Africa-Europe trade pacts give Uganda tough choices
| http://www.observer.ug/index.php?option=com_content&task=view&id=4065&Itemid=68 |
| Written by Devapriyo Das / The Observer |
| Thursday, 02 July 2009 05:51 |
| When it comes to fair trade, African countries often find themselves caught between a rock and a hard place. The East African Community (EAC) finds itself in a similar position as it tries to conclude negotiations with the European Union (EU) over the European Partnership Agreement before the July 31 deadline.
Scheduled to wind up in Mombasa, Kenya, the negotiations are bound to take on a more difficult direction due to the global economic recession that has not only forced some European countries to become more protectionist, but also cut aid to poorer nations. In so doing, European nations are backtracking on the most crucial issues in the negotiations, which have been a bone of contention since the talks started more than seven years ago. On its part, the East African community has a weak bargaining chip. As the block continues to absorb the secondary effects of the global economic recession, exports to the lucrative markets in the EU are dwindling. Signing the EPAs is one of the slim chances the EAC has to increase its exports to the EU, making the final round of negotiations tension packed. On a broader scale, any disagreement among the five East African countries; Kenya, Uganda, Tanzania, Rwanda and Burundi, over whether the EPAs should be signed or not could destabilise the East African Community. According to the European Commission, the African, Caribbean and Pacific (ACP) region countries’ share of EU imports fell from 6.7% in 1976 to 2.8% in 1999, and their share of world trade fell from 3.4% to 1.1% over the same period, despite the World Trade Organisation (WTO) rules giving them preferential access to European markets. In 2000, the WTO declared preferential access to Europe by African, Caribbean and Pacific countries illegal because it excluded other developing nations, and was not reciprocal. The EPAs, which have been negotiated since 2002, and whose framework the EAC initiated in Kampala in 2007, are structured to enable reciprocity, and give ACP exports access to a European market comprising some 500 million people. Uganda’s private sector and civil society are worried that the criteria stipulating increased development aid through the EPAs are not being taken seriously. “Up to now, the Europeans continue saying ‘No’”, observes John Ssempebwa, Director of Trade, Private Sector Foundation Uganda. “We hoped EPAs would provide further resources for roads, railways – this is not happening.” The development carrot was dangled before the EAC as an incentive to sign. It was also understood that the EPAs would work only if local industry was given funding and technical assistance to make it more competitive. For now, the EAC continues to grapple with high costs of production, like the poor transport network and limited power supply. “EPAs are about deepening the liberalisation of our economy,” said James Kintu, Policy Manager at ActionAid International (Uganda), a global advocacy group. “It will not be doing it to our advantage. We need to do this at our own pace and in line with our development priorities. In its current form, it does not promote poverty eradication or sustainable development.” ActionAid and trade rights groups believe that the fledgling local industries will be stifled and out-competed by better-equipped and funded enterprises from Europe and Asia, and the regional market flooded with foreign goods, if the EPAs are signed in their current form. “In fact, they are turning protectionist. We see no point why we should sign EPAs when others are protecting their economies.” Uganda could have declined to join the process, but the potential risk in this strategy probably outweighs the benefits. “The biggest threat to Uganda not signing is this: Kenya has to sign,” explains Ssempebwa, who is part of Uganda’s negotiating team. Kenya is not considered a Lesser Developed Country (LDC), and has non-preferential, non-guaranteed access to European markets via bilateral agreements. Ssempebwa adds, “When Kenya signs, the EAC Customs Union can’t work. The day Kenya signs, and the rest don’t sign, you can’t enforce the Common External Tariffs because you don’t know what they will have agreed. The EAC will disintegrate immediately.” “We need to address reasons why 30 years of trade preferences have not been enough to stimulate development. ACP and Lesser Developed Countries trade has not diversified while productivity has lagged behind other countries with less privileged market access.” He argues that “EPAs will help create viable regional markets with greater economies of scale,” and will boost regional integration while addressing development needs. He also believes they will “forge explicit links between trade capacity needs and development finance; set up transparent rules to promote the services and investment LDCs need; reduce the costs of trade by better co-operation and trade facilitation; and allow negotiation of new and simpler rules of origin that meet EAC needs.” But Ssempebwa predicts that under the EPAs, changes will be slow in the first 10 years of the agreement. Uganda’s most traded products will remain the same as of now: coffee, fish and flowers. EAC negotiators are worried that European farmers are over subsidised, and this will make it difficult for African products to compete against them. Negotiators want these subsidies, which could also see more European products dumped in local African markets, reduced before any discussion can take place on rules governing intellectual property rights, government procurement, investment and competition. Gagawala puts it into perspective when he says; “Trade is basically a game, and a game means all players must have approximately the same facilities. Now, the football field for LDCs is not slashed, there are thorns, they don’t have proper gumboots. We’re saying the supply side constraints and issues of equity and parity must come in whatever we do [with EPAs].” Ssempebwa believes tourism and labour exports, rather than agriculture, will serve as catalysts for growth and will benefit from EPAs. Rouse agrees: “The growth of services is one key reason LDCs need a new kind of trade agreement. Services have overtaken agriculture as the largest share of LDC economies.” “Uganda doesn’t have a policy on export of labour,” Ssempebwa says. “It has just happened [but] we’re going to establish the kind of labour that Europe is not comfortable supplying.” This mostly involves essential sectors like nursing, transport and security services, where Uganda’s cheap labour is expected to have competitive advantage. As it is assumed that this labour will be for export, Europe will have to relax its visa regimes to allow for freer movement of labour. For the European Commission, EAC-EU EPAs will lead to regionally integrated, predictable markets which will deliver higher investment flows, growth and employment. That maybe true, but no figures exist to prove this. “No model has been built and that is the technical danger we are in,” warns Ssempebwa. “We just rely on gut feeling.” // < …
written by Epak , July 02, 2009 It is amazing to hear some folks urguing that the EPA to be signed between the EC and EAC will give Uganda tough choices!!! Let us be realistic! The EPA is likely to grant Uganda and other EAC countries duty free and quota free access for their products to the European market. What makes this a hard choice for Uganda and those other countries in the Community?? The situation with Uganda now, is that Uganda can export anything to Europe without paying any duties under the Everything But Arms (EBA) arrangement. Then why hasn’t Uganda managed to penetrate the European market? Definitely it is not because the Europeans have given Ugandans a bad deal. The reality is that we are lazy and we want to always rely on donations and handouts. It is high time our people produced for international markets. There are internatuional standards to be observed, and regulations governing international trade in the form of Rules of Origin if we want to take advantange of the existing preferential arrangements. Our failure to do this on our part should not be blamed on the Europeans or our other trading partners for that matter. The EPA will replace the trading arrangements under the Cotonou Paertnership Agreement that was signed in 2000. This replaced the successive Lome Conventions that had roots in the Yeounde Convention of 1975! These Conventions gave preferential trade arrangements to ACP countries in the European market!! What do we have to show for these preference? Instead the market share in the key markets has shrunk and ironically, the market share of countries that had no preferences increased over the years!! This should teach us that it is not preferences that are going to improve our trade with the rest of the world, but our countries have to address other factors like governence, security, infrastructure, etc. No business person will put their money in a place that does not have the basic international benchmarks. The EPA is not being dictated by Europe but other countries without preferences are demanding, and rightly so, that Europe observes the Most Favoured Nation Treatment (MFN) under the WTO rules. This is the cornerstone of the WTO arrangement and it requires all trading partners to be treated in the same manner under similar conditions!! All the EAC countries are members of WTO and as such can not rune away from their obligations. Uganda is not being given tough choices, Uganda should wake up and take advantage of the favourable trade arrangement that existing instead of whining!!! |
