Article written

  • on 22.03.2010
  • at 08:15 AM
  • by Staff

East Africa: EU pushes for progress on EPA trade deal 0

BRUSSELS- The European Commission (EC) is increasing the pressure on the East African Community (EAC) to sign the free trade deal known as an economic partnership agreement with the EU.

Jacques Wunenburger, head of the economic partnership agreement (EPA) Unit at the EC, told IPS: “If no EPA is concluded, then these countries would be accommodated under either the ‘Generalised System of Preferences’ or ‘Everything But Arms’, as there is no other trade instrument available”.

Both options would entail more stringent rules of origin and higher duties on EU imports than an EPA, he said, burdening companies that buy machinery and capital goods from Europe.

The interim EPA, also known as a Framework EPA (FEPA), is the first legally binding step towards a full EPA, a new trade framework that replaces the preferential, non-reciprocal trade system between the EU and the African, Caribbean and Pacific Group of States (ACP) that expired in 2007.

Talks have stalled due to EAC fears concerning reduced policy space, declining tariff revenue, and damage to local industry from EU imports. Compensation aid has also been a source of dispute.

The deal would require Burundi, Kenya, Rwanda, Tanzania and Uganda to liberalize tariffs on 82.6 percent of EU goods imports by 2033, while the EU liberalises all tariffs on EAC goods imports, with transition periods for rice and sugar.

David Hachfeld of Oxfam Germany told IPS that tariff liberalization could cause enormous revenue losses for the EAC.

But Wunenburger insist that such fears are exaggerated: “Commentators often refer to the costs of EPA, such as fiscal losses due the lowering of customs duties, without considering that tariff dismantling could attract more trade, and increased volumes could partially offset the reduction of duties.”

Reductions in tariff revenue will be gradual.

Hachfeld further argues that EPAs could depress local industry. He told IPS: “EAC countries would never be able to increase industry in competition with the EU, and might not see a rise in exports, except in basic food products.”

Finally, he criticized the controversial Most Favored Nation (MFN) clause, whereby the EAC would have to offer the EU the same trade terms as they offer other large countries and regions.

By Adam Robert GreenIpsAfrica

subscribe to comments RSS

Comments are closed

P.IVA 11273390150
Direttore Responsabile Giuseppe Frangi