PUBLISHED ON October 14th, 2014

What next after EAC missed trade deal deadline?

October 1 was the deadline set by the European Union for the East African Community to conclude, initial and ratify the Economic Partnership Agreement (EPA). This never happened. We must squarely put the blame where it belongs.

The decade long trade negotiations failed to meet the deadline due to inflexibility on the side of the EU to address concerns brought forth by EAC negotiators on three outstanding issues of the negotiations.

These include export taxes, non-execution clause as well as the agricultural subsidies given to EU farmers.

The EU has been extremely aggressive to ensure that African countries eliminate the export taxes. The first attempt was through a proposal to the WTO for an introduction of an agreement on export taxes which was out rightly rejected by the WTO members.

The EU further consolidated the Raw Material Initiative (RMI) whose main pillar seeks to reinforce its trade strategy through an open campaign against restrictions such as export taxes.

The export taxes remain critical for EAC member states for several reasons. They could be applied in very exceptional circumstances such as to protect infant industries, encourage value addition, for food security purposes as well as protection of environment. This is why the policy space needs to be safeguarded from any sort of a trade agreement.

The EPA council should not determine the kind of export taxes to be applied by the EAC. Kenya and Ethiopia have applied export taxes in the leather industries and seen a tremendous improvements and revival of this sub-sector.

With the discoveries of oil and gas in Kenya as well as massive gas deposits in Tanzania, export taxes ought to be retained for industrialisation purposes.

It is unfortunate that the recent agreed West African EPA texts eliminated export taxes while the Southern African EPA texts sneaked in provisions for application of export taxes for a period of time to be determined by the EPA council.

The EPA envisaged a trade deal that is compatible with the WTO rules and export taxes were permitted to be applied from when EAC partner states acceded to WTO.

On the issue of agricultural subsidies given to EU farmers, it is clear that subsidised products should never be allowed to enter the EAC market.

EU has deliberately failed to eliminate agricultural subsidies as was agreed during 2005 during the Hong Kong WTO ministerial.

The safeguards provided for in the EAC-EPA are neither effective to protect millions of smallholder farmers and producers in East Africa.

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.