1 March 2017

East Africa: Magufuli Stance On EU-EAC Trade Deal Could Split Bloc

Photo: The New Times
Red and green peppers in preshipment sorting (file photo).

Tanzania has yet again refused to endorse a regional trade pact with the European Union, saying the deal stood in its way to industrialization.

This stand, however, threatens to split the bloc as Kenya and Rwanda that have already signed the deal see other partner states as reading from a different scrip. Last weekend, President Museveni met his counterpart John Pombe Magufuli where they talked about the possibility of ratifying the Economic Partnership Agreements (EPAs).

These are trade agreements that the European Union is negotiating with blocs in Africa, Caribbean, and Pacific (ACP) - majorly former colonies. Once signed, the EPAs would lead to up to 82 per cent opening of the East African markets to European goods tariff-free in a span of 25 years.

The EU argues this would be reciprocal as it would also take in EAC products tariff-free. The deal would also compel the partner states not to impose export taxes on key raw materials, a move seen by analysts as likely to stall the region's quest to industrialize.

President Magufuli reportedly told Museveni that Tanzania will not sign until outstanding issues have been addressed. In statement on Sunday, Kampala said "the two leaders urged experts in their respective governments to continue studying the matter and advise the principals who are also consulting further".

On February 2, Museveni met Magufuli in Addis Ababa at the AU summit where they agreed to meet later this month and chart the way forward. In Addis Ababa, Museveni said he was "more worried about the unity of East Africa".

Burundi has not signed be- cause it is under EU sanctions. Even if they don't sign, Uganda, Rwanda, Burundi, and Tanzania would still access European market under the Everything But Arms (EBA) arrangement because they are still classified as least developed countries. It is only Kenya which is non-least developed and could see high tariffs imposed on its goods if it didn't endorse EPAs.

The EU is the biggest market for flowers from the region. Last November, the Tanzanian legislators unanimously agreed that their country must delay signing the deal as they study the full impact it could have on the country's infant industries. The EAC and the EU finalised the EPA negotiations in October 2014, seven years after their start in 2007.

The agreement was expected to be signed in July 2016 on the sidelines of the fourteenth session of the United Nations Conference on Trade and Development (UNCTAD 14), but the signing was postponed after Tanzania expressed the need for more time to review the content of the EPA and evaluate its potential economic impacts.

Civil society and analysts have spoken widely against the EPAs, saying they were agreements between unequal parties where the EU was more primed to benefit.

BREXIT

In a statement last month, the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) said that on top of losing taxes through waivers on imports from Europe, there were more serious issues that EAC should consider before signing these deals.

"This liberalisation seems to be thttp://www.monitor.co.ug/aking 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," SEATINI said.

Also, Britain's exit from the EU should be of concern to the parties before they ratify the agreements. SEATINI said the EAC-EPA was concluded before Britain voted to get out of the European Union.

"The EAC should take into account the implications of the Brexit when considering whether to sign and ratify the EPAs given the fact that the UK accounted for 35.6 per cent of the EAC exports to the EU in 2015. Therefore, the Brexit reduces the value of EU's market for the EAC," the statement said.

All eyes are set on the April regional summit, where heads of state are expected to reach breakthrough on EPAs.

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