Tanzania demands study on impact of EU trade deal
Tanzania wants a study conducted on the impact of the Economic Partnership Agreement with the European Union on the East African Community, ahead of the Summit of Heads of State scheduled for next month.
The demand reiterates Tanzania’s position that Kenya and Rwanda should not have signed the EPA last year and, given the inadequate time before the summit, there won’t be much progress on the matter before April 1, when the EU expects the EAC to sign up to the accord.
In an EAC Sectoral Council of Ministers’ meeting on trade, industry, finance and investment held in Arusha this month, Tanzania demanded that the EAC Secretariat conduct an analysis on the effects of the EPA on the Community. This, Dar es Salaam said, would bring about regional perspectives on the concerns they have raised with Burundi.
“The results will guide the ministers’ and presidents’ decision on the EPA in the next summit or even at a later stage. Signing a bad EPA will set a bad precedent, which will compromise the region’s interests in subsequent Free Trade Area negotiations,” said Tanzania in the sectoral council’s meeting report.
Tanzania further asked: “What is the rationale of Burundi signing the EPA while the EU has imposed an embargo on its exports? How will EAC partner states avoid such scenarios of the EU unilaterally putting embargoes on trade under the EPA while Article 136 of the EPA still refers to the same agreement that the EU has used to put an embargo on Burundi. How will the EAC partner states operationalise the free movement of goods while there is no free circulation of goods in the region and no refund mechanism for Customs duty paid to another partner state?”
Tanzania’s concerns have been forwarded to the EAC Council of Ministers for guidance and direction at their next meeting expected at the end of this month just before the summit.
During the meeting, Burundi cautioned that the issue relating to EU sanctions needs to be considered and resolved.
It was thus agreed that a high level political engagement between the EAC and EU be explored to address the issue of EU sanctions on Burundi.
EAC Deputy Secretary General for productive and social sectors Jesca Eriyo said that the decision on the EPA is expected to be finalised by the ministers before the next summit and that partner states were committed to doing so.
According to Betty Maina, Principal Secretary in Kenya’s Ministry of EAC Affairs, the other option for the partner states is for the summit to allow variable geometry, where countries will approach the implementation on different timeframes. This will allow the partner states that are ready to sign and implement the EPA to go ahead with the decision.
However, Article 37 of the EAC Customs Union Protocol stipulates that the partner states should sign the EPA as a bloc.
“If Tanzania doesn’t sign the EPA and others do, this means the deal cannot be operationalised. It means EAC countries shall trade with EU under different trade regimes that are unilateral and can be changed by EU any time. This is not good for attracting investors into the region,” said former EAC director of trade and Customs Peter Kiguta.
‘Most favoured nation’
The other concerns raised by Tanzania touch on the effect of the “most favoured nation” clause under the EPA on the future engagement of EAC with third parties, how the EAC partners will hold the EU party liable as one party in case of failure to implement any of the EPA provisions when Article 132 (1) of the EPA does not define the EU as one party when it comes to the definition of parties and fulfilling of their obligations.
“How will the EAC partner states bridge the gap in their balance of trade with EU while continuing trading with raw materials, taking into account that the EPA has limited EAC policy space in instituting duties and taxes on export?” asked Tanzania.
However, Tanzania is requesting the EAC to also explore how to proceed in the event that some partner states do not sign the EPA.
In November last year, Tanzania’s parliament voted for the country not to sign the EPA as it would not benefit from it. The EPA was to be signed in July 2016 but Tanzania asked the EU to extend the deadline to January this year so it could do a cost-benefit analysis of the deal.
Kenya has signed and ratified the agreement while Rwanda has only signed. Uganda has said it will sign the EPA while Burundi has indicated that it is not in a position to sign it because the EU has suspended relations with the government, but has maintained co-operation with the private sector and civil society.