PUBLISHED ON October 28th, 2014

EPA trade talks finalised amid civil society worries

After more than a decade, the European Union and East African states announced last week that they had finalized negotiations to sign the Economic Partnership Agreement, overcoming one of the last major hurdles before the two blocs agree to open market access.

The legal teams on both sides will now comb through the details of what the two blocs agreed upon before the heads of government sign and ratify the agreement. The EPA agreement, which had long courted controversy, is expected to provide legal certainty for businesses and open a long-term perspective for free and unlimited access to the EU market for products from Burundi, Kenya, Rwanda, Tanzania and Uganda.

“The EAC region stands out for its dynamism, and ambition to develop as an integrated region. The comprehensive partnership agreement we have just reached is the best way in which we can support EAC’s aspirations”, said EU Commissioner for trade Karel De Gucht in a statement.

In Uganda, the European Union applauded the conclusion of negotiations. The EU Head of Delegation to Uganda, Ambassador Kristian Schmidt, said: “I am truly delighted for Uganda. This is a new- generation trade agreement that will promote regional integration, greater value-addition in the East African region, while retaining very favourable conditions for completely quota-and-tariff-free market access to the EU’s 28 member states and 500 million consumers. This deal is good for Uganda, for East Africa and for the trade and investment partnership with the European Union.”

A statement from the EU office in Uganda noted that the EAC committed to liberalise 82.6 per cent of imports from the EU by value. Under the EAC Customs Union, more than half of these imports are currently duty-free. Dutiable lines will be liberalised over 25 years, with most of the cuts within 15 years.

“The deal is fully in line with the EAC Common External Tariff and supports the EAC’s ambitious regional integration project,” the EU pointed out.
The European Union said the EPA is particularly relevant for Uganda, now an LDC, but with an ambition to graduate from its LDC-status: “The EPA means that Uganda can develop, without fear of losing its privileged access to EU markets… So in short, a Ugandan producer can have his produce grown in Uganda, packaged in Kenya or anywhere his pockets may allow and then exported to the EU market as ‘Produce from Uganda’.”

However, some civil society groups still have reservations over the EPA, and they argue that the agreement is simply a death trap for local industries.

Ambassador Nathan Irumba, a renowned WTO negotiator and former Ugandan envoy to Geneva, said earlier that most exports by African countries to the EU are primary commodities that are covered under Generalised Systems of Preference (GSP). He said the only two products that will be affected are flowers and fish and that fish exports already face a threat of depletion.

“The EU is an elusive market. It’s negotiating with everybody in the world and is granting the same preferences to other players. There are trading opportunities in other emerging markets beyond the EU. The only thing we are worried of is fish and flower exports, and one would consider banning fish exports in that circumstance,” Irumba, also executive director, SEATINI Uganda, said.

“For over 30 years, exports from the ACP (African Caribbean and Pacific) countries were given generous access to the European market, yet preferential access failed to boost local economies and stimulate growth in ACP countries.”

EPA trade negotiations were launched in 2002 to create a free-trade area between the EU and the African, Caribbean and Pacific group (ACP) group under the Cotonou Partnership Agreement (CPA). There are 36 countries, including Uganda and other EAC members, which are part of the ACP, the states that are to benefit from the EPA.

In a bid to strengthen their regional integration agenda, the five EAC partner states in 2007, decided to reconfigure and negotiate the EPAs as a bloc, and subsequently initiated an interim Framework Economic Partnership Agreement (FEPA) in Kampala between the EAC and EU on November 27, 2007.

Even after 2007, however, negotiations continued at a slower pace than the EU desired. Only with the Caribbean countries was an agreement for a full EPA concluded. In the negotiations with various African regional formations, disagreements over various aspects of the EPAs continued.

The delay in the negotiations has been partly attributed to the insistence of including trade in services, investments, government procurement and the protection of intellectual property rights in the EPA.
Expert criticism

Economic policy and trade experts, and some civil society organisations, still contend that East Africa should not sign the final EPA.

“EPA is about a resource war. It’s not about getting market access for fowls to Europe. It has been camouflaged as a market issue. Never negotiate out of fear. If the EU doesn’t get the resources, then they are finished,” said Prof Yash Tandon, the former executive director, South Centre, an intergovernmental think tank.

Peter Kiguta, the director general, Customs and trade EAC Secretariat, said the EPA should not come and disintegrate the EAC region.

“A bad agreement is better than no agreement. If we have to sign an EPA, we have to protect our integration process. We need to reserve policy space so that in the future we don’t get derailed with this agreement,” Kiguta said.

Cyprian Batala, the assistant commissioner, external, in the ministry of trade, said the EAC weighed the contentious issues that had held back the negotiations and found that their marginal effect on the EAC’s economy was so minimal and thus called for conclusion on the EAC side. Some of the most contentious issues in the EPA talks were the export taxes and the agricultural subsidies, which, trade experts argued, placed East African farmers at a disadvantage.

Under the export clause, the EU disallows the EAC partner states to impose new export taxes, which analysts say are an indispensable development tool used to create incentives for value addition to local products. Export taxes are more crucial for the region than ever given the prominence of the extractive sector with the discovery of oil and gas and other minerals.

The outstanding issue under agriculture is the subsidies provided in the EU and the weak safeguard provided in the EPAs. The EU has reportedly rejected the discussion of its agricultural subsidies in the EPAs on grounds that it is a WTO issue.

With the EAC facing challenges of low industrialization, low competitiveness, high trade deficit as a result of exporting low-valued primary products, low agricultural production and productivity, and limited forward and backward linkages in the economy, experts say it is unlikely the EU-EAC EPA deal will be the solution to these problems.

Source:: The Observer

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.