Trade Policy at Work

EU-EAC Economic partnership agreement (EPA): State of play & national perspectives

With a deadline of October 2014 to complete and sign the EU-EAC EPA looming, a number of important issues still remain to be agreed. At the 18th EAC Geneva Forum, EAC WTO negotiators discussed the challenges that their countries could face in implementing the agreement and different alternatives to overcome them. The participants also briefly discussed the state of play of the EAC countries concerning trade facilitation.

The state of play with regard to outstanding issues under the EPA

The main challenges identified in the Country Update Notes on the subject were the provisions on export taxes, as well as the non-execution clause based on Human rights and good governance. Nevertheless the consulted stakeholders on the ground felt that the EPA was developing well and the contentious points were very minimal according to them. The objective now is, through policy analysis, to identify and utilize the potential benefits of the EPA, but also to mitigate possible negative effects.

The EAC WTO negotiators observed that the EPA is likely to whittle away policy space for developing and least developed countries that was gained and is being maintained at the WTO. The developmental dimension of policy space is in line with empirical evidence throughout the history of economic development and has been advocated by various studies including UNCTAD publications as one of the means of ensuring sustainable economic growth of developing countries such as the EAC Member States. The EPA provides for extensive liberalization at zero rate for almost all industrial tariffs which risks stunting the growth of infant industries in the region. History has proven that completely opening the market without accompanying measures to protect the underdeveloped sectors will harm the sub-region’s trade and overall development. It was recommended during the discussions to develop a monitoring system which would assess the impact of the EPA on the various sectors in the region, and come up with policy prescriptions to avert negative impacts, once the agreement comes into force. Moreover, advocacy actions need to be taken to share information about this agreement and its potential impacts; as well as to involve private sector stakeholders in order for them to create a pressure group and intervene as constituencies in the future negotiations.

Needs and challenges of the EAC countries to implement trade facilitation measure.

A regular note discussing one or several WTO issue(s) was this time about the state of play of EAC countries on trade facilitation. According to the TFA, LDCs and developing countries would have one year after entry into force of the agreement to self-declare the categories of the different trade facilitation measures particularly Category B and C. Despite the failed consensus and uncertain current negotiations’ situation, this can be considered as an opportunity by the EAC counties to examine the status of their trade facilitation measures so as to accurately report the implementation status in the respective categories.

Following the discussions, Delegates expressed their appreciation of the forum materials, especially the brief nature of the notes that allows for quick intake of information provided.