THE EAC-EPA NEGOTIATIONS: STATE OF PLAY

1. THE EAC-EPA NEGOTIATIONS:STATE OF PLAY Presentation to SEATINI WORKSHOP By Silver Ojakol

2. THE EAC-EPA NEGOTIATIONS:STATE OF PLAY OUTLINE OF PRESENTATION Background EAC-EC EPA framework The EAC-EC Market Access Offer Key issues in the Framework Agreement conclusion

3. Background to the EPAs Trade relations between ACP and EU since 1975 governed by preferential trade agreements The latest of these was the COTONOU Partnership Agreement (CPA) 2000 Pitfalls of the CPA was violation of Most Favoured Nation (MFN) provisions of the WTO WTO Members were challenging the preferences A 6-year waiver was negotiated in Doha 2001

4. Background to the EPAs Waiver essentially meant that the preferential trade arrangement under COTONOU would come to an end December 2007 Launch of the EPA negotiations was result of the inconsistency with the WTO Rules

5. Background to the EPAs Everything But Arms (EBA) unilaterally offered in line with the provisions of Article 37.9 of the Cotonou Agreement. The EBA was for all LDCs but with access terms e.g Rules of Origin (ROO), labour issues, governance matters set by EU

6. Background to the EPAs Negotiations Launched 2002 at all ACP level 2003 at regional level to take care of unique regional issues Uganda and Kenya later Burundi and Rwanda negotiating under ESA Tanzania under SADC Situation was threat to EAC integration under the Customs Union Protracted EAC negotiation led to EAC configuration and initialing in November 2007

7. EAC-EC EPA framework Objectives Contributing to economic growth and development Promoting regional integration, economic cooperation and good governance in the EAC; Fostering the structural transformation of EAC economies establish an agreement consistent with Article XXIV of General Agreement on Tariffs and Trade 1994 ("GATT 1994")

8. EAC-EC EPA framework Principles Asymmetry, in favour of the EAC Party, in the liberalization of trade the application of trade related measures and trade defence instruments; �Allowing the EAC Partner States to maintain regional preferences

9. EAC-EC EPA framework contains Market Access offers made by both the EAC and EC to each other EC market access offer consists of 100% duty free and quota free access to imports from the EAC Partner States except for rice and sugar Duty on rice till Jan 2010 Duty on sugar till Oct 2009

10. EAC-EC EPA framework The EAC offers to liberalize 64% of her imports from the EU in 2010 Machinery and raw materials constituting the 64% already at 0% duty The EAC offers to liberalize a further 16% of her imports from the EU between 2015 and 2023 Intermediate goods at 10%duty

11. EAC-EC EPA framework The last basket of liberalization by the EAC constitutes 2% by 2033 finished products at 25% tariffs 18% products excluded from liberalization (reduced to about 17.8% after cleaning figures) �new� liberalization is 18% for EAC 16% liberalization on intermediate products plus the 2% liberalization of finished products

12. EAC-EC EPA framework Fisheries provisions that look at both marine and inland water fisheries and aquaculture With regard to inland fisheries, the provisions commit the EC to co-operation to improve access to the EU market, attract capital inflows and investment into the sector, enhance aquaculture production, remove supply side constraints and improve the quality of fish and fish products

13. Key issues in the Framework Agreement Standstill Clause (Article 13 ) Export Taxes (Article 15) MFN Clause (Article 16) Antidumping and countervailing Measures (Article 19.7) Multilateral Safeguards (Article 20.4) Bi-lateral Safegurds (Article 21.5b ) The Rendezvous clause ( Article 37)

14. Key issues in the Framework Agreement Standstill Clause (Article 13 ) � Except for the measures adopted according to Article 19 and 21, the Parties agree not to increase their applied customs duties for all products subject to liberalization under this Agreement� Modify the level of customs duties in various annexes relating to imports from the EC region to the EAC Considering: Regional integration Article XXIV of GATT 1994

15. Key issues in the Framework Agreement Export Taxes (Article 15) Criteria for use in determining use of export taxes Proposal to levy tax and inform EPA Council MFN Clause (Article 16) Proposal to raise a threshold from 1% to 6%! New proposal is to delete Article entirely Antidumping and countervailing Measures (Article 19.7) WTO rules to apply Multilateral Safeguards (Article 20.4) WTO rules to apply to provisions of para 1 Bi-lateral Safeguards (Article 21.5b ) Period can be extended by EPA Council for maximum 5 years

16. Key issues in the Framework Agreement The Rendezvous clause ( Article 37) Customs and trade facilitation (finalized) Focus on trade facilitation and capacity building Rules of Origin ( EAC dedicated session due next month) Focus on flexibility and cumulating TBT (finalised except for the development provisions) SPS (finalised except for development provisions) Focus on capacity building and technical infrastructure Trade in Services � EAC to make joint request but different offers

17. Key issues in the Framework Agreement Trade Related Issues Competition Policy Investment and private sector development Trade, environment and sustainable development IPRs Transparency in Public Procurement

18. Key issues in the Framework Agreement Agriculture DSU Development cooperation Other issues (Art 45.3)

19. CONCLUSION COTONOU governed trade regime but was in violation of WTO MFN Clause Waiver negotiated EBA is unilateral. EPA was the viable alternative Negotiations on course A few contentious issues though.