Arusha; July 11, 2016 -----The East
African Business Council (EABC) has appealed to the East African Community
(EABC) Partner States to remain focused and united in having agreement with
European Union (EU) as well as other third parties in order to safeguard the
achievements of the EAC Customs Union.
The call comes hardly three days after Tanzania
announced its position that it will bolt out of the comprehensive Economic
Partnership Agreement (EPA) between East African Community (EAC) and the
EU.
The EU and EAC Partner States concluded EPA
negotiations and the two parties initialed the Agreement last year with both
parties (European Commission EC representing EU and EAC 5 Partner
States-Tanzania, Kenya, Uganda, Rwanda and Burundi) agreed to continue with
legal scrubbing and translation of the EAC-EU EPA into Kiswahili before signing
and ratification of the Agreement by both parties.
The main reason for initialing the EPA was to avoid
trade disruption between EU and EAC Partner States.
During the meeting of the EAC Sectoral Council on
Trade, Industry, Finance and Investment (SCTIFI) which was held in Arusha on 23rd
-27th May 2016 it was reported that translation of EAC-EU EPA into
Kiswahili was finalized and circulated to EAC Partner States and shared with
EU.
After consultations EAC Partner States in July 2016,
agreed that the signing ceremony of EAC-EU-EPA will be on 18th
July 2016 as EU Commissioner for Trade will be in Nairobi for UNCTAD XIV
Conference.
However Tanzania has announced that it will not
sign EPA on the same dates citing what it termed turmoil at EU after UK
referendum to exit from EU.
The EABC Chief Executive Officer, Ms Lilian Awinja
says that if all 5- EAC Partner States sign the EAC –EU-EPA on the same date it will project the EAC region as a functional
Customs Union
“Tanzania as current chair of EAC should take a
leadership role in signing the Agreement as it has been committed to the
negotiations since the formation of EAC-EU EPA configuration in October 2007.
Before that Tanzania was negotiating EPA under South African Development
Community (SADC) while the other 4-EAC Partner States (Kenya, Uganda, Burundi
and Rwanda) were negotiating the EPA under Eastern and Southern Africa (ESA)
configuration” Ms Awinja explains.
She further says that the UK exit from EU (as cited
by Tanzania) should not be a reason to back out as signing with the remaining
27 EU Countries presents the EAC bloc with clear opportunities for export
development. The agreement also gives the EAC.
According to her, Tanzania should be able to
observe the deadline set by the EU of 1st October 2016 for
ratification. After signing the EAC Partner States are supposed to ratify the
Agreement by 1st October 2016 so the Agreement can came into force.
Costs of Tanzania Failing to Observe the deadline
set by the EU on Ratification
· After 1st
October 2016 if `Tanzania would not have finalized ratification of EPA;
the country will lose Duty-Free Quota-Free Market Access to EU market. This leaves Tanzania with the EBA (everything
but arms), which is not a better option, as it will have more stringent rules
of origin requirements.
· Under EPA, EU
market access offer consists of 100 per
cent Duty Free, Quota Free access of EAC exports to EU, while EU access to EAC market consists of a gradual liberalization
of tariffs over three phases spanning over
25 years, eventually reaching 82.6 % of imports from the EU by 2028.
· Aiming at
maintaining EU market preferences Tanzania may be compelled to opt for
Everything But Arms (EBA) trade regime. While EPA is expected to create
some level of predictability and transparency in trade regime between EU and
EAC since the Agreement is negotiated between the two parties, EBA does not
since it’s a unilateral scheme provided by
EU to Least Developed Countries (LDCs). More importantly under EBA eligible
members are assessed periodically by EU to ascertain their eligibility.
In addition, EBA contains stringent Rules of
Origin while their Sanitary and Phytosanitary (SPS) and Technical Barrier to
Trade (TBT) measures are non-negotiable.
· Trade
relations between Tanzania and EU will be disrupted given the fact that EPA is a continuation
of Lome Convention of which business community were familiar with in
terms of Rules of Origin, SPS and TBT.
· Given the
prospectus of natural gas and Tanzania vision of attainment of middle income economy by 2025, EBA will not be the best option as Tanzania will not be permanently categorized as LDC.
·
Most
of investments in Tanzania (especially in floriculture) which are using
EPA trade arrangement to export in EU duty free and quota free are likely
to relocate
to other EAC countries in order to be able to
continue enjoying trade preferences.
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