Wednesday March 1 2017

Uganda struggles to deliver EPA to success

Tanzanian president John Pombe Magufuli (L) and Ug

Left t right: Uganda’s Yoweri Kaguta Museveni , Tanzanian president John Pombe Magufuli and Rwanda’s Paul Kagame interact shortly after a group photograph during the 17th Summit of the East African Community in Arusha, Tanzania in March 2016. Uganda believes it is a good thing to sign the EPA, and the country is striving to see that all EAC member countries sign the deal. FILE PHOTO 

By DOROTHY NAKAWEESI & ISMAIL MUSA LADU

Despite the lack of consensus among the East African Community (EAC) partner states over the signing of the Economic Partnership Agreement (EPA) with the European Union (EU), Uganda still believes that all is not yet lost.
Already Rwanda and Kenya have gone ahead to sign the deal, with the former’s Parliament even ratifying it.

As for Tanzania, she has refused to append her signature on the dotted lines after raising several objections which ultimately resulted in the Tanzanian Parliament voting against the deal.

Meanwhile, Daily Monitor understands that Uganda and Burundi who are yet to sign the pact, are reading from the same script, with the latter playing a leading role to broker consensus among the split member states.

In a meeting last week at the ministry of Trade in Kampala with Mr James Wharton, the U.K Undersecretary of State for Trade/DFID, Ms Amelia Kyambadde, the Trade minister, said Uganda is ready to sign the agreement, although it will prefer to sign it as a block.

She, however, said a meeting of the regional heads of state will happen soon and a decision regarding the pact will be arrived at, stressing that as a country, Uganda is committed to signing the deal.

On his part, Mr Wharton, said even as they are negotiating their way out of Brexit, something that could take not less than 24 months, he urged that the deal be concluded amicably.

When interviewed for this article last week, the Permanent Secretary, ministry of Trade, Amb. Julius Onen, said: “We are not going to allow EPA to disfranchise EAC. What is happening now is that this issue (EPA) is being blown out of proportion by a group of people.”

He continued: “Even with all that is happening (such as Tanzanian’s objection), it is not the end of the world for the EAC region. As we speak now, we are negotiating with USA. China and Iran are also interested in doing business with us and so are a host of many other countries.”

Mr Onen whose understanding of trade dynamics is highly commendable, let alone his astute appreciation of global trade interplays, says that it is too early, and for that matter, unreasonable for the critics to declare EPA as dead.

In fact, he disclosed that a summit (meeting of the EAC heads of state due in March) will meet and pronounce themselves on whether the community should sign the EPA collectively or as individual partner states.

The heads of state were supposed to make a pronouncement in October last year, but postponed it to January before cancelling it again to February. Reliable sources have intimated to this newspaper that the heads of state will meet next month.
In-roads
Mr Onen said: “Uganda does not want to see a weakened EAC, this is why as a country we are trying to see that we are all pulling from the same direction. And Burundi has since agreed with us on this. We want to sign EPA collectively and from a very high-level we are trying to see that happens. If that fails (signing collectively) then that will not be the end of EAC. It is the regional partner states that introduced the aspect of collective signing under the article 132 (2).

And if need be we can go back to that article and simply remove the word collective so that a country that is ready goes ahead with the deal - sign, ratify and enforce it.”

According to Mr Onen, about 60 per cent of the trade in the region happens among the member states. However, he stressed that it is important for the region to make inroad into the EU market. And that is why it is important to commit to the market access that has been negotiated under the EPA.

Sticky issues
According to the EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) Meeting held in Arusha, Tanzania in early February, Kenya and Rwanda had no concern in relation to the signing of the EPA. But despite being on the same page with Kenya and Rwanda, Uganda wants the partner states to sign the agreement as a bloc. She also wants available options explored in the event that some EAC members, as it is the case already, go ahead and sign the EPA without others doing so.

As for Burundi, her main concern was the decision of EU to unilaterally suspend direct partnership with her government.

And for Tanzania, the issues of contention are several, including being wary of the effects of EPA on EAC industrial development. Tanzania is also concerned about how the revenue losses resulting from substantial trade liberalisation will be bridged.

The effect of Brexit is also among the things causing the largest EAC country sleepless nights, considering that UK is one of the major EAC trading partners.
Other concerns raised in the meeting include queries regarding how the EAC partner states will operationalise Article 13 (2) on movement of goods while there is no free circulation of goods in the region and no refund mechanism for customs duty paid to another partner state.

Some members are also concerned about how the bilateral and multilateral safeguards will protect the EAC domestic industries against any economic injury.
Members are also wary about how an individual EAC member can denounce the EPA if she feels that her interests are interfered with. Another concern is how the EAC will bridge the gap in their balance of trade with EU while continuing trading with raw materials.

EU’s views
The press and information officer, EU Delegation to Uganda, Mr Emmanuel Gyezaho, responding to the developments, said: “I fully share the idea that EAC regional market needs to be consolidated but this does not mean that the EAC should drop the Economic Partnership Agreement with the EU.”

“It is our expectation that those discussions will be constructive. Already, Europe as a block has signed. Now we wait for the EAC,” he added.
On the issue of EU’s suspension of partnership with Burundi, Mr Gyezaho said Burundi is not suffering from any trade sanctions from the EU.

He said Burundi can sign the deal, adding: “What is true is that the EU has imposed restrictive measures against (only) four persons.”

Private sector speaks

Mr Gideon Badagawa, the Private Sector Foundation Uganda (PSFU) executive director, urges that when Uganda signs the EPA, she agrees to open up her market.

“Whatever we do, this is where the world is now moving to. Open access to markets as long as one meets the market requirements. We will have duty-free and quota-free access to European markets,” Mr Badagawa shared. He added: “The advantage with the EPA is that the EU will have arrangements to help us build our capacities over the time and the requisite infrastructure. So it is in our interest to sign the agreement.”

Mr Badagawa, thinks that the benefits of signing EPA are much more to Uganda and the block. “We shall open to raw materials to enter EAC at zero duty and after seven years, we shall open to intermediate goods and after 25 years, to final goods. By that time, Uganda is expected to have developed its capacity to compete with final goods coming from the EU,” he said.
EAC trade with EU

The total value of trade of the EAC with the EU has never been so high, standing now at slightly more than Shs25 trillion. Even after Brexit, the EU still remains the biggest single market in the world. The EPA further prohibits them to EAC countries. Other provisions stimulating regional processing, eliminating customs red tape and protecting EAC infant industries, would help Uganda and the rest of the EAC to add value to their exports to Europe.

EAC-EU EPA

Economic Partnership Agreements (EPAs) are trade and development agreements negotiated between the EU and African, Caribbean and Pacific partners engaged in regional economic integration processes.

In other words, EPA is an initiative by the EU to secure free market access in the region and reciprocate in equal measure.

The EU-EAC EPA covers trade in goods and fisheries as well as development cooperation that aims to reinforce cooperation on the sustainable use of resources.

Further negotiations are ongoing to include services and trade-related rules in the future.

The deal is balanced and fully in line with the EAC Common External Tariff.
It bans unjustified or discriminatory restrictions on imports and exports, which contributes to the EAC’s efforts to eradicate non-tariff barriers in intra-EAC trade.

It supports the EAC’s regional integration agenda and has what it takes to foster development.

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