UNECA: SIGNING TRADE DEAL WITH EU WILL NEITHER SPUR ECONOMIC GROWTH NOR BRING WEALTH TO THE REGION’S CITIZENS

The United Nations Economic Commission for Africa (UNECA) says in a report that if East African Community signs an Economic Partnership Agreement (EPA) with the European Union (EU) , local industries will struggle to withstand competitive pressures from European Union firms, while the region will be stuck in its position as a low value-added commodity exporter.

“If the EAC-EU EPA is fully implemented, the region risks losing trading opportunities with other partners, industrial output, welfare and GDP,” report says.

The report titled Analysis of the Impact of the EAC-EU Economic Partnership Agreement on the EAC Economies is yet to be made public and is expected to be discussed by the Council of Ministers in the “days to come,” according to sources at the EAC Secretariat.

The report, commissioned by the EAC Secretariat, is likely to further polarise the position of the Community’s members on the EPA, which Kenya and Rwanda have already signed.

The two countries were opposed to the commissioning of the study that was requested by Tanzania towards the end of last year.

Uganda said it would only sign the EPA if there was consensus among the EAC members while Burundi refused to sign the agreement until the EU lifts sanctions imposed on Bujumbura in 2015.

Sources say Rwanda and Kenya have already said they will not discuss the report at the next Council of Ministers meeting.

The EU-EAC EPA promises duty-and-quota free access to EU markets for East African goods in exchange for a gradual opening up of the region’s markets to European products.

However, UNECA says the removal of taxes on capital goods from Europe will cause the EAC accumulated revenue losses of $1.15 billion per year. The market would be opened up over a 25-year period and capped at 80 per cent market access.

The UNECA findings are in direct conflict with a 2014 report by the European Commission, which shows that the region will experience an economic boom due to improvements in market access to the EU.

EAC has been negotiating the EPA since 2007 and the current differences reflect the divergent economic strategies of the member states. Rwanda which has a small industrial sector is pursuing a growth strategy based on building a knowledge-based economy while Kenya has a fairly developed industrial sector and perceives less risk from the EA.