Tanzania’s exit from trade pact tests regional integration

Kampala.

The exit of the United Republic of Tanzania from the Economic Partnership Agreement (EPA) that the European Union (EU) is expected to sign today with the East African Community (EAC) member states serves as a litmus test to the regional integration process, according to trade and treaty specialists.

The EPA is an initiative by the EU to secure free market access in the region and reciprocate in equal measure.
Should the deal eventually collapse, regional products to the EU market and vice versa would not be subjected to preferential treatment.

Uganda has already shown her intention to delay the signing of the deal which is supposed to be done at the margins of a one-week UN Conference on Trade and Development (UNCTAD XIV) taking place in Nairobi, Kenya, starting today.

Speaking in an interview last week, the permanent secretary at the Ministry of Trade Mr Julius Onen, said Uganda is not about to act as an accomplice to the regional disintegration.

He said: “We are not prepared to disintegrate. So we would rather sign it (EPA) altogether as EAC even if it means postponing it.” He added: “Our position has always been to sign it together. On our side (Uganda) we will do anything to keep away from disintegrating.”
Now the heat is with the Republic of Kenya, a key regional partner state.

Kenya is under intense pressure to sign the agreement because if the deal collapses, her flower industry, said to have benefited most, will be hard hit as it will not secure a free market access to European markets.

Should Kenya append its signature on the dotted lines, the future of EAC integration and the talk of working as a bloc will be under spotlight. It will also raise questions as to whether this could be the beginning of the real cracks on the young bloc.

What civil societies say
A civil society statement by about 15 members across the region on the EU-EAC EPA and the Rendezvous Clause negotiations issued jointly last week called for the EAC partner states to rethink the signature and ratification of the EU- EAC EPA.

“We note that the EAC concluded the EPA negotiations after 12 years of negotiations with the EU not because it was contented with the provisions of the agreement but rather in order to meet the October 1 2014, deadline so that Kenya, a non-LDC, won’t be removed from the list of beneficiaries of the duty free quota free market access to the EU.

Statement issued by the regional CSOs over the weekend stated that according to UN Economic Commission for Africa (UNECA, 2005) the EPA will result into revenue shortfalls estimated at $9,458,170 (Shs32b) for Uganda; $32,490,659 (Shs110b) for Tanzania; $ 5,622,946 (Shs19b) for Rwanda; $107,281,328 (Shs364b) for Kenya and $ 7,664,911 (Shs26b) for Burundi.

This revenue shortfall is due to the fact that the EAC has committed to liberalise 82.6 per cent of all its imports from the EU by 2033. The shortfall has serious implications on the EAC partner states’ ability to domestically mobilise resources for their development that their reliance on aid will continue which will increase their indebtedness.

In order to achieve the industrialisation dream, the role of EAC partner states in regulating trade, investment and in enacting relevant policies is critical, something the agreement takes away.
The EPA will result into trade diversion of EAC’s products estimated at $1,236,647 (Shs4.2b) for Uganda, $269,314 (Shs914m) for Burundi; $2,426,328 (Shs8b) for Kenya; $749,240 (Shs2.5b) for Rwanda; and $607,417 (Shs2b) for Tanzania.

EAC will be more exposed to EU’s dumping of subsidised agricultural products under the EPA than through the World Trade Organisation because of the much deeper liberalisation in the EPA.
We are more concerned that the issues therein the rendezvous clause will further shrink the policy space impacting on value addition, small scale farming and food security.

Speaking in a breakfast meeting last week in Kampala, Ms Jane Nalunga, the country director, SEATINI-Uganda, said EU has all along been using the carrot and stick method to have the EAC countries sign the EPA, saying this shouldn’t be the way to go considering the impact the pact will have on the regional countries once signed.

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