ARUSHA -  Talks on new trade between the East African Community and the European Union enter a critical stage this week when EAC trade ministers meet in Arusha, Tanzania.

The four-day meeting that begins on Friday is expected to address areas of disagreement between the EAC and the EU with time running out on the March 31, 2010 deadline.

EAC trade ministers will be briefed on the outcome of the EU-EAC technical meeting in Brussels on February 23-24, 2010 to resolve sticky issues that have delayed the talks.

The areas the EU and the EAC are yet to agree on are development cooperation, the most favoured nation clause and trade in services.

EAC member states are negotiating a new trade arrangement known as the Economic Partnership Agreement (EPA) to replace the non-reciprocal trade preferences granted under the 2000 Cotonou Agreement.

The EPA is structured to introduce reciprocity in the trade arrangement between the EU and African Caribbean and Pacific (ACP) countries. Currently, while ACP countries’ exports enter the EU duty free, EU exports to ACP countries are charged duty.

The new agreement seeks to compel ACP countries to also allow EU exports in duty free. The parties are expected sign a Framework Economic Partnership by the end of this month and a comprehensive Economic Partnership Agreement by December 2010.

Unless there is an agreement with the EU by the end of the year, there is a risk that there will be an immediate loss of market opportunities in the EU for commodities that have gained market access through preferential tariffs.

Such commodities include horticultural produce which currently attracts no duty in the EU market. Products such as cut flowers, pineapple juice and French beans will experience preference erosion ranging from between 8.5 to 15.7 per cent, according to figures by the EU.

The East African Business Council acting executive director Agatha Nderitu said that the prolonged impasse on contentious issues had created uncertainty in the business community, especially in Kenya over whether their exports to the EU would soon attract tariffs.

Ms Nderitu said the EPA should guarantee EAC products more access to EU markets beyond duty-free and quota market access by having simple and flexible rules of origin.

"And more business friendly technical barriers to trade, sanitary and phytosanitary, cutting substantially its domestic support and doing away with export subsidy programmes in the agriculture sector,” she said in a statement.

Initialled in November 2007, the Framework Economic Partnership Agreement with the European Commission was to be concluded on July 31, 2009, but the signing was postponed due to contentious issues. The head of the EU delegation in Tanzania Timothy Clarke recently said that this situation was unsustainable.

Mr Clarke said that ACP countries that signed the EPA enjoy free access to EU markets, but they also took legally binding commitments, while a number of others, including EAC countries that initialled but did not sign the framework, enjoy the same access without any legal commitments.

"In fact the current situation is contrary to both European Union law and World Trade Organisation rules,” he said.

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