31 Aug 2007: ISS Today: Economic Partnerships Agreements - The East African Gremlin?

31 August 2007: Economic Partnerships Agreements - The East African Gremlin?

 

The recent ‘troubled’ negotiations for the Economic Partnerships Agreement (EPA) with the European Union (EU) have shown the rifts in the envisaged East African Community (EAC) political union. In 2002, it was agreed that the EAC would negotiate with the EU as a bloc on all matters related to the African, Caribbean, and Pacific (AC) countries within the World Trade Organisation.

 

True to the Cotonou principle of differentiation and regionalization, developing countries are encouraged to enter into the EPAs in regional groupings. So far the ACP countries have formed six regional groupings for this purpose. These regional groupings are:

• l’Union Économique et Monetaire Ouest Africaine (West African Economic and Monetary Union)
• La Communauté Économique et Monetaire de l’Afrique Central (Central African Economic and Monetary Union)
• Southern African Development Community (SADC)
• East African Community
• Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM)
• Pacific Region

 

Tanzania, unlike the other COMESA (Common Market of East and Southern Africa) members; Kenya, Rwanda, Burundi and Uganda, has thrown spanners into the process by continuing to express a preference for inclusion as a participant under the SADC banner rather than as a member of the EAC. This behaviour raises questions on commitment to the ideals of the EAC and retards progress on the new World Trade Organisation (WTO) -friendly EPAs that seek to achieve the preferential treatment enjoyed by some ACP countries under the Cotonou Agreement. However, ‘unequal reciprocity’ should perhaps be the new term for the EPA outcomes since these will favour the already better off European countries. After all, experience has demonstrated that free trade areas between larger markets and small fragmented ones are never sustainable.

 

At the Arusha meeting held last week the five presidents in the East African region failed to agree on where Tanzania should stand, and left it up to the ministers for trade to persuade Tanzania to be part of the COMESA group in the negotiations.

 

Development realities forced the EAC to focus on economic integration, but in the process what has been forgotten is the need for political structures by which to resolve the differences that inevitably arise. Ugandan scholar Dani Wadada Nabudere has cautioned against neglecting this since the first EAC attempts in 1962. That the EAC is following the same trajectory demonstrates the failure to learn from history, since the same issues still remain on the table: territorial and economic issues, the fear of Kenya’s dominance, and concerns over Uganda’s imperial ambitions.

 

The WTO requires that the agreements must be concluded by December 31 2008. However, delays are occurring due to the many unresolved issues that have yet to be debated. Both the ACP and EU parties are guilty of holding up the process albeit for different reasons. To begin with, the ACP member countries must all approve of the agreement, and in addition all involved regional organizations become a second tier approval forum. Furthermore, the EU must give the final approval and must ensure that negotiations followed procedures established in the agreed upon structures. Unfortunately, the number of regional blocs involved on the continent has resulted in a lengthy ratification process that will be tough to wind up before December 2007.

 

The four month time frame for coming up with the EPAs was unrealistic, especially for a region with many differences to iron out.  Other challenges plaguing the EAC union are the harmonization of trade and commerce policies. Currently the revenue authorities of all five countries have to compile a single database in Arusha, which is intended to make it possible to monitor cargo and account for the movement of goods as well as accounting for revenue. Although there is already something resembling a system in place, the Common External Tariff of 2005 has failed to contain the problems of diverted and counterfeited goods that cause distortions in the market.

 

A critical question is whether the EPAs should be signed at all. Will they really make a difference to the world trade order? The creation of free trade zones between each country and the EU is quite tempting. But as usual, there is a Sword of Damocles hanging over the negotiations. The EU is threatening that if the EPAs are not signed by the end of the year the ACP countries will automatically lose the priviledges they currently enjoy, particularly the zero tariff on unprocessed goods to Europe.  Worse still is that they will revert back to a regime in which certain countries face duties of up to 60 percent on their European exports. The big question remains: Will the new regime substantially improve the trade environment and offer development perspectives to African countries?

 

The EU is clearly not demonstrating the spirit of the new partnerships as envisaged by NEPAD. Conditionalities appear to be a fact that is here to stay where world trade is concerned.  Fifteen ACP countries already enjoy favourable access under the ‘Special Incentive Arrangement for Sustainable Development and Good Governance’ (the Generalised System of Preferences (GSP)). But they only do so as a consequence of signing 27 international conventions. And Kenya has already signed 24 of these. Failure to sign the EPAs as blocs would thus compel the individual countries to adhere to these GSP conditionalities so they can access European markets, and this does not augur well for African development.

 

Dr Annie Barbara Chikwanha, Senior Researcher, African Human Security Initiative, ISS Nairobi