25 June 2017

East Africa: U.S.Raises Concern On Future Deals With EAC

Photo: Michael Kakumirizi/Daily Monitor
Heaps of second-hand clothes.

The United States has raised concerns that future trade and investment deals with East African countries based on a continent-wide free trade agreement may be unrealistic due to their diverse interests.

According to Washington, the differences could lead to a lowest common denominator agreement and consensus on the African Growth and Opportunity Act (Agoa) would be difficult.

Last year, the EAC told the US that, in order to increase trade and investment between the two parties, the general outlook of post-Agoa should take on a development dimension based on trade facilitation and investment promotion as well as address supply constraints and improve the business environment in the region.

"Future agreements with the US, post-Agoa, should be discussed at the continental level in line with the African Regional Integration Agenda," said Beyond African Growth and Opportunity Act, a report of the meeting of the Sectoral Council on Trade, Industry, Finance and Investment held on June 2 in Arusha.

"Special and differential treatment should be factored into any trade and investment agreement post Agoa, as well as development support, in order to enhance EAC capacity to trade with the US. Therefore, there may be a need to qualify reciprocity that would take into account the asymmetrical nature of the economies involved."

According to the EAC, although policy reforms can have a positive impact on the private sector and influence the global competitiveness of the region's firms, future trade relations should not be made conditional on these reforms.

Such agreements should focus on trade development and promotion.

The US noted that the issues mentioned by the EAC are being addressed in the context of the current trade and investment partnership, and that there was a need to consider other areas that could serve as potential building blocks to deepen future trade relations.

The EAC Agoa work-plan is ready, and it estimated that it will cost $102 million to implement.

The priority areas for the EAC-Agoa strategy are to increase production and export of tradeable products, diversify products exported to the US from the EAC, intensify value addition, and promote and attract investment capital.

Visa concerns

The EAC had also raised concerns about the issuance of visas to the US to business operators in the region. The region's private sector claims that issuance of visas sometimes takes up to one year.

The US said that its visa policies vary in EAC countries, based on reciprocity, and said it was willing to discuss the issue further.

On the sanitary and phytosanitary requirements (SPS), concerns were raised by the Kenyan National Plant Protection Organisation about the lack of conclusive communication from the US Animal and Plant Health Inspectorate Service office.

Kenya had started a pest risk analysis for avocado with the intention of exporting the fruit. On possible areas of collaboration, the report noted that in addition to cold chain development within the region, investors could pursue possible establishment of cold treatment plants, especially for avocados. This would ensure avocados from the region are able to satisfy the SPS requirement of the US market.

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