MEMBERS of Parliament in Tanzania have dealt a crushing blow on hopes for the East African Community to sign the Economic Partnership Agreement (EPA) with the European Union as a bloc after rejecting it as a raw deal.
The lawmakers meeting in Dodoma last
week urged the government not to sign the Economic Partnership Agreement
(EPA) between the European Union (EU) and the East African Community
(EAC) member states saying they want a better deal that will protect the
country’s infant industries.
The agreement was tabled before the
house on Monday last week by the Minister for Industry, Trade and
Investment, Charles Mwijage for discussion. They argued that the country
would not be able to protect domestic industries against more
sosphicated European Union competitors.
The MPs now want the government to
negotiate a new deal which is more favourable to the country or
renegotiate the agreement on terms which would protect country’s
burgeoning industries. Tanzania is promoting an industrial economy as it
is focused to transform from an agricultural economy to a
semi-industrial economy by 2025.
Negotiations between the EU and the East
African countries over the trade deal have been going on since 2007 and
an agreement was finally reached in 2015. However, the implementation
of the deal has been impeded by MPs in both Tanzania and Uganda because
of concerns relating to EU exports harming domestic industries.
Lawmakers from both the ruling Chama Cha
Mapinduzi (CCM) and opposition parties have raised concerns that the
free trade deal will open up Tanzania’s markets to EU exports with zero
tariffs, which will damage the nation’s economy.
Tanzania’s major exports are
agricultural commodities such as tobacco, coffee, cotton, cashew nuts,
tea and cloves. The East Africa second largest economy enjoys duty and
quota free access to the EU and other developed markets due to its
designation as a least developed country (LDC).
Thanks to World Trade Organisation’s
(WTO) 10th Ministerial Conference in Nairobi in December last year,
LDC’s preferential trade provisions were extended to access into
developing countries as well.
Thus the incentive to sign the EPA could
not be strong enough to convince the MPs who were told the deal would
cost the country 853 million US dollars in lost revenue over the next 25
years.
EAC exports to the EU in 2013 amounted
to €2.2bn ($2.4bn) and consisted mostly of coffee, cut flowers, tea,
tobacco, fish and vegetables. While imports from the EU into the EAC –
mainly consisting of machinery and mechanical appliances, equipment and
parts, vehicles and pharmaceutical products – were €3.5bn ($3.9bn) over
the same period.
According to the leader of opposition
party Alliance for Change and Transparency (ACT) and Kigoma Urban
legislator, Zitto Kabwe, the EPA with the EU as it stands could cost
Tanzania between 700 and 850 million US dollars in lost revenue in the
next 25 years, while the whole of the EAC bloc – Kenya, Uganda,
Tanzania, Burundi and Rwanda – could lose 3.7billion US dollars.
“The tricky part is that the EU knows
that we will incur losses, but they don’t seem too keen on a
compensation framework,” he said. “We need to be firm.” Tanzania is yet
to ratify the EPA, despite East Africa’s biggest economy, Kenya, and
Rwanda signing the deal in September this year.
The trade deal had been expected to have
been signed and ratified by October 2016, however, Tanzania and Uganda
have not yet approved it. Some Tanzanian MPs, meanwhile, have raised
concerns that continued rejection of the EPA could damage cooperation
between the EU and Tanzania, particularly with regard to aid.
“Yes, we are rejecting this deal because
it is bad for our economy, but how far are we prepared to deal with the
consequences?” said MP Saada Mkuya, a former finance minister.
“I suggest that we start to prepare
early and allocate funds in the next budget for implementing development
projects currently financed by the EU.”
Meanwhile, the EU finally implemented a
similar trade deal with Southern African countries in October this year
after a decade of negotiations.
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