Report: EAC members risk losing Europe aid over EPA

Dar es Salaam. East Africa Community member states could lose aid should they fail to sign the Economic Partnership Agreement (EPA), a new report has suggested.

The New Times of Rwanda yesterday quoted the secretary-general of the African Caribbean and Pacific Group of states (ACP), Mr Patrick Gomes, as warning that refusal to sign the deal with EU was not without consequences.

Two EAC members — Tanzania and Burundi — have rejected the deal.

Rwanda and Kenya have embraced the deal while Uganda has remained unclear on the agreement that requires all the countries to sign it as a bloc.

A technical team formed to iron the differences is reviewing the agreement before the bloc issues its verdict by February 2017.

The refusal by the other countries to sign EPA could subjected exports from Kenya to the EU to fresh taxation.

The reports say other countries except Rwanda could be the target of the aid threat after declining to ratify the EPA. The Times if Rwanda quoted Mr Gomes as saying that aid to the poor countries must be tied to trade agreements.

“The truth is that Tanzania, Uganda and Burundi, which are sluggish in signing the deal, could end up losing important development aid from the EU,” Mr Gomes told the 32nd conference between the ACP and the European Union (EU) in Nairobi on Wednesday.

However, withdrawing foreign aid could be viewed as an attempt to arm-twist the countries into accepting the trade pact which Tanzania has dismissed as harmful to its planned industrialisation drive. Tanzania government officials argue that opening up its domestic market to free competition by superior EU markets would be suicidal.

“EPA comes, not only with trade opportunities with Europe, but development aid as well,” Mr Gomes pointed out while speaking after the EU opened a new avenue for Kenya to walk it alone to the trade pact, which had initially been discussed by the five EAC countries. ACP is composed of 79 African, Caribbean and Pacific states that are signatories to the Cotonou Agreement, also known as the “ACP-EC Partnership Agreement” which binds them to the European Union.

European Parliament President Louis Michel said Kenya could sign a bilateral trade agreement with EU, pointing out that a similar deal had been struck with South Africa. He added that concerns raised by Tanzania and the other EAC member states were misplaced.

But even with the standoff, Mr Gomes was still hopeful that Kenya could still convince its regional neighbours to reach a quick agreement about the signing of the deal.

Under the bilateral trade agreement, EAC members are to get quota-free and tax-free to the EU market, while they would be required to reciprocate in a phased structure.

EU is the biggest market for Kenya’s fragile exports like flowers, fruits and tea.

ACP has asked EU to be flexible and allow Kenya to sign EPA individually, if regional blocs frustrate the collective approval.

Mr Gomes, however, asserts that signing as a bloc is still the best option.

“The significance of signing EPAs as a bloc is that regional countries can integrate their markets and have a bigger bargaining ability.”