More than a decade since the negotiations for the European Union (EU), East Africa Community (EAC) Economic Partnership Agreement (EPA) commenced, Kenya is the only country in the region that has signed, ratified and is implementing the agreement, with the rest of the countries holding back, citing various concerns.
Economic partnership agreements are reciprocal free trade agreements (FTAs) between the EU and Africa Caribbean Pacific (ACP) states that were launched in 2002, with the aim of ensuring sustainable development of ACP countries, promoting regional integration, eradicating poverty and ensuring the gradual integration of ACP states into the global economy.
In 2007, the then five EAC partner states (Kenya, Uganda, Rwanda, Tanzania and Burundi) decided to negotiate the EPA as a bloc. Kenya and Rwanda signed the agreement, commonly known as the EU-EAC EPA, in September 2016, with Kenya subsequently ratifying it.
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However, the negotiations hit a snag, with some of the EAC countries citing various concerns.
Burundi's concern was that the EU had unilaterally suspended direct partnership with the Government of Burundi, while Tanzania was concerned with effects of the EPA on EAC industrial development,potential revenue losses, the effect of EU subsidies and domestic support on EAC farmers, among other issues.
Uganda, on the other hand, had an interest for all the partner states to sign the Agreement as a bloc.
EAC Concerns
A 2005 study commissioned by EAC heads of state and carried out by the United Nations Economic Commission for Africa (UNECA) to analyse the impact of the EAC-EU EPA on EAC economies concluded that the EPA would result in revenue shortfalls estimated at $32.5 million for Tanzania, $9.5 million for Uganda, $5.6 million for Rwanda, $7.7 million for Burundi, and $107.3 million for Kenya.
The EAC states were also concerned that the liberalisation that came with the EPA would harm local industries and discourage the development of new ones.
According to Jane Nalunga, Executive Director of the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI-Uganda), the EPA would jeopardise regional integration efforts.
"The EPA is likely to have far reaching implications on sub-regional and continental integration prospects. It also has implications on the African Continental Free Trade Area (AfCFTA), as it was envisaged that the Regional Economic Communities will be the building blocks of the AfCFTA," she said, adding that the EPA would also deepen divisions between African countries, making African trade policy harmonisation even more difficult.
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Besides concerns that were raised by member states, the negotiation process was further complicated by a deadline imposed by the EU.
"In May 2013, the EU imposed a deadline for conclusion of the negotiations, by revising her Market Access Regulation 1528/2007 to clearly indicate that any ACP state which will not have signed or ratified the EPA by October 1 2014 will be removed from the list of beneficiaries of the Duty-Free Quota Free access to the EU market," Nalunga said.
The EU decision created pressure on Kenya, a non-Least Developed Country (LDC), which would cease to access the EU market on a duty free and quota free provision, with the new market access regulation leading to an imposition of a tariff of 12 per cent on cut flowers and 8.5 per cent on fish.
Faced with a dilemma, the EAC heads of state made a decision.
"During their 21st Ordinary Summit, EAC Heads of State concluded that the partner states who wished to move forward with the Agreement could commence engagements with the EU, with a view to start the EAC-EU EPA implementation under the principle of variable geometry," Veronica Nduva, EAC Secretary General told The New Times.
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Kenya-EU EPA
With a nod from the EAC heads of state, Kenya notified other EAC partner states that she was engaging the EU to begin the implementation of the EPA in May 2021.
Kenya signed the agreement with the EU in December 2023.
According to Nalunga, the Kenya-EU EPA is the same as the original EAC-EU-EPA other than the addition of a chapter on trade and sustainable development.
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"However, the EAC did not sanction negotiations on the Trade and Sustainable Development chapter," she noted, adding that the regional bloc has not pronounced itself on whether to join the existing Kenya-EU EPA.
Although the negotiation process stalled at the regional level, Nduva indicated that further engagement at the national and regional levels with the EU is expected, though timelines are yet to be agreed.
However, Nalunga maintained that the EAC states will need to answer a few questions before making a decision to sign or not to sign and ratify the EPA.
"Quoting the words of the late Tanzanian President Benjamin Mkapa, the EAC needs to ask whether the EPA will help increase domestic production capacities, encourage diversification and industrialisation and support the bloc's move from being a raw material exporter to being producers of finished products," she said, adding that answers to these questions will give the region a way forward.
Currently, Rwanda, Uganda and Tanzania have access to the EU market under the Everything But Arms (EBA) deal.
