Economic Partnership Agreements (EPAs) are very important for Kenya and its neighbours in the region for a number of reasons. To begin with, they are trade and development tools. They are not classical, hardnosed, free trade agreements of the sort that developed countries negotiate between them. These agreements are a new step in Europe’s long standing relationship with the ACP dating back to the Lome conventions. The EPAs are a means of maintaining that special relationship for the future under WTO rules. We must conclude these Agreements by the start of 2008.
EPAs are potentially a crucial, hugely positive contribution that Europe can and must make to trade and development. The purpose is the successful integration of Kenya and its neighbours truly into the global economy- and by that I mean putting the ACP on a ladder of prosperity that ends the grinding poverty which is the daily experience of so many citizens in this region.
EPAs are about South/south economic integration, region by region. The EPAs are about building markets. Regional economic Integration on the basis of transparent, stable and predictable rules is the determining factor in promoting investment: the pivotal condition for successful development.
Kenya is leading the way in embracing this future of regional economic integration. While in 1991 41.5 per cent of Kenyan exports were destined to the EU and 17.5 per cent to COMESA, by 2004, the EU share of Kenyan exports increased to over 33 per cent. In the same period, Kenya has also increased its exports to the rest of Africa, Middle and far East, and Australia. Furthermore, it is important to note that Kenya holds the largest share of intra-COMESA trade-with 29 per cent of all trade- nearly three times that of Zimbabwe and Egypt!
EPAs are about progressive trade opening. And there is a deliberate double meaning in my use of ‘progressive.’ Despite the very hard work of our colleagues, the trade opening or ‘Market Access’ part of these agreements is not at the forefront of the EPAs: it comes towards at the end, after regional integration has kick-started growth and long transition periods. The transition periods for market opening will be as long required based on the actual needs identified in the negotiations. Lets also not forget that Kenya -which enjoys currently 98 per cent market access into the EU- far more than any other developed country or trade bloc – will enjoy 100 per cent following the successful conclusion of the EPAs – like all the least developing countries.
EPAs are about strengthening the ability of the ACP to tap into market opening. This means reducing capacity constraints and helping to overcome poor economic and social infrastructure. Let me give a concrete example. For instance it takes on average about 1 day- in many cases less – to clear a container through a European port – whereas it takes many countries in this region 30 days. This has to change.
The EPAs are not standard free trade arrangements. This agenda is not about opening ACP markets to our own exports. And EPAs are not about forcing new rules on ACP regions either. The EPAs are an opportunity for the ACP regions to fast-track their way to regional integration – to building bigger markets, attracting investors, growing, developing and eradicating poverty. This is something you must do if you are to face ever fiercer competition – mostly from other developing countries such as Brazil and China!
EPAs are also importantly flexible arrangements which will take account of your stage of development. EPAs will need to send the right messages. Offering predictable and transparent rules is a must. Today, investors avoid Africa, even Africans themselves! This has to change.
While no country has successfully developed by turning its back on international trade or long term capital flows – trade liberalisation is not a silver bullet for development. An appropriate supply side capacity to facilitate trade is required.
In joint commitments in Cotonou and in the EU’s Strategy for Africa, legitimate and effective governance is recognised as a prerequisite for development. Setting the right trading conditions and addressing supply side constraints – could all be to no avail if investors are frightened away and businesses can’t operate effectively due to red tape and widespread corruption. Also- I must underline – in the future, the assistance of Europe will be linked to the performance of each country with regard to governance.
In short: in order to put trade at the service of development- the future iscertainly about regional economic integration. The EPAS will reinforce this process and provide assistance to address supply side constraints. We must also work as partners in making sure that investors are not only attracted to this region but business can flourish by ensuring that good governance runs unfettered through the veins of the country. Let’s do that – and therefore ensure that the EPAs put trade at the services of development!
By Ambassador Eric Van der Linden
Head of delegation of the European Commission in Kenya
Comment on this article!