Trade ministry defends new EU deal
Dec 10, 2007
THE East African Community member states last month signed a trade deal with the European Union (EU) under the Economic Partnership Agreements (EPAs). The business community is not sure of the impact of the deal. Dr. Sam Nahamya, the trade permanent secretary, explained to Peter Kaujju what the agreements entail.
QUESTION: The public seems ignorant about EPAs. Would you explain?
ANSWER: EPAs are a trade regime that will replace the current non-reciprocal preferential deal extended to the Caribbean, African and Pacific (ACP) states –which Uganda is a member. This regime expires on December 31.
The current trade cooperation chapter of ACP countries with the European Community Partnership Agreement (Cotonou Agreement) guides our trading regime with the EU.
The Cotonou Agreement covers other components like development cooperation under, which the EU extends to ACP states through the European Development Fund.
Although other components of the agreement expire in 2020, the trade cooperation chapter expires on December 31.
An aspect of reciprocity will be introduced in the trade relation with the EU.
The World Trade Organisation (WTO) rules allow ‘less than full reciprocity’ or asymmetry if there are differences in the levels of development in countries participating in such negotiations.
This has been inbuilt in the EPAs negotiations; for example, under the framework EPA signed with the EAC and EC in November in Kampala, the EU offers full duty and quota free market access to our products effective January 1, 2008 while about one-fifth of our imports from the EU are completely excluded from liberalisation.
For sectors where liberalisation will be undertaken, it will be done in a phased manner over a period of up to 25 years and it does not start in 2008.
What are the detailsof the deal?
The initial framework agreement contains market access offers made by the EAC and EC to each other.
The EC market access offer consists of duty free and quota free access except for rice and sugar for which a transitional arrangement is being worked on.
After 2010, all Ugandan exports to the EU will be duty and quota free. Implementation of the EC market access offer begins on the January 1 2008.
On its part, the EAC also made her market access offer to the EU that consists of 82% liberalisation of imports from the EU over a 25-year transition period.
In effect, the first real liberalisation will begin in 2015 and is done in phases.
The EAC offers to liberalise 64% of her imports from the EU in 2010.
The products covered in this phase are already zero-rated or do not attract any import taxes under the EAC Customs Union Common External Tariff.
From 2015 – 2023, further liberalisation covering 14% of Uganda’s imports from the EU will be undertaken.
About one-fifth (18%) of our imports from the EU are to be excluded from liberalisation.
The framework agreement also addresses issues of non-tariff barriers and trade defense instruments.
The latter allows Uganda to raise tariffs to protect against imports of either goods that are being dumped or where an increase in imports is hurting local industry.
The implication of the framework is that Ugandan exports to the EU will continue to enjoy preferential treatment on the EU market.
The products eligible to benefit from this treatment are now more than they were under Cotonou.
The public believes the deal will force the local business community out of business because the EU goods will flood the market?
The most important thing to note is that currently an average of 64% of our imports from the EU are already zero-rated, that is, do not attract any taxes when imported into the country.
This is mainly because of the nature of such imports; they are either of capital nature like machinery, which we need cheaply to boost our production sectors, or products that we need but cannot produce here such as pharmaceutical products. Therefore, the fears cannot become a reality because we have sufficient defence mechanisms.
Uganda is eligible for the “Everything But Arms†initiative of the EU. Why did you opt for EPAs where we have to give something in return?
This lies on the importance of predictability and transparency as a form of enabling environment for private sector growth.
Predictability and transparency are pre-requisites for private sector growth.
The EBA is unilateral –it was not negotiated, but simply given under terms and conditions decided by the EU.
This means it can be withdrawn or modified anytime.
Critics say EPAs were imposed on African countries. What is the true position?
The negotiation of EPAs is based on the Cotonou Agreement, signed way back in 2000. In this agreement, besides agreeing to the current non-reciprocal preferential trade regime, the ACP and EC agreed to negotiate WTO compatible economic partnership agreements.
It was also agreed that the negotiations would be concluded by December 31 “unless earlier dates are agreed.â€
The Cotonou Agreement was concluded with provisions that breached WTO rules, and as such, a WTO waiver to derogate from a country’s international trade commitments, was sought and granted in 2001. The waiver, just like the current Cotonou trade provisions, also expires on 31st December 2007. So, in effect the decision to negotiate the EPAs was a joint one between the ACP Group of States and the EC and its member states.
What is the way forward with EPAs?
It is important we ensure a secure and predictable private sector trading regime with their main export market. To leave the private sector to continue guessing the tariffs and the trade regime they would face in the EU on a perpetual basis is not in the interest of private sector growth.
We must jointly work to ensure the predictability of this regime. The Government will not fail the private sector. The possible shocks that normally come with any change have been well anticipated and safeguards will continue to be in-built into the negotiations and ultimately the EPA.
My appeal to the public therefore is for them to objectively contribute to efforts aimed at achieving these agreements.
QUESTION: The public seems ignorant about EPAs. Would you explain?
ANSWER: EPAs are a trade regime that will replace the current non-reciprocal preferential deal extended to the Caribbean, African and Pacific (ACP) states –which Uganda is a member. This regime expires on December 31.
The current trade cooperation chapter of ACP countries with the European Community Partnership Agreement (Cotonou Agreement) guides our trading regime with the EU.
The Cotonou Agreement covers other components like development cooperation under, which the EU extends to ACP states through the European Development Fund.
Although other components of the agreement expire in 2020, the trade cooperation chapter expires on December 31.
An aspect of reciprocity will be introduced in the trade relation with the EU.
The World Trade Organisation (WTO) rules allow ‘less than full reciprocity’ or asymmetry if there are differences in the levels of development in countries participating in such negotiations.
This has been inbuilt in the EPAs negotiations; for example, under the framework EPA signed with the EAC and EC in November in Kampala, the EU offers full duty and quota free market access to our products effective January 1, 2008 while about one-fifth of our imports from the EU are completely excluded from liberalisation.
For sectors where liberalisation will be undertaken, it will be done in a phased manner over a period of up to 25 years and it does not start in 2008.
What are the detailsof the deal?
The initial framework agreement contains market access offers made by the EAC and EC to each other.
The EC market access offer consists of duty free and quota free access except for rice and sugar for which a transitional arrangement is being worked on.
After 2010, all Ugandan exports to the EU will be duty and quota free. Implementation of the EC market access offer begins on the January 1 2008.
On its part, the EAC also made her market access offer to the EU that consists of 82% liberalisation of imports from the EU over a 25-year transition period.
In effect, the first real liberalisation will begin in 2015 and is done in phases.
The EAC offers to liberalise 64% of her imports from the EU in 2010.
The products covered in this phase are already zero-rated or do not attract any import taxes under the EAC Customs Union Common External Tariff.
From 2015 – 2023, further liberalisation covering 14% of Uganda’s imports from the EU will be undertaken.
About one-fifth (18%) of our imports from the EU are to be excluded from liberalisation.
The framework agreement also addresses issues of non-tariff barriers and trade defense instruments.
The latter allows Uganda to raise tariffs to protect against imports of either goods that are being dumped or where an increase in imports is hurting local industry.
The implication of the framework is that Ugandan exports to the EU will continue to enjoy preferential treatment on the EU market.
The products eligible to benefit from this treatment are now more than they were under Cotonou.
The public believes the deal will force the local business community out of business because the EU goods will flood the market?
The most important thing to note is that currently an average of 64% of our imports from the EU are already zero-rated, that is, do not attract any taxes when imported into the country.
This is mainly because of the nature of such imports; they are either of capital nature like machinery, which we need cheaply to boost our production sectors, or products that we need but cannot produce here such as pharmaceutical products. Therefore, the fears cannot become a reality because we have sufficient defence mechanisms.
Uganda is eligible for the “Everything But Arms†initiative of the EU. Why did you opt for EPAs where we have to give something in return?
This lies on the importance of predictability and transparency as a form of enabling environment for private sector growth.
Predictability and transparency are pre-requisites for private sector growth.
The EBA is unilateral –it was not negotiated, but simply given under terms and conditions decided by the EU.
This means it can be withdrawn or modified anytime.
Critics say EPAs were imposed on African countries. What is the true position?
The negotiation of EPAs is based on the Cotonou Agreement, signed way back in 2000. In this agreement, besides agreeing to the current non-reciprocal preferential trade regime, the ACP and EC agreed to negotiate WTO compatible economic partnership agreements.
It was also agreed that the negotiations would be concluded by December 31 “unless earlier dates are agreed.â€
The Cotonou Agreement was concluded with provisions that breached WTO rules, and as such, a WTO waiver to derogate from a country’s international trade commitments, was sought and granted in 2001. The waiver, just like the current Cotonou trade provisions, also expires on 31st December 2007. So, in effect the decision to negotiate the EPAs was a joint one between the ACP Group of States and the EC and its member states.
What is the way forward with EPAs?
It is important we ensure a secure and predictable private sector trading regime with their main export market. To leave the private sector to continue guessing the tariffs and the trade regime they would face in the EU on a perpetual basis is not in the interest of private sector growth.
We must jointly work to ensure the predictability of this regime. The Government will not fail the private sector. The possible shocks that normally come with any change have been well anticipated and safeguards will continue to be in-built into the negotiations and ultimately the EPA.
My appeal to the public therefore is for them to objectively contribute to efforts aimed at achieving these agreements.