EAC states demand development deal before signing EU trade pact

According to the bloc’s Secretary-General Mr Juma Mwapachu, although the partner states are willing to sign a deal on the framework, concerns over development assistance have prevented them from doing so. "We need some breathing space so that we work towards what is best for us with regard to development. They need to have some provisions to address the supply side constraints", he said.

He said the provisions under the European Development Fund (EDF) are not sufficient to reward the region should it enter into comprehensive Economic Partnership Agreements (EPAs) with the European Commission (EC).

"We are willing to sign the framework and our ministers have been in Brussels to re-affirm that, as long as development needs are addressed", Mwapachu told a media briefing in Nairobi.

Experts at the United Nations Conference on Trade and Development (UNCTAD) have already urged countries negotiating EPAs to ensure that the deals have specific components on development that would help alleviate the costs inherent in entering such pacts.

"Infrastructure improvement should be among the key priorities of these EPAs. Helping Africa to put in place the hard and soft infrastructure needed to strengthen economic integration among African countries could pave the way for higher FDI flows and more intra-African trade", the agency said.

Permanent Secretary at the Ministry of EAC Affairs Mr David Nalo said countries still have concerns over the Most Favoured Nation (MFN) clause and are thus reluctant to sign the FEPA.

According to the World Trade Organisation (WTO), the MFN is a status handed by one nation to another in international trade, such that the receiving nation will be granted trade advantages (for instance, low tariffs) that others nation do not receive.

The EAC’s hard stance is likely to add onto the EC’s woes which just three weeks ago renewed pressure on Kenya and other East African states to sign the FEPA citing "a slow pace of proceedings".

However, Kenya’s Trade Permanent Secretary Dr Cyrus Njiru has downplayed Europe’s latest concerns, saying that Kenya and other EAC states are optimistic of signing the FEPA on time.

"The deadline is not cast in stone. We are willing to sign when we are ready to", he said in an interview with Business Daily, noting that most of the issues in the negotiation text have already been agreed upon.

President Kibaki recently said that Kenya would conclude negotiations with Europe and sign the framework by the end of this month. But meeting this deadline now seems unlikely going by Mr Mwapachu’s sentiments.

Nevertheless, Mwapachu said they are still committed to negotiations because of the potential impact on the regional economies should they fail to sign. "We are talking and we are sure something will come through that is good for all of us", he said.

Analysts believe that failure to sign the FEPA could result in trade disruptions for Kenya and other EAC countries. Trade with Europe would revert to the less generous market access terms under the Generalised System of Preferences (GSP), which Kenya estimates would see some of its products currently being exported to the EU at zero rates attracting duties ranging from 8.5 to 15.7 percent.

By Odhiambo, Allan; Reuters (Business Daily, Nairobi)

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