News / 7 July 2011

Will a Free Trade Area benefit the Eastern African Community?

In June 2010 the East African Community (EAC) decided to hold off the signing of the Economic Partnership Agreement with the European Union (EU). Such an agreement would eventually constitute a Free Trade Area (FTA) between the EU and the EAC. It seems that the Eastern African countries would benefit from such an agreement, but is this really the case? Benjamin William Mkapa, Chairman of the South Centre and former President of the United Republic of Tanzania (1995-2005), says it would bring the EAC mostly disadvantages compared to the EU.


The EAC is an intergovernmental organization between Burundi, Uganda, Kenya, Rwanda and Tanzania. Since 2010 these countries share a common market for goods, labour and capital. Export of raw materials from the EAC to the European Union is declining, while the export of manufactured products to Africa is rising. EAC countries should focus more on fabricated products which will stimulate industrialization, says Mkapa, this will help these countries to develop themselves. He predicts that the abolishment of import taxes on EU products will damage the fragile manufacturing and agricultural sectors within the EAC. The current rise in production and exports would be heavily affected. The same goes for government budget, due to the tariff revenue losses.


Furthermore the EU has refused to suspend its subsidies to farmers in negotiations on a FTA. With the continuation of these subsidies there will always be unfair agricultural trade between EU and EAC according to Mkapa. The current EAC tariffs protect farmers in the EAC region from this. He claims that in the future "the EAC region should concentrate its efforts on consolidating our new customs union, as well as putting our energies into elaborating on and implementing carefully thought through and robust industrialization, agricultural and services strategies".

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