needed policy space for the regional countries will be no more.

"As SEATINI and as part of the wider civil society fraternity, It is our considered view that a careful reading of the EPA agreement arrived at falls far short of securing the regions' overall development interests and maybe inimical to achieving our aspirations for structural transformation," reads part of the statement issued by SEATINI-Uganda.

Issues of contention

According to the agreement, the EAC has offered to liberalise 82.6 per cent of her imports from the EU over a 25 year transition period by initially liberalising 65.4 per cent on entry into force of the agreement.

The rationale is that some of these products are currently zero rated because they are either industrial inputs or capital goods (i.e. machinery and pharmaceuticals).

Only 17.4 per cent (1432 tariff lines)

have been excluded from liberalisation to presumably cater for the protection of the sensitive products and infant industries.

This liberalisation seems to be taking a static approach to development which does not envisage Uganda and the East African region graduating to producing either industrial inputs or the capital goods. The zero rating and the Standstill clause (Article 12) effectively constrain the policy space for the region to achieve this aspiration.

It should also be noted that the 25 years provided for the completion of liberalisation process may appear long in the life of an individual but it is actually a short period in the life of a nation.

The liberalisation schedule, on the face of it, caters for the protection of infant industries and sensitive products. However, a careful examination of the schedules brings out clear contradictions.

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