Tanzania backs out of EU-sponsored EPAs

TANZANIA has become the first among East African Community (EAC) member countries to pull out of the much-touted Economic Partnership Agreements (EPAs) with the European Union (EU) bloc
The EPAs were meant to allow the EAC bloc to trade directly with the European Union countries.
Permanent Secretary in the Ministry of Foreign Affairs, East Africa, Regional and Internation Cooperation Aziz Mlima disclosed this at a meeting in Dar es Salaam yesterday that the move aimed at protecting the country’s infant economy now that the government was spearheading the establishment of an industrial economy.
According to political and economic observers, Tanzania’s pullout from the EU-sponsored economic agreements will likely spell a big blow to Kenya, a member of the EAC bloc which had intense interest in the deals as they benefited its flower exports to EU countries.
In January 2015, a German member of the European Parliament, Ska Keller, who had expressed displeasure at the way the European Union had brokered the trade agreements with the East African Community, was quoted as saying that developing countries had a gun pointed at their (EAC) chest – either they signed or their market access to the EU would be restricted.
The gun was specifically pointed at Kenya which has been benefiting from its cut flowers industry, a lucrative business worth more than £7.7bn annually.
PS Mlima said besides protecting local industries, there was still some confusion following the United Kingdom’s vote to withdrawal from the EU about two weeks ago.
“The possible biggest negatives derived from signing the EPAs is turning small countries’ economies into international markets for developed countries’ products, hence killing their local industries,” said the PS.
He added that apart from economic interests, signing of EPAs on July 18, this year, for Tanzania was too early given that it needed more time to study the agreements by various public departments and private stakeholders.
After this, the PS said the government would have to seek public approval, insisting that the time for signing the agreements had not yet come.
He said individual countries were free to sign the EPAs if they felt they would benefit from them.
Renowned economist and former University of Dar es Salaam dom Prof. Samuel Wangwe commended the move, saying the EPAs had no benefit to Tanzania as they favoured Kenya’s flowers and vegetables exports to EU countries where they would enter duty free.
“EPAs won’t help in promoting our local industries but rather will benefit the EU a lot, given that developing countries have standard goods to sell in EA markets,” commented Prof Wangwe.
Asked about the matter, Minister for Industry and Trade Charles Mwijage hailed the move, saying EPA agreements were tricky as EU allowed goods exports despite being quite aware that African countries couldn’t possibly meet international standards due to their infant economies.
He said allowing EU goods to freely flood the EAC market meant the killing of local industries while turning the bloc into a source of raw materials.
The Agreements were also categorical that in case EAC countries got in another economic agreement with anyone else and found that the set amount for the products’ duties and levies were lower than those operative in EPA, the amount would have to be downsized.
EPA further had a condition that there would be no reverse for products’ duties and levies amounts once set, according to Mwijage.
“Generally, the APAs are tricky. It is like someone offering something but sets a condition that an applicant should be 100 years old and must be accompanied by both parents,” said the minister.
He added that it was difficult to sign the EPAs because small industries are protected the world over, adding that investing in industries meant creating employment to all Tanzanians.
According to Mwijage, industrial goods production was the government’s second mission, the third being the promotion of economic growth and the last one being tax collection given that people would be willing to pay tax as long as they were employed.
In May, this year, during a televised Mwalimu Nyerere Intellectual Festival Debate at the University of Dar es Salaam, Tanzanian former president Benjamin Mkapa warned East African leaders against embracing EPAs, saying they could negatively impact the countries’ economies.
The signing of EPAs, according to Mkapa, could hinder the development of EA countries and lead them to de-industrialization, adding that he did not understand how such a powerful bloc (EU) could have trade agreements with developing countries.
European countries have been soliciting EA countries to sign the EPAs through offering customs-free access to their markets, especially for Kenyan products.
In October 2014, the media reported that exports from Kenya to the EU would no longer be duty-free after failing to sign EPAs.
The Kenya Association of Manufacturers (KAM) said that earnings from the EU market would drop by close to 35 per cent due to severe import taxes.
According to the manufacturers, Kenya was likely to lose approximately KSh7.64 billion annually in taxes imposed by the EU, adding that the county’s products would start attracting export duty of between four and 24 per cent.
Over 67 per cent of Kenyan exports to Europe would be affected, losing a total of €24.7 million, which was revenue from the European market.
Goods to Europe would now be subjected to customs duties of approximately Ksh 7.64 billion annually, or about Ksh 637 million per month.