PUBLISHED ON October 28th, 2014

Vital lessons in delayed EPAs on market diversity

The white smoke came on October 14 when Foreign Affairs PS announced on Twitter that ‘‘we have a deal.’’

The five East African Community (EAC) states had waited with bated breath for more than five months as the technocrats negotiated the all important trade deal with Europe. What a relief that was!

Europe is still very important to African economies.

It is worth noting that 24 per cent of our exports go to Europe while 95 per cent of our horticultural flowers also end up somewhere in the continent.

This is made possible by trade arrangements between the two nation-groups established historically from as early as early as 1975 to date.

Economically speaking, Europe is a significant trading partner. It is the word ‘partner’ that they don’t realise is significant in the economic agreement.

The delay in signing the Economic Partnership Agreement (EPA) was occasioned by EU’s rejection of three items fronted mainly by Kenya — export taxes, subsidies and the relationship between the Cotonou Agreement and the EPA.

The Kenyan government wants export taxes imposed on goods where they feel the country have capacity for value addition to discourage all the raw materials from going abroad. Europe felt there was no need for such as they needed the raw materials.

EAC further wanted an expanded band of subsidies, something the EU did not approve of. Further, there was tête-à-tête around the longevity of the Cotonou agreement.

In the end, however, the wishes of EAC were met after the larger trading partner’s bluff diplomacy failed to work.

With the benefit of hindsight one can look back and wonder, what was that all that about? Sometimes it feels like some fellows in Brussels think its 1974 and they are the only source of market for Africa.

They feel any partnership with the continent is aid and they must dangle it while declaring their sovereign wish. It never worked.

For the first time ever, it has dawned on Europe that the continent has alternatives in the East or the emerging economies. I salute the Foreign Affairs ministry for standing their ground and ably communicating the country’s stand.

However one wonders, must we go through this again, or can we start early to build our trade relationships with other countries to significant levels?

China remains a viable option for exports. The Caribbean countries are also rising with a growing middle class that can provide adequate market for the finished goods in Africa.

Other alternatives include India and the Middle East. If any generation is to get economically empowered, they must learn to work together and in empowering one another, they grow strong enough to fight off the larger, more experienced players. The battle cannot be won by stand alone entities.

In the same way, Africa, Caribbean and the Pacific countries have worked together on many occasions to negotiate with the developed nations.

Maybe it’s time they realised their own strengths and started doing greater volumes of trade among each other, given the amount of growth happening therein.

Africa’s reliance on Europe and the US may be our undoing someday. After all, money from India is also legal tender.

Source:: Business Daily

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.