EAC states in row over EU trade deals

The EastAfrican

The question is whether they should negotiate with the EU as a single bloc, or as part of the Eastern and Southern Africa Group. WILFRED EDWIN reports

Should the five member states of the East African Community negotiate an Economic Partnership Agreement (EPA) with the European Union as a single bloc, or should they do so as part of the larger Eastern and Southern Africa (ESA) group?

A controversy appears to be raging between Kenya and Tanzania over the approach to be adopted in negotiating the new trade arrangement that will govern the relationship between the EU and African Pacific and Caribbean (ACP) countries when the new World Trade Organisation regime takes effect.

Bernard Membe, Tanzania’s Minister for Foreign and International Affairs, told The EastAfrican last week that EAC member states have agreed to negotiate an EPA collectively, building on what has already been achieved under ESA and SADC.

This would represent a parting of the ways with ESA — which is de facto the Common Market for Eastern and Southern Africa (Comesa), including as it does 16 of the Comesa member states — which suits Tanzania, the only EAC member that also belongs to SADC. Tanzania pulled out from Comesa in 2000, and so feels that to enter into an EPA as part of ESA would effectively “force” it to rejoin Comesa.

Tanzania argues that with the recent accession of Rwanda and Burundi to the EAC, the Community is now big enough to engage the EU in negotiations, and that the EU should treat the Community just like it treats the SACU, which also has five members — namely Botswana, Lesotho, Namibia, South Africa and Swaziland.

Now Tanzania is accusing Kenya of muddying the waters. Recently, Zitto Kabwe, an opposition MP belonging to Chadema and a trade expert who has served as a consultant on EPA negotiations on behalf of the Tanzanian government, accused Kenyan Trade Minister Mukhisa Kituyi of sabotage, alleging that the minister had “secretly written to the EU informing them that Kenya would negotiate EPA under ESA.”

The MP, who was contributing to the 2007/08 budget estimates of the Ministry of East African Co-operation, accused Kenya of reneging on the 2002 agreement compelling EAC member states to negotiate as a bloc.

Kenya, Uganda, Rwanda and Burundi, all members of Comesa, have been negotiating EPAs with the European Union collectively under ESA, while Tanzania has been negotiating under SADC — which however excludes South Africa, with which the EU is pursuing a separate EPA under the narrower South African Customs Union (SACU). (The Europeans are similarly dealing separately with Egypt, Comesa’s largest economy)

Mr Membe said that to allow EAC states to negotiate directly with the EU, it was initially proposed that Kenya, Burundi, Rwanda and Uganda withdraw from the negotiations going on under ESA umbrella, and that Tanzania would also withdraw from the negotiations under SADC.

“This issue will be at the centre of discussions by EAC heads of state when they meet in Arusha on August 20,” Mr Membe said.

The controversy began in 2003, when all the EAC members reneged on an agreement stipulating that matters relating to participation in the World Trade Organisation and ACP-European Community arrangements would be negotiated as a bloc.

Had they stuck to that agreement, the region would have circumvented the problem of overlapping membership that continues to plague the trading bloc.

It was not until April 13 this year that the Community announced that it intends to negotiate its own agreement with Europe as a separate regional bloc.

According to WTO rules, a country cannot be a member of more than one Customs Union.

To complicate matters, Kenya is the current chair of the Comesa trading bloc, while Tanzania fears that if the Comesa states are part of its EPA, its position and strategic interests will be undermined.

Meanwhile, The East African Business Council, the umbrella association of businesses in the region, has all along supported the view that the EAC should negotiate EPAs with the EU as one bloc.

An EABC programme office, Charles Mndeme-Yegella, told The EastAfrican, that it was important for members of the Community to approach the negotiations as a bloc, pointing out that the alternative, where members will be trading with the EU under different policies, procedures and mechanisms, is undesirable.

He said such a scenario would negatively affect the fundamental rules governing investment and regional co-operation.

“When countries belonging to one regional bloc approach a major trading and developmental partner like the EU through different arrangements, the result will be inconsistencies and unnecessary confusion within the community,” he said.

Mr Mndeme-Yegella said that while it may be possible to align the Comesa common external tariff with that of the EAC, aligning it with SADC’s is likely to be a major challenge.

The problem is compounded by the fact that Comesa and SADC will acquire Custom Union status at different times, long after the conclusion of the signing of the EPAs.

Hussein Kamote, director of policy and research at the Confederation of Tanzania Industries, argued since Tanzania has been categorised as an LDC, it has the option of shelving the EPA arrangements and negotiating under the Everything But Arms (EBA) trading arrangements; however, EPAs are considered more superior trading arrangements.

He said that unlike EBA, EPA agreements provide room for technical assistance for developing countries.

“Our states should not rest on EBA expectations, as this is a unilateral arrangement which LDC countries did not negotiate with EU,” he said.