Finance and Economics
Afirca-EU Trade: Blown off course
Another trade deal adrift.
The winds that waft along the Swahili coast change direction with the seasons, a boon to traders in times past.
Shifts in the political winds are harder to predict.
Last July a proposed trade deal between five countries of the East African Community (EAC) and the EU was thrown into disarray when Tanzania backed out at the last minute.
An EAC summit, scheduled for months ago, was meant to find a way forward.
Held at last on May 20th in Dar es Salaam, after many postponements, only two presidents showed up.
The deal is in the doldrums.
The pact is one of seven “Economic Partnership Agreements” (EPAs) the EU wants to sign with regional groups in Africa, the Caribbean and the Pacific.
The first was agreed with the Caribbean in 2008; southern Africa followed suit last year.
But progress in west Africa has also stalled, with Nigeria raising objections.
The EPAs were promoted as a new breed of trade deal, and were supposed to bring development and regional co-operation.
So far they have brought neither.
Negotiations on EPAs began in 2002.
Under previous conventions, the EU gave favourable market access to African, Caribbean and Pacific countries, most of them former colonies.
That fell foul of World Trade Organisation rules.
Hence the idea of EPAs: reciprocal deals, requiring both parties to open their markets.
Two obstacles have to be surmounted.
First, EPAs overlap with existing trade arrangements.
The poorest countries, like Tanzania, already enjoy duty-free and quota- free access to the EU under an initiative called “Everything But Arms”.
That could one day be withdrawn, but at present they see little to gain by opening their markets.
Second, countries within the same region face different incentives.
Take Kenya, richer than Tanzania and not eligible for Everything But Arms.
It ratified the EPA last year and needs others to do so for the deal to come into force.
It recalls the pain of 2014, when the EU briefly slapped tariffs on its exports, such as cut flowers, and is frustrated by Tanzanian foot-dragging.