COMESA Faults EU’s Plan

Allan Odhiambo (Business Daily)-Africa’s largest regional trading bloc is rooting for joint negotiations with the European Union on the prickly subject of development financing, which was left out of the interim pact that East African Community member states signed in Kampala last week.

The Common Market for Eastern and Southern Africa (Comesa) secretariat warned that African governments risked being short changed on the contentious subject should they approach the EU individually or in smaller groups.

"We need inter-regional committees working as a team to pursue favourable arrangements with the EU on development," Comesa Secretary-General Erastus Mwencha said.

Though Kenya’s pushing through of the Kampala pact was seen as critical to the country’s shrugging off of a looming disruption of trade with the EU in January, its failure to tackle development financing is now raising fears that poor nations may suffer huge financing gaps while the pact lasts despite its offering unfettered access to the European market.

The Kampala pact offers East Africa’s exports, except sugar and rice, duty and quota free access to the EU market after the December 31 expiry of the Cotonou agreement under which they currently trade with Europe.

A copy of the interim agreement seen by Business Daily shows that it largely addresses market access and offers EAC member states a 25-year-moratorium to gradually liberalise their markets to European goods.

The pact also touches on the Rules of Origin (ROO) that has over the years generated heat among trading nations some of who see them as amounting to non-tarrif barriers to trade.

Currently, the main avenue of development financing between the EU and developing nations is the European Development Fund (EDF).

Though Africa, Caribbean and Pacific (ACP) have been demanding separate development pacts with Europe, the latter has insisted that the fund would remain as its main avenue for supporting development in poor nations.

The developing nations are however seeking an assurance that key sectors of their economies will not be affected by increased opening up of their markets to European goods and services.

Though this fund has served the EU’s development relations with Africa over the years, analysts say opening up of Africa’s markets to European goods is a new thing that needs a new framework of financing.

Those pushing for a new pact on development financing say the opening up of developing country markets to European goods poses the danger of forcing some players to change their occupation and move to other sectors. Such a shift, they say, needs to be supported by a new stream of development financing.

Comesa member states say they may be forced to tie the schedule of opening their markets to allocation of extra and adequate support to the aid kitty. This effectively means that the market liberalisations will be tied to the inflow of aid for trade.

"The point is that we should only open up our market if we feel sufficient assistance has come through to help us develop. This will require regular reviews of our relations on this matter and the taking of appropriate action based on progress," said Mr Mwencha.

Trade between 80 ACP nations, including the EAC member states and the EU has been based on a preferential framework that grants nearly all products originating from the ACP duty-free access to the European market.

Pressure has however been mounting on the parties to adopt a new trade regime that is compliant with the World Trade Organisation (WTO) rules. The two blocs had consequently agreed to pursue an alternative regime under EPA and have it signed by December 31,2007.

Failure to sign new EPA, would have forced trade between the two blocs to revert to the less generous General System of Preference (GSP) where good that previously enjoyed duty free entry into the EU market would be taxed - resulting into reduced competitiveness of key exports products.

To forestall such losses, the EAC and other ACP nations have been pursuing stop-gap measures with the EU, including the negotiation of interim trade pacts after it emerged that they would not beat the December 31 deadline.

But as the ink dried on paper in the EAC-EC interim deal, analysts said Kenya was the biggest gainer because it had the highest pressure to sign an agreement ahead of January 2008.

This is because the country does not qualify to export to Europe under an alternative preferential trade regime known as "Everything But Arms" (EBA) that is open to least developed countries.

Other EAC member States qualify to sing EBA.Kenya also had the highest number of its products listed in the EAC sensitive.

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