Tanzania should reject EU free trade deal, MPs say - African Business Magazine
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Tanzania should reject EU free trade deal, MPs say

Tanzania should reject EU free trade deal, MPs say

Members of Parliament (MPs) in Tanzania have urged the country’s government not to sign the Economic Partnership Agreement (EPA) between the European Union (EU) and the East African Community (EAC) member states. Negotiations between the EU and the East African countries over the trade deal have been going on since 2007 and an agreement was finally reached in 2015. 

However, the implementation of the deal has been impeded by MPs in both Tanzania and Uganda because of concerns relating to EU exports harming domestic industries. The free trade deal should be rejected because the current version is not conducive to the economic development of Tanzania, the MPs said during a parliamentary discussion on Tuesday.

Lawmakers from both the ruling Chama Cha Mapinduzi (CCM) and opposition parties have raised concerns that the free trade deal will open up Tanzania’s markets to EU exports with zero tariffs, which will damage the nation’s economy. Tanzania’s major exports are agricultural commodities such as tobacco, coffee, cotton, cashew nuts, tea and cloves.

Tanzania, and other the EAC member states, can already export merchandise duty-free to the EU market without providing the EU with similar market access because the African economies are deemed to be developing rather than advanced. EAC exports to the EU in 2013 amounted to €2.2bn ($2.4bn) and consisted mostly of coffee, cut flowers, tea, tobacco, fish and vegetables. While imports from the EU into the EAC – mainly consisting of machinery and mechanical appliances, equipment and parts, vehicles and pharmaceutical products – were €3.5bn ($3.9bn) over the same period.

Despite this lucrative partnership, Tanzanian MPs have called on the government of President John Magufuli to renegotiate the agreement on terms which would protect country’s burgeoning industries. The EPA with the EU as it stands could cost Tanzania between $700m and $850m in lost revenue in the next 25 years, while the whole of the EAC bloc – Kenya, Uganda, Tanzania, Burundi and Rwanda – could lose $3.7bn, according to MP Zitto Kabwe, the leader of opposition party Alliance for Change and Transparency.

“The tricky part is that the EU knows that we will incur losses, but they don’t seem too keen on a compensation framework,” he said. “We need to be firm.”

Tanzania is yet to ratify the EPA, despite East Africa’s biggest economy, Kenya, and Rwanda signing the deal in September this year. The trade deal had been expected to have been signed and ratified by October 2016, however, Tanzania and Uganda have not yet approved it. 

Some Tanzanian MPs, meanwhile, have raised concerns that continued rejection of the EPA could damage cooperation between the EU and Tanzania, particularly with regard to aid. “Yes, we are rejecting this deal because it is bad for our economy, but how far are we prepared to deal with the consequences?” said MP Saada Mkuya, a former finance minister. “I suggest that we start to prepare early and allocate funds in the next budget for implementing development projects currently financed by the EU.”

Meanwhile, the EU finally implemented a similar trade deal with Southern African countries in October this year after a decade of negotiations.  

Taku Dzimwasha

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