THE announcement by the Ministry of Trade and Commerce that the East African Community (EAC) and the European Union had reached consensus on most of the contentious clauses embedded in the Economic Partnership Agreement (EPA), signals commitment between the two trading blocs to ink the deal by the end of the year.

The EPA is meant to replace the decolonisation era trade system between the EU and the African, Caribbean and Pacific Group of States, that expired in 2007.

The EAC member States initialled the EPA deal in 2007 and secured EU market access but they have not signed the agreement, which means that there are no legally binding commitments.

The Ministry stated that the European Union had softened its position and agreed to increase funding development in the region, a decision that seems to address EAC’s major concerns in the long-delayed deal.

The signing of the agreement would mean that the two economic blocs will enjoy less stringent trade terms and lesser tariffs on EAC exports to the EU. Whereas a win-win deal is desirable, the EAC needs to adopt an export-led growth strategy to address the challenges of foreign aid dependence.

This means that trade liberalisation would not only open the EAC economy to greater Foreign Direct Investment (FDI) inflow, but it would also shift resources to sectors in which it has a comparative advantage. This would increase efficiency and create more jobs.

The EAC already has a customs union and as it moves towards a fully integrated economic community where goods, capital, labour and services move freely, it is equally important to embrace opportunities that result from cooperation with other economic blocs.

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