Tuesday, June 2, 2009

Uganda MPs oppose new trade deal with the EU

By CHARLES KAZOOBA - June 1 2009 , www.theeastafrican.co.ke

Ugandan legislators have recommended the suspension of trade talks between the East African Community member states and the European Union.

The talks, which will lead to the signing of Framework Agreements this July, are aimed at opening up markets in the Community member states to EU goods, a move they argue is detrimental to the region’s industrial growth.

The MPs arrived at the position following their consultations with trade activists, the private sector and government officials.

The MPs on the committee of Tourism, Trade and Industry, in their report to parliament, have urged the EAC member states to pull out of the negotiations before any concrete agreements are signed.

The MPs argue that the market access offer as provided by the Economic Partnership Agreements (EPAs) is questionable.

According to them, “it creates a commitment to open the region’s markets to goods from Europe yet we also need to build our industries. We risk killing our young industrial sector with the EPAs the same way the industries in Jinja were killed with liberalisation.

The deal only makes it slightly easier for the African, Caribbean and Pacific (ACP) countries to export to Europe.”

The MPs argue in their 16-page report that the EPAs require ACP countries to dramatically open their markets to imports from Europe. The report was supposed to be tabled more than a week ago for general debate.

Uganda’s Trade Minister Nelson Gagawala had earlier defended the EAC-EU trade deal saying the bond between the two blocs would strengthen trade relations.
“This process is still on-going. It is prudent to conduct trade with an agreement instead of none at all.

The Cabinet met and made a resolution to sign the EPAs,” Mr Gagawala told the MPs, adding, “We are benchmarking the EU as our best friend in the region.

Preferential treatment is acceptable because if the EU signs a better agreement with another country, they will be obliged to do the same for us.”
However, the MPs’ report is expected to be supported by the private sector once it is made public.

Trade analysts say the government’s position will have to be reviewed, after parliament sided with trade activists against what they termed hostile EPAs.

“The EAC must not lock itself in the EPAs with provisions that prohibit the future development of our countries through value addition to our products. The EPAs, as they are, lock East Africa in the bracket of producing raw materials,” the MPs warn.

Although the EU has given ACP countries significant market access since 1975, trade between the two blocs has been decreasing. ACP exports to the EU fell by more than a half, from 8 per cent in 1975 to 2.8 per cent in 2000.

The EPAs are a reciprocal World Trade Organisation-compatible trade arrangement that replaced the previous Lome and Cotonou non-reciprocal preferential trade arrangements extended by the EU to ACP countries.

Under the Lome and Cotonou agreements, the EU discriminated in favour of ACP exports by charging them zero or lower duties than similar imports from elsewhere.

The ACP did not extend the same treatment to the EU. This arrangement, which had been deemed to contravene WTO rules, lasted to December 31, 2007.