The signing of the EAC-EU EPA deal in Brussels, Belgium, by trade ministers for Rwanda and Kenya is a step in the right direction, business leaders and officials have said.
Rwanda’s Trade and Industry minister Francois Kanimba and Kenya’s trade cabinet secretary Adan Mohamed, put pen to paper pursuant to the EAC Council decision earlier in the year for the EAC to sign the Economic Partnership Agreement (EPA) with the European Union.
“This is a step in the right direction. As EAC gears up for the Summit of Heads of State next week, EABC calls on the three other Partner States to also reconsider and agree to sign EAC-EU Economic Partnership agreement,” East African Business Council (EABC) chief executive Lilian Awinja told The New Times.
An extraordinary summit of the EAC Heads of State is slated for Dar-es-Salaam, Tanzania, next week, according to Richard Owora Othieno, the EAC head of corporate communications and public affairs.
Earlier this week, Othieno said key issues to be discussed include the EAC-EU EPA deal.
Awinja said the deal is part of the agenda for the forthcoming summit.
“As the EAC Council of Ministers are preparing their report, let them consult widely, consider private sector positions and if there are contentious issues let them be tabled for the Council to discuss them,” she said.
The Council of Ministers is the central decision-making organ of the EAC.
The move by Rwanda and Kenya is momentous as, previously, negotiation for the trade deal which started in 2007 encountered challenges. The bloc countries often failed to agree, resulting in postponement of the deadline several times.
In July, Tanzania’s foreign affairs permanent secretary Aziz Mlima said his country will not sign the agreement, citing the “turmoil” that the EU is experiencing following Britain’s exit.
The objectives of the agreement include promoting regional integration, economic cooperation and good governance in the EAC; and contributing to economic growth and development through the establishment of a strengthened and strategic trade and development partnership consistent with the objective of sustainable development.
The deal also seeks to foster the structural transformation of EAC economies, and their diversification and competitiveness by enhancing their production, supply and trading capacity; while improving EAC capacity in trade policy and trade related issues are among the other goals of the deal.
Asked what the signing means to the Rwandan private sector, Stephen Ruzibiza, chief executive of Private Sector Federation (PSF), said the benefits can be looked at from the cost benefit analysis measured as tariff revenue losses against the duties the country would avoid paying if they export to the EU market under the EU’s generalised system of preference scheme.
“Revenue losses are higher than the duties at the EU border if there is no EPA,” Ruzibiza said.
If EPA were not signed and ratified by all EAC partner states by September 30, Kenya feared that it stood to lose its market to the EU, having significant impact on her economy.
Kenya faced the risk of being removed from the EU’s generalised scheme of preferences trade regime for live plants and floriculture products, hence attracting even more duties under the ‘most-favoured nation’ rates.
Kenyan exporters would be subjected to import duties of between 5 per cent and 8.5 per cent.
In a statement, yesterday, the Kenyan government said the signing by the two countries signaled a start of the EAC partner states’ effort to secure the duty-free quota market access to the EU.
“The signing of the EPA sends strong signals to the EU on EAC partner states’ commitment to the EPA,” the statement said.
On Wednesday, Mohamed appeared before the EU parliament where the matter to lock out Kenya from the EU market after October 1 was being discussed and assured them of EAC commitment to EPA.
Efforts to get a comment from Emmanuel Hategeka, permanent secretary at Rwanda’s Ministry of Trade, were futile by press time.
However, responding to the EPA issue in the recent past, Hategeka said “we all benefit as it is going to be a reciprocal agreement that clearly takes into account the stage of development at which EAC countries are at present.”
Michael Ryan, the head of EU Delegation to Rwanda, said Kenya and Rwanda had made the best choices as some of the countries that stand very much to lose if there is no ratified economic partnership agreement with European Union.
“I hope the others follow along at some stage and see sense, although I understand their concerns and we have done everything we agreed at the EU level to address a number of concerns, he said.
“The concerns involve fear of potential European investors who might dominate and become more competitive in the East African market. But there are many safeguards and measures in the EPAs to protect partner states’ manufacturers and traders, so there should be nothing to worry about.”