EA states looking outward for trading partners as local ties sour

East African Community Heads of State summit in Dar es Salaam, Tanzania on May 20, 2017. PHOTO | DPPS 

In Summary

• East African countries are moving closer to a deal that would allow them to negotiate free trade area agreements with new partners from Asia, the Middle East, South America and the European Free Trade Area.
• A report published by the EAC Secretariat shows that this is largely due to the region’s poor infrastructure at the ports and the main transport corridors, ineffective management of its tax exemption regime, lack of value addition to export commodities and delays in concluding trade agreements such as the EPA.

By JAMES ANYANZWA
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East African countries are moving closer to a deal that would allow them to negotiate free trade area agreements with new partners from Asia, the Middle East, South America and the European Free Trade Area.

This comes as declining intra-EAC trade and differences over the bloc’s trade agreement with the European Union threaten to stall joint regional integration projects and slow down the countries’ pace of economic growth.

It is feared that the emerging trade arrangement is likely to affect discussions on the stalled EU-EAC Economic Partnership Agreement, the Tripartite Free Trade Area and the Continental Free Trade Area agreement.

But the EU is confident that its trade agreement with the EAC will not be compromised by new trading partners seeking to strike deals with the East African countries.

READ: EAC-Europe trade deal signing put on hold

“The EU remains committed to the agreement reached with the EAC, which we still look forward to being signed and applied by all EAC partners. We understand that our partners need some time to continue their internal process,” Stefano Dejak, the EU’s ambassador to Kenya, told The EastAfrican.

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“Other trade initiatives by third parties just confirm the EU’s belief in the potential for economic growth of the East Africa region,” he added.

The EastAfrican has established that among countries that have expressed interest in signing free trade area agreements with the EAC are Turkey, China, Singapore, the United States and the European Free Trade Area, which consists of Iceland, Liechtenstein, Norway and Switzerland.

READ: Sigh of relief as Europe gives East Africa four months to sign EPA

Others are Brazil, India and the Gulf Cooperation Council, which is made up of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.

The EAC Sectoral Council of Ministers of Trade, Industry, Finance and Investment meeting in Arusha early last month adopted the terms of reference of a comprehensive cost-benefit analysis of the region’s trade with third parties.

The document, prepared by the EAC Secretariat, focuses on countries that have expressed an intention to negotiate free trade areas with the EAC.

A meeting of experts was convened on May 4 and 15, to consider the draft terms of reference.

The ministers urged the Secretariat to start preparing for negotiation with the third parties and develop a background paper for all negotiations that the EAC will engage in.

Currently, the EAC’s contribution to world trade stands at less than one per cent.

READ: US raises concern on future deals with EAC

A report published by the EAC Secretariat shows that this is largely due to the region’s poor infrastructure at the ports and the main transport corridors, ineffective management of its tax exemption regime, lack of value addition to export commodities and delays in concluding trade agreements such as the EPA.

READ: EA region needs $100b for infrastructure gap

Others are prohibitive non-tariff barriers, lack of a common position on duty exemption regimes by member states, thereby distorting the Common External Tariff and lack of a comprehensive investment plan to promote the EAC as a single investment destination.