I wish to refer to the headline which appeared in your newspaper of November 30 entitled “EU deal will hurt East Africa, Oxfam warns”. The EU is of course the key trading partner in this region and also by far the largest provider of development grants.
Trade, while not a magic wand or silver bullet, can be a powerful tool for development. Properly targeted and timed, in a progressive way, flanked with development assistance, it is an engine for growth, job creation and poverty elimination. This is the real reason why the agreement which was signed in Kampala late last month is so important and such headlines miss the point.
We often hear people say that EPAs (Economic Partnership Agreements) are not fair. That they will open markets in this region to EU trade, at the expense of local businesses, growth and employment. This is simply not true. Our agenda is not about opening ACP markets to our own exports. And EPAs are not about forcing new rules on ACP regions either.
The framework agreement signed in Kampala, which leads to an EPA next year, does not mean “free trade” between the EU and EAC from January 1, 2008. From the EU side, there will indeed be the full removal of tariffs and quotas, with only a temporary exception for sugar and rice.
This means that all Rwanda’s and other EAC countries products have free access to the EU market.
But from the EAC side, we have agreed to progressive trade opening. And there is a deliberate double meaning in the use of the word “progressive”. The first step is to strengthen local markets and make the region more attractive for investment. The EPA will then bring such a regional market into closer economic partnership with the EU and gradually – very gradually – liberalise trade between the two.
To be clear: the current Cotonou trade arrangements will lapse at the end of this year because they are out of line with WTO rules. We managed to get a special waiver to protect the interests of ACP countries but this waiver lapses at the end of this year.
We also have a need to make sure that our special trading relationship is compatible with international trade rules so that other countries in the WTO do not challenge it and therefore potentially take it away from us.
We believe that we can defend together in the WTO a complete exclusion by EAC countries of one fifth of their trade from any market access liberalization vis-à-vis the EU. This is what the present agreement will allow.
In addition, we all must recognise that the trade advantages which ACP countries have up till now enjoyed, though well intentioned, have not succeeded in their objective of promoting sustainable development in the region.
Although EAC and the other ACP countries have much better preferential access to the EU’s market than other developing countries, their share of EU and world trade is falling. We needed to address this together. EPAs offer the opportunity to bring together our trade and development policies more coherently than in the past.
I would like to underline two other essential facts about the agreement. It very importantly includes a simplification of rules of origin for apparel products. Clothing companies established in the EAC will be able to source fabrics from all over the world and export their products to the EU free of duties and with no quota restrictions.
In addition, the agreement is accompanied by well-targeted development support that will address capacity constraints and be channeled towards regional programmes, notably infrastructure, in order to underpin regional integration.
The EPAs, of which the framework agreement signed late last month is the first and vital step, are an opportunity for EAC and the other ACP countries to fast-track their way to regional integration – building bigger markers, attracting investors and thereby stimulating growth and development.
The writer is the Head of the EC Delegation in Rwanda