Cape-to-Cairo free trade area closer
The East African Community is getting closer to a deal on tariff offers with Egypt and the South African Customs Union (SACU) that would allow the bloc to ratify the Tripartite Free Trade Area agreement by December.
Egypt ratified the treaty on May 3, becoming the first country of the 18 that have signed the agreement to endorse it.
The EAC partner states pushed the bloc’s ratification date from February 2017 to December 2017 to allow more time to resolve pending issues on rules of origin and tariff offers.
A report by the East African Community Sectoral Council on Trade, Industry, Finance and Investment, from a meeting held in Arusha, Tanzania from May 29 to June 2, shows that the EAC has made strides in reaching an agreement on tariff offers with Egypt and SACU.
According to the report, the EAC has already presented its prioritised request lists of 403 tariff lines, of which 283 are for immediate liberalisation and 120 are on a phase-down basis. SACU has responded “positively” to the 112 tariff lines.
The EAC has requested more time to consult on the remaining tariff lines on SACU’s prioritised request list as it was not submitted on time.
“At the current stage of negotiations SACU has offered to immediately liberalise 66.7 per cent of its tariff lines while EAC’s offer stands at 61.4 per cent of tariff lines.
“As the negotiations are on a reciprocal basis EAC has identified an additional 158 tariff lines for immediate liberalisation which would lift the offer to 64.25 per cent of tariff lines which is beyond the 63 per cent mandated by East African Community’s Sectoral Council on Trade, Industry, Finance and Investment,” the report says.
Tanzania, which belongs to both the EAC and the Southern African Development Community (SADC) but not the Common Market for Eastern and Southern Africa, has provided a tariff offer to Egypt – a Comesa member – comprising 96.89 per cent for immediate liberalisation and the remaining tariff lines to be gradually phased out in five years.
Although Egypt had initially provided an offer of 100 per cent tariff liberalisation to all the EAC partner states, it is reviewing its offer on the basis of reciprocity.
The EAC Secretariat is seeking a meeting to conclude the EAC-Egypt tariff discussions. Comesa and SADC are pushing their agenda as individual entities.
Under the TFTA Protocol, each bloc is expected to remove duty on between 60 per cent and 85 per cent of the tariff lines. The remaining 15 per cent of its tariff lines are to be negotiated over a period of between five and eight years.
Under the TFTA pact, the members of the three trading blocs are required to ignore sensitive products and subject them to duty and quota restrictions in order to ensure fair competition. Among the products earlier listed for protection until 2017 were sugar, maize, cement wheat, wheat, rice, textiles, milk and cream, beverages and second-hand clothes.
A trade framework agreed upon by the member states requires countries to exchange tariff concessions based on reciprocity.
However, it is understood that the extended discussions on tariff offers had been triggered by South Africa, which is keen on protecting its key markets from competition. The country is cautious of opening up its own domestic market and its export markets in Botswana, Lesotho, Namibia and Swaziland which are members of SACU.
The TFTA was launched by the Heads of State and Government of Comesa, EAC and SADC in Egypt on June 10, 2015.