{{For a long time, countries in the East African region have enjoyed preferential access to European Union (EU) markets. This arrangement, however, came to an end in 2007. }}
This led to the start of negotiations for a long-term reciprocal trade arrangement between the EU and the East African Community (EAC) regional bloc, which are known as Economic Partnership Agreements (EPAs). These negotiations have stalled for years and have recently hit a deadlock.
This is mainly because of ‘contentious’ issues that were raised by the EAC, including legal provisions on the Most Favoured Nation clause, export taxes, the Stand Still clause and Rules of Origin, among others.
These issues bear serious implications for the region that if concluded in the current form, can be detrimental to East Africa’s trade and development needs.
Not only have the so-called contentious issues remained unresolved, we have also seen the EU table new areas for negotiation.
For instance, by submitting a new text of Trade Related Issues such as services, environment, labour standards and social accountability, the EU has greatly contributed to the delay in the process.
These new areas go beyond what is required of regional trade agreements under the World Trade Rules.
In September 2011, the EU also made a proposal to amend its Market Access Regulation. This Market Access Regulation 1528/2007 is a unilateral temporary instrument of the EU to ensure that pending implementation of the EPAs, there will be no trade disruption.
It provides for duty free-quota free market access to countries having signed or initialed the interim EPA.
This amendment permits the EU to exclude countries from the market access arrangement if they do not take necessary steps to ratify and implement their EPA agreement or conclude a new regional EPA from January 1, 2014.
This amendment also put a strain on the pace of negotiations and African Trade ministers spent a lot of time petitioning the EU parliament to review this amendment, which was fortunately revised.
Again in November 2011, the EU proposed two new issues to be included in the negotiations, namely, good governance in the tax area and obligations from Customs Union Agreements concluded with EU.
The EAC has not agreed to the inclusion of the new issues. It is not surprising that every time the EU adds a list of items on the agenda, our negotiators have to go back and consult their governments, which delays the process.
In light of this, a number of things need to be considered for both parties to reach a lasting win-win partnership. First, it is important to appreciate that the two parties are not negotiating at a level playing field in as far as trade and investment is concerned.
While the EU is economically advanced with highly industrialised economies, the EAC states are still under developed and largely dependant on primary commodities as major exports.
In global trade, all the five EAC states still grapple with the long-standing supply side constraints due to very low productivity, especially in the agriculture sector.
In terms of geographical make up, the EAC constitutes five small economies yet under EPAs trade regimes, we are talking about removing all trade barriers to about 27 countries within the EU.
Due to the huge disparity between the EAC and EU, one would expect that the EU would re-consider or revise the issues that have created an impasse in the negotiations.
It is only justified that the EU gives the EAC adequate time to fully prepare for each round of negotiation without necessarily building a long list of complex issues on the agenda.
Second, we cannot have negotiations for trade in goods and then services, competition, investment, environment and labour all in one EPA agreement. All these issues are too broad to be concluded in one package.
The new issues bear significant political and socio-economic consequences and can be counterproductive to development if not carefully handled.
Last but not least, if EPA negotiations are to be concluded, we need to have a sequenced negotiation agenda. We need to conclude the agreement on trade in goods first.
Then we can have separate negotiations for services and other issues as long as the EAC is ready and prepared to negotiate. Alternatively, these new issues can still be resolved under the multilateral world trading system.
It is not realistic to blame and pressure the EAC to conclude the agreement.
{Ms Karungi works with the Advocates Coalition for Development and Environment.}
Adapted from NMG
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