the eac Geneva forum
Every two months, delegates from the missions of the five EAC countries to the World Trade Organization meet in Geneva to discuss issues of common interest to them at the WTO. This EAC Geneva Forum also improves information sharing between delegates and the grassroots in their respective countries, trough the provision of update notes prepared for them by the local civil society on issues related to the interplay between national, regional and international trade policy.
Making the Tripartite Free Trade Agreement work for the interests of EAC Countries
Tuesday, 17 July 2012
The 4th EAC Geneva Forum meeting under the PACT EAC project was held on 17 July 2012. EAC Member countries’ WTO negotiators gathered to discuss the topic “Making the Tripartite Free Trade Agreement work for the interests of EAC Countries” as well as trade facilitation measures in the context of this arrangement. The discussions, facilitated by CUTS International, revolved around the potential trade and related opportunities and challenges that will arise from the FTA for EAC countries. Delegates also considered perspectives from the ground on this issue as well as their potential role in addressing the challenges.
Negotiations for the establishment of an integrated market of 26 countries were launched in June 2011 by their respective heads of State. Together the countries have a combined population of nearly 600 million people and total GDP of approximately US Dollars 1 trillion. The tripartite integration process is rooted on three pillars of: a) market integration aimed at creating a wider market; b) trade facilitation and infrastructural development to enhance physical connectivity and reduce costs of doing business in the region; and, c) industrial development to address productivity capacity constraints. The potential for the FTA to enhance the livelihoods of its people is not in doubt. However harnessing the opportunities that will arise from the FTA is not automatic, and therefore calls for a strategy at the national, regional and international level, in order for the Members to optimally benefit from this arrangement.
In order to facilitate exchange of views among the delegates and inform them about how the EAC-COMEASA-SADC Tripartite Arrangement is perceived by stakeholders on the ground, Julian Mukiibi presented five short country update notes prepared by project partners in consultation with the grassroots in the respective countries, including with the government, private Sector, CSO's, Media and academia among others. These notes analyse the potential trade and related opportunities that will arise from the FTA, current and expected trade pattern/relationship between each country and the tripartite blocs before and after the implementation of the arrangement, and potential positive and negative changes as a result of the Tripartite FTA. They also make proposals for addressing the challenges and maximizing the benefits of FTA. CUTS presented highlights from the notes as follows:
- The Tripartite FTA is an opportunity to address the prevalent issue of overlapping membership in the three RECs by states parties, where two thirds of the 26 countries in the region are either in a Customs Union or negotiating alternative Customs Unions contrary to WTO obligations/rules;
- Negotiating capacity is a challenge for most of the Members, given that they are also engaged in other on-going negotiations such as the EPAs;
- In Rwanda the general feeling is that well as the proposed tripartite will enhance trade and related opportunities, there is need to undertake research on the impacts and outcomes, especially for the smaller country members. These should be catered for in negotiating the final terms of the tripartite. Therefore the process should not be rushed or expedited in order to avoid negative outcomes for some of the members;
- In Kenya it is anticipated that the tripartite will make the region more attractive for both local and foreign investors hence increased FDI that could also stimulate industrialization, and value addition for products;
- Given the regions large untapped natural resources, the tripartite could also present the capacity to optimally exploit these resources;
- However, caution is needed in order to avoid challenges such as polarization of investments towards the larger and more diversified economies in the region. This could be mitigated through compensatory schemes as is the case in the SACU Customs Union ;
- Loss of Customs revenue is also a concern for some member countries where this contributes significantly to national income (e.g. Burundi); there is therefore need for alternative fiscal arrangements that would compensate the resulting loss in revenue foregone;
- Short-term negative impacts of the tripartite will include loss of employment and decrease in outputs for different sectors in concurrence with a countries competitiveness;
The ensuing discussion among EAC delegates to the WTO brought to light the concerns of small economies on the impact of the TFTA on their private sector, which might be unable to compete with more competitive firms from the region. They were wary of opening their markets to products from South Africa, which is the largest and most diversified economy in the region and main producer of goods and services in sub-Saharan Africa. In particular concern was the unclear implications of the South Africa-EU Trade and Development Cooperation agreement (TDCA) on the future TFTA. It was felt that this is an area that urgently needs to be investigated. In order to enable small economies benefit from the TFTA and other trade agreements, it was pointed out that there is a need for support measures and government interventions backed by sound competitiveness strategies to ensure that their SMEs can survive. This aspect should be addressed in the trade agreement in the form of a “Competitiveness fund” that would support the most vulnerable parties in achieving this objective. Another issue of concern was the fast pace of trade negotiations on all fronts, from EPAs and the TFTA to the WTO and bilateral agreements. This hampers coordination among different negotiating teams and their capacity to analyse the implications of their overlapping membership. It was felt that EAC countries need assistance in identifying competitive sectors that can compete within the EAC, within the TFTA and internationally in order to negotiate terms that are beneficial to them. Such analysis should also look at the implications of the TFTA both in terms of trade creation and trade diversion.
The delegates appreciated the concept of concise country update notes that are easy to peruse. The meeting concluded with the selection of topics for the next two EAC Geneva Forum meetings of September and November 2012, these are:
- Food security implications that bio-fuel subsidies in the developed countries would have for EAC countries.
- Analysis of services sectors in the respective EAC member countries to identify policies and regulations in place, those missing, or that need updating. This should be with a view to understanding the regulated and unregulated sectors, those that have attained competitiveness and therefore could be liberalised, and those that have not and need to be protected.
Download: Full report (.pdf)
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