{UAH} OPINION: EAC/EU PREFERENTIAL TRADE DEAL.
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OPINION: EAC/EU PREFERENTIAL TRADE DEAL.
What is happening to the East African Community market?
Uganda is said to have joined Tanzania in rejecting a preferential trade deal with the EU. An agreement that removes taxes on certain exports from East Africa to Europe and vice versa.
However, Tanzania has pragmatic reasons to hold back.
Their argument according to The East African Daily is that Tanzania's trade with Europe is mainly with the UK. So with the recent Brexit referendum, a preferential trade deal with the whole EU is insignificant. In fact it could mean colossal economic losses. Because much as the arrangement provides untaxed EU products a ready market in Tanzania, the East African country hardly sells anything to Europe. Therefore Tanzanians stand to loose from the agreement comparably.
Daresalaam says it is actually more pertinent for them to sign such an arrangement directly with the UK instead. And that makes perfect sense. Because the EU deal as it stands would at the minimum mean a massive permanent drain in Tanzania's foreign exchange reserves, and an even bigger trade deficit.
Meanwhile, I have found no economic reasoning that explains why a decision to withdraw from the EU deal was taken on behalf of Ugandans. I hope it has nothing to do with other squabbles with the EU (e.g. AMISOM salaries funding).
The last time I checked, the slogan that was being held up to western capitals by Africans was "Trade. Not Aid".
The decades long principle has apparently failed to be concretized on the trade front as well as the foreign aid arena. Yet Africa has to start curbing the constant dependence on foreign funding.
Early last year, Tanzania's then president Mr. Jakata Kikwete promised their citizens budgetary self reliance for 2017. That might explain the current fight against corruption and wastage that Mr. Magufuli has successfully embarked on.
So has Uganda lost the plot?
Because ultimately the EU trade deal could strengthen East Africa's position as a vibrant trade block. One that would definitely enable more development, more business and more jobs for Ugandans.
by Hussein Lumumba Amin
17/07/2016
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