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Four East African countries set to sign trade pact with EU next week

Xinhua, July 14, 2016 Adjust font size:

Four East African countries are set to sign economic partnership agreement with the European Union (EU) next week in Nairobi, a senior Kenyan official said on Wednesday.

Kenya's Deputy President William Ruto said Burundi, Kenya, Uganda and Rwanda will ink the Economic Partnership Agreement (EPAs) that allows these countries to export their agricultural products to Europe without attracting tax.

The deal will however be signed without Tanzania which said last week it will not sign the trade pact between East Africa Community (EAC) and EU following Brexit.

The announcement caused shock at the EAC countries. Aziz Mlima, Tanzania's Permanent Secretary in the Ministry of Foreign Affairs, said the country had decided to halt the signing because of "turmoil" that the EU is experiencing following Britain's exit.

Mlima said signing the pact would risk exposing young EAC countries to harsh economic conditions given the prevailing conditions in Europe.

The official said Tanzania's Parliament would first peruse and advise the government before committing to the deal.

"Our experts have established that the way it has been crafted, the EPA will not benefit local industries in East Africa. Instead it will lead to their destruction as developed countries are likely to dominate the market," Mlima said.

Ruto had travelled to Burundi to meet President Pierre Nkurunziza on Wednesday over the EPAs deal set to be signed on Monday next week. All four partner states, except Tanzania, participated and agreed to sign the agreement.

A statement issued in Nairobi after the visit to Burundi said the development (Tanzania refusal) poses a great threat to the EAC Customs Union which requires all Partners States to sign the EPA in order to safeguard against the perforation of the Common External Tariff.

"In the event that the EAC does not sign the EPA as a bloc, all EAC partner states stand to lose generous market access terms negotiated under the EU market," Ruto said.

The decision by Tanzania not to sign the agreement leaves the region, and specifically Kenya, at a great risk of losing a lot of revenue when exporting goods to the EU.

This essentially means Kenya's exports to the European Union-mainly flowers and vegetables-will attract tax. Kenya exports produce worth 1.2 billion U.S. dollars to the European market.

The EAC partner states negotiated EPA as a bloc since 2007 and Ruto said Kenya stands to lose more because its exports to the EU will attract import duties thereby threatening jobs, revenue, and relocation of industries to less developed neighboring countries.

According to the statement, Ruto and Nkurunziza said stability of the region was important for economic growth and welfare of the people.

The economic agreement is due for signing by East African countries after the Sectoral Council of Trade, Industry, Finance and Investment (SCTIFI) EAC agreed.

An extra-ordinary council meeting of ministers responsible for East African Affairs met on June 30 and proposed that the countries sign the agreement on July 18. Endit