East African states could part ways in trade with UK

The member states of the East African Community are likely to negotiate trade terms with the United Kingdom separately after failing to agree on a timeframe set by the former colonial master.
Although the UK has openly declared that it prefers to pursue a collective deal with the EAC as a bloc Kenya and Rwanda, the chair of the economic bloc, claim that other member states are selfishly slowing the negotiations and may not meet the December 31, 2020 expiry date of the current trade arrangement.
EAC partner states currently enjoy duty-free and quota-free access to the lucrative UK market after the former colonial master quit the European Union.
Britain has proposed the same type of duty-free and quota-free privileges to goods from the EAC, with safeguards and flexible rules of origin similar to those under the current European Union agreement.
London proposes the existing EU-EAC agreement to be the basis for negotiations, saying that “deviating substantially would require a new mandate and could take many years”.
The EAC is supposed to have signed a draft agreement by the end of September, which is now looking more unlikely after the initial meeting a week ago was downgraded to “consultative talks” rather than a decisive, agenda-setting forum.
Now, Kenya, which is categorized as a Lower Middle-Income country, says would opt for a leeway under the variable geometry arrangement since it stands to lose the most if the EAC does not sign a collective post-Brexit trade deal with the UK, as its exports will become subject to taxes and other restrictions.
Variable geometry, in global trade terms, refers to a situation in which member countries of a regional trade bloc enter into trade agreements as individuals rather than as a group.
Britain, which voted to exit the EU in 2016, formally left the bloc in January this year. A transitional period of one year means that all previous trade deals it signed with Kenya, through the EU, will continue until the transitional period is over.
Nairobi doesn’t want to face the same fate as happened during the failed Economic Partnership Agreement (EPA) talks in which the EU negotiated with trade blocs in Africa and the Caribbean.
Rwanda though is chairing the regional negotiations; it is pursuing a double-pronged approach to achieve a new trade agreement with post-Brexit UK.
Kigali is pushing for a collective trade agreement but also pursuing a bilateral post-Brexit trade deal with the UK that aims to replicate the European Union’s “Everything but Arms” scheme that will offer Rwandan exports duty and quota-free access to the British market from January 2021.
UK officials say that Rwanda will continue to benefit under the WTO arrangement, even if a deal with the East African Community stalls.
Therefore, Kenya and Rwanda want to be allowed to negotiate bilateral deals with the UK that will allow the other EAC partners to join them later. But Uganda opposed the proposal.
Tanzania, Burundi and South Sudan skipped the preparatory negotiation meeting between the EAC and the UK, making it difficult to chart a way forward whereas Uganda has opposed the September timeline that Kenya is supporting, terming it as being too short.
Uganda wants talks to continue until December this year. Kampala says that will allow sufficient time to discuss the pros and cons of the new deal, but Nairobi argues that the extended deadline will not allow room for national debates because the transitional period ends on December 31.
On its part Tanzania wants to protect its locally-made goods in the trade negotiations with Britain emphasizing that it would not accept a deal that poses a danger to Tanzanian-made products.
Dar es Salaam’s current stance is similar to its position in the stalled Economic Partnership Agreement negotiations between the East African Community and the European Union. Tanzania does not want an open door to all UK products
Tanzania’s late former president Benjamin Mkapa was vocal against the EPA negotiations, arguing that they would have serious implications on growth of the country’s industries.
President John Magufuli’s administration, which is pursuing a vigorous industrialization agenda for Tanzania, has shown little desire to pursue the EPA talks despite EAC pressures.
Tanzania has remained lukewarm over the EAC/EU/EPA deal that has been on the table since long before Brexit happened.
The EPA, signed only by Kenya and Rwanda among EAC member states, is designed to give the bloc’s products total access to the European Union market while allowing 82.6 percent of imports from the EU into the regional market.
Kenya is by far EAC’s biggest trade partner with the UK, having exported goods worth $393 million last year against imports of $349 million. Tanzania sold $60 million worth of goods to the UK in 2018 against imports of $170 million, while Uganda exported $10 million against imports of $81 million in the same year, as per the latest available trade data.
Rwanda’s imports from the UK, mainly machines, pharmaceuticals and equipment, have increased steadily over the past five years. They were valued at $19.8 million in 2019, up from $18.5 million in 2018 and from $9 million in 2015, according to the UK’s Office for National Statistics.
Rwanda’s exports to the UK — mainly coffee, tea, spices, minerals and apparel — were valued at $10 million in 2019, more than doubling from $4.8 million in 2018.