East Africa: Private Sector – We're Left Out in the Cold in EU Trade Deal
By Janeth Mesomapya
Dar es Salaam — Members of the business community have criticised the government for not involving them during the over 10 years of negotiations on Economic Partnership Agreement (EPA) with the European Union (EU).
However, speaking under the clout of the Tanzania Private Sector Foundation (TPSF), they hailed the government for backing out of the deal, noting that its content would harm the local economy.
Now that the East African Community (EAC) leaders have asked for a three-month long extension of the signing deadline, they urged the government to fully involve them in the discussions as they have valuable inputs that could strengthen the country’s position in the matter.
Speaking in a meeting called in Dar es Salaam yesterday, TPSF officials appealed to President John Magufuli to organise a meeting which brings together experts and members of the private sector to deliberate thoroughly on the agreement.
According to them, since the government started talks with other EAC governments, they were neither involved nor consulted on how the matter should be handled.
This was done despite their rich knowledge and experience with regards to international business and economic issues.
Speaking in an interview with The Citizen on Saturday, TPSF executive director Godfrey Simbeye said if the agreement was to be signed in its current state, it would have been detrimental to the government’s intention of building an industrial-based economy. “The nature of the treaty requires member states to eliminate tariffs for imports and exports for 10 years. This will narrow local trade, which directly touches our manufacturing sector,” he said.
He argued that Tanzania was not capable to start new industries and improve present ones and at the same time compete with European nations within the 10-year long grace period. “This means our economy will deteriorate as other partners’ economies flourish. We will only turn into a market for foreign goods because our manufacturers will not manage to compete with the imported goods. Besides, our goods would not penetrate the highly competitive European market,” he elaborated.
Efforts to contact Industry and Trade minister Charles Mwijage to explain why the private sector was left out in the key negotiations failed.
For his part, TPSF Advocacy, Research and Lobbying director Gili Teri said the treaty was designed with terms that were most likely unfavourable to Tanzanian’s endeavours to become a middle economy country through industrialisation.
“EPA will also force the country and its partners not to sign other pacts which would compete with it. This would render the country incapable of entering other economic deals which have similar components to EPAs,” he argued.
He noted, for instance, that Tanzania would not be able to sign economic deals with countries such as the United Kingdom or China; and if there was such agreement it would be subject to termination or redesigning.
Mr Teri said also that EAC countries would not be able to produce goods which meets biological specifications to be accepted in the EU market.
“I strongly advise the government not to commit into this agreement because its drawbacks overweighs the benefits. It should rather proceed with the Trade Facilitation Agreement (TFA) under the World Trade Organisation (WTO) which is greatly favourable,” he advised.
Economics professor Honest Ngowi of Mzumbe University said: “The issue of removing tariffs for imported goods will make Tanzania the dumpsite for the foreign products. This will kill our local trade and factories.” He explained that the country has no industrial muscles, technology and capital to match other partners in the deal meaning it would not produce enough for the expanded market thus ending being a consumer.
“Imported goods will be as and more likely cheap as the local goods and the fact that their standards will be superior to ours, consumers will likely rush to the imported goods and shun locally produced ones,” he explained.
Prof Ngowi added that the free market arrangement would also make Tanzania lose revenue from levies and taxes on imported and exported goods.
“The government should thoroughly assure itself on this before committing to the deal that will further lead the country into darkness economically,” he said.
Initially, the European Union (EU) and East African Community (EAC) deal intended to have Europe open up its market for exports from the region duty free, while the region offers quota-free access to the bloc.
This will open up 80 per cent of its market to foreign products in 25 years.
The final bloc’s commitment on EPA, whose negotions between the two blocs started in 2002, by the EAC Heads of State was pushed back to January next year on Thursday to give room for further reflections on the treaty before the signing.
One of the issues for the postponement was raised by President Magufuli who questioned how the Community would safeguard Tanzania’s industries against competition from European manufacturing sector.
Another issue was whether or not EAC would become a destination for agricultural produce from EU and how the bloc would protect local agriculture sector which is the largest contributor to the GDP.
During the conference Ugandan President Yoweri Museveni said this interim period should be used to plead with EU to bend back and accommodate fears of the countries such as Tanzania.