The implementation of the EU-Kenya Agreement originally planned for the economic partnership agreement with the entire East African Community to untie the Goldie knot between supporters and opponents of African countries in the short term, but the long-term consequences go beyond the tariff differences on the EU. Redrickstand wrote.
Frederik Stender is an economist who works on trade policy and regional economic integration issues at the German Development Institute (DIE).
The history of the East African Community can be traced back to 1967. However, the inter-state relations among its member states have historically been tense. Whether it is differences in product standard design and interpretation, or openly expressing the contradiction between national economic interests and regional obligations, the past has provided opportunities for trade disputes, especially those between Kenya, Tanzania and Uganda.
Another source of conflict is the economic partnership agreement reached with the European Union (EU) in October 2014. After many iterations, the agreement is no longer implemented as a binding agreement on the EU. All Area, but initially will follow the principle of “variable geometry”. Of course, this change highlights the strong stance between the East African Community countries on the pros and cons of the economic partnership agreement, and may further cool the sense of community. However, this development may go beyond previously feared internal trench wars against third-country rules of origin and tariffs.
Since negotiations began in 2002, the economic partnership agreement between the European Union and the African, Caribbean and Pacific (ACP) countries has been the focus of controversy. In order to reform the formal trade relations between the EU and ACP countries in accordance with the rules of the World Trade Organization, the decades-long unilateral trade preference system will be replaced by regional economic partnership agreements. Although the latter ensure that ACP exports continue to enter the EU market without tax, they also require EU imports to gradually open the market.
Although some economic partnership agreements came into effect a few years ago, others are in danger of being unresolved. African partner countries especially dislike economic partnership agreements. Although the agreement has been fully negotiated, the signing and ratification process has stalled in many places. The East African Community is no exception.
Since the East African Community has reached the level of integration of a common market with (official) common external tariffs, its regulations require a joint approach to trade agreements with third countries. So far, the EU has also insisted on closing the implementation of the economic partnership agreement with the entire region, so as not to endanger the integration that has been achieved.However, Burundi, Rwanda, South Sudan, Tanzania, and Uganda have already obtained EU duty-free market access under the “Everything Except Arms” initiative, so small Interest in reciprocal trade agreements. The situation in Kenya is different. This country is the only country in the East African Community that has important trade relations with the European Union. However, as Kenya is more economically developed than neighboring countries, it faces the threat of cancelling its still transitional commitments to enter the EU market completely tax-free. Therefore, Kenya has repeatedly sought to implement a bilateral economic partnership agreement with the EU.Following the East African Community’s joint decision in February 2021, the EU has recently agree For this bilateral approach.
For the EU, there are strategic reasons to deviate from the original regional approach. Kenya is not only an important exporter of agricultural products (especially flowers), but also an emerging technology market. Britain has reached a bilateral trade agreement with Kenya, and the United States has initiated corresponding negotiations under the leadership of the Trump administration. The bilateral economic partnership agreement with Kenya will also give the European Union a foothold in East Africa.
However, economic partnership agreements are not just trade agreements.On the contrary, both parties also link them to economic development In the ACP countries, among other things, it is possible to better integrate into the European value chain through more advantageous access to industrial primary and intermediate products. The Economic Partnership Agreement also goes hand-in-hand with (more) Aid for Trade and closer cooperation on product standards, and compliance with these standards is one of the biggest obstacles to African exports to the EU. Although these positive aspects may also be offset by increasing competitive pressure, the East African Community countries will further “promote” or benefit from the positive aspects of the agreement, which is already the most economically developed region. Therefore, the heterogeneity within the East African Community may increase further.
The same applies to potential conflicts. Today, the East African Community countries resent each other’s economic success and tend to tend to beggar-thy-neighbor trade policies. Regional non-tariff trade barriers often appear, bringing advantages to the country’s economy. Therefore, the future bilateral economic partnership agreement between Kenya and the EU may lead to more trade disputes rather than fewer.
The bilateral agreement between Kenya and the European Union may temporarily resolve the conflicts surrounding the economic partnership agreement within the East African Community, but it is too short-sighted. In the end, the change of route may cause more conflicts rather than resolve conflicts. In the long run, the economic disparity in the East African Community is in danger of intensifying.I’m afraid this Structural The differences will even outweigh the differences on EU tariffs.
