Why EAC should work as a bloc to negotiate trade deals

The 14th session of the United Nations Conference on Trade and Development (UNCTAD) will today come to an end in Nairobi, Kenya. It is one of the most important events for the global investment community, providing an opportunity and platform to interact trade-wise.

The 14th session of the United Nations Conference on Trade and Development (UNCTAD) will today come to an end in Nairobi, Kenya. It is one of the most important events for the global investment community, providing an opportunity and platform to interact trade-wise.

The conference brings together Heads of State and Government, ministers and other prominent players from the business world, civil society and academia to tackle global trade and economic development challenges.

Among the key issues the meeting tackled is the need to strengthen the evolution and management of globalisation, interdependence of trade, finance, investment and technology, and ways of advancing growth and development prospects, especially for developing countries.

One feature during this high-level trade conference is calling off the scheduled signing of Economic Partnership Agreement between East African Community (EAC) and European Union (EU).

Members of the EAC were split down the middle, with Uganda reportedly joining Tanzania in pulling out of the pact that would have guaranteed continued access to the European Union market without paying duty.

Of course, this arises from the recent Brexit.

It stood out that regional trade agreements are too difficult to negotiate, may be for defensive reasons, fear of individual interest being locked out or protection of existing preferential agreements in other areas.

Such reservations may ultimately slow down the higher ambitions and results sought by the crucial integration agenda. Trade gains from regional integration are one of the key economic objectives behind the creation of any trading bloc.

Turns out that member states’ decision to accept a regional agreement is informed by geopolitical considerations. 

However, the definitive success of the negotiations and the long-term viability of the arrangement should focus more on strong economic and commercial considerations.

Despite member countries having their own agenda on every deal, immense benefits from trade deals are easier to achieve when negotiations proceed among countries which are willing to unilaterally open to trade, or have actively supported multilateral trade like the East Africa Community.

It also increases their bargaining power with third countries by negotiating on common external barriers.

Economists argue that pursuing regional trade agreements helps form the building blocks for global free trade deals. Increasing trade will not only help individual economies develop but also drive growth around the region.

It would allow EAC economies to gain in terms of scale of exportation and consequently move up the value chain. Regionalism has been largely beneficial to the world trading system.

While there are multiple ways for governments to advance free trade, trade liberalisation can be further realised via multilateral, bilateral or regional mechanisms. 

It is understandable that regional trade negotiations intervene into domestic policies, and has been historically considered as over reaching, such as protection and enforcement of intellectual property rights, government procurements, administrative procedures, investment, competition, and legislation for services providers and sometimes environment.

Thus, negotiations are complicated by the fact that members try to reflect on their own terms.

Nevertheless, it should be noted that driving a regional bloc has its costs which each member must be willing to bare for the benefit of all.  

This lack of a common ground should alert policy-makers to devise strategies aimed at building on the opportunities and curtailing extreme demerits that may be caused by any regional agreements, including closely monitoring the negotiation basis and to ensure that the potential for trade imbalances is minimised.

At the same time trade liberalisation in the region implies simplifying rules and domestic administrative procedures. 

Regional economic integration should be facilitated by the fact that member states’ economies face the same conditions even if there might be some small indifference.

In fact, a regional trade agreement should fill such gaps and provide the expanded market for exports that is needed for greater growth –improving trade among East African countries would be an obvious way to open room for more trade ties.

The EAC must focus more on diversifying export structures as a bloc; this is a sure source of more intra-regional trade, as other regional agreements have demonstrated.

Another advantage is trade facilitation; it will not only do away with extremely bureaucratic procedures that act as non-tariff restrictions to trade but also foster further bilateral relations, as well as strengthen political and economic partnerships.

In conclusion, the motivation behind any given regional agreement depends on the nature of the deal being negotiated.

For instance, agriculture may be considered as key to these negotiations for East Africa, especially when we talk of export – we all import industrial goods.

The underlying advantages on either side are, therefore, not enormous as to warrant discord.

Definitely, a collective approach will provide more significant competitive advantage than countries going as individuals.

oscar_kimanuka@yahoo.co.uk

 

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