EAC-US Begin Discussion on Trade and Investment Partnership, 26th July 2012, Arusha, Tanzania

The East African Community has begun consultations with the United States Government with a view to starting negotiations on the Trade and Investment Agreement (TIP). The negotiations of the EAC-US Trade and Investment Agreement are based on the Policy Strategy of Presidents Obama's Administration’s on Sub-Saharan Africa which was released on June 14 2012, The Strategy outlines four main pillars which include.

1. Strengthening democratic institutions,
2. Promoting economic development,
3.  Ensuring regional security, and
4. Continuing to improve development assistance initiatives. The strategy makes clear that the focus of Obama’s plan lies in the first two pillars.

The EAC-US Trade and Investment consultation meeting which began on 26th July 2012 in Arusha, Tanzania is in response to the directive of EAC Ministers responsible for trade and the United States Trade Representative in a Joint Statement released on June 14, 2012 on the sidelines of the AGOA Forum between the United States and the East African Community (EAC) Partner States, in Washington, D.C. The Statement recognizes the importance of strengthening the economic links between the United States and East Africa, by pursuing a new Trade and Investment Partnership between the United States and the East African Community. 

Through the EAC-US Trade and Investment Partnership the parties will build on the foundations of our existing trade and investment relationship, including the African Growth and Opportunity Act (AGOA), and the U.S-EAC Trade and Investment Framework Agreement (TIFA) to provide new business opportunities to U.S. and EAC firms by reducing trade barriers, improving the business environment, encouraging open investment regimes, and enhancing our two-way trade.

In the Joint Statement the parties agreed to explore under the new umbrella partnership; a regional investment treaty, a trade facilitation agreement, continued trade capacity building assistance, and a commercial dialogue. It hoped that these agreements and other activities that they will pursue will help to promote EAC regional integration, economic growth, and expand and diversify EAC-US Trade and Investment. They could also serve as building blocks towards a more comprehensive trade agreement over the long term. The Joint Statement directs the respective technical teams to begin consultations on each of the agreed areas of the EAC-US Trade and Investment Partnership.

In the meeting, the parties proposed an ambitious timeframe for regular engagements at all levels which will include Experts, Senior Officer and Ministerial levels as indicated in the table below.

	EAC Side	US Side
1.	EAC Ministers led by Trade Ministers	USTR
2.	Permanent Secretaries (Senior Officer)	Assistant STR Africa Affairs
3.	EAC Experts Officials	US Expert officials

The US team expressed interest in understanding the state of play on the trade and investment regimes in the EAC Community. A number of areas were highlighted for consideration in the development of the Investment Treaty whose main objective is to increase FID to the EAC region. They include provisions on;

1. National Treatment and Most Favoured National principals as applied at the WTO
2. Fair and Equitable treatment
3. Free transfer of capital
4. Obligation on compensation in cases of expropriation
5. Transparency especially on publication of policies
6. Allowing advance comments on new policies
7. Rights of investors on recruitment of personnel
8. Performance Requirements, and
9. Dispute settlement mechanism

The Investment Treaty will allow policy space for either party to act in a manner that contravenes the agreed terms for example in situations where there is a security or a balance of payments issue. It will not necessary include sector specific provisions. Negotiations will follow after initial consultations on the investment regimes operations in the jurisdictions of the two parties. The consultations will then highlight the areas for negotiations as part of the process to developing the Treaty. The meeting agreed to hold regular technical committees meetings in order to generate enough workload for the Ministers.

On Trade Facilitation the US indicated that they are interested in improved customs processes and procedures. They listed the following areas as the areas to be negotiated

1. Publication and Transparency
2. Simplified procedures and faster release of goods
3. Expedited Shipments
4. Appeals
5. Advance rulings
6. Simplified procedures and guarantees on transit goods
7. Implementing a Leniency system on the Penalty regime
8. Exchange of information on customs procedures
9. Elimination of consular fees and formalities

The EAC on its part expressed interest in negotiating additional areas such as;

1. The simplification of SPS and Rules of Origin to exporting to the US,
2. Removal other non-tariff barriers to exporting to the US
3. Cooperation on development and implementing IPR regime within the EAC
4. Trade infrastructure development 

Regarding Capacity Building, the US shared with the EAC the areas the possible areas support relating to trade and investment. These include;

• Customs Union: Harmonizing Customs Regulations, evaluations, clearance audit and customs interconnectivity, harmonizing standards on staple foods, and supporting to member states on harmonizing SPS
• Common Market: development of efficient payment systems including electronic cross border payments, integrated border management, implementation of the simplified certificate of origin, development of a web based trade statistical data base( www.rfbs.in ), and financial market integration 
• Regional Infrastructure: development of financial regional infrastructure, ICT development, technology transfer and infrastructure investment as a whole
• Regional Productive Structure:  Integrating staple foods into the regional markets through improved technology, provision of inputs and increasing private sector investment in the region. Support is also directed to cleaner energy and global climate change as part of the effort to promote sustainable natural resource management
• Support to EAC Institutions: Support has been support to Lake Victoria Basin Commission on the water trans-boundary water for biodiversity in the Mara-River Basin Initiative. The US Government also supports the safe skies for Africa including the EAC on establishing Civil Aviation Safety and Security Oversight Organization
• Training on policy development, SPS, codex etc

On Commercial dialogue, the meeting noted that the proposed consultations process will serve as a cornerstone of linking, informing Governments on private sector priorities. The forum will help in linking the private sector agenda to Government programs. It is proposed that the dialogue should focus on promoting effective public-private partnership (PPPs), which are a critical mechanism for attracting greater U.S. investment, to the EAC region, especially for infrastructure projects. The dialogue will implement its activities through: targeted sector trade missions; coordinated programs between U.S. agencies and their EAC counterparts in conjunction with trade associations, regional and diaspora chamber activities and events.

African Union Summit Concluded With Commitment on Increasing Intra-Africa Trade, Addis, 16 July 2012

African Union Summit concluded in Addis Ethiopia on 16 July 2012, with African Leaders committing on the theme of the Summit “boosting intra-Africa trade”. The Summit which elected Ms Nkosazana Dlamini-Zuma of South Africa as Chairperson of the African Union Commission Mr. Erastus Mwencha of Kenya to be the Deputy, noted the need infrastructure development with a view to linking up the continent. The Summit also emphasized the principal of progressive integration and allowing the regional blocs to consolidate their integration goals as part of the process promoting intra-Africa trade. 

One speech was particularly spot on. This was the speech by the President of Uganda, H.E Yoweri Kaguta Museveni. The President noted that intra-Africa trade is low because the continent is not linked. He noted that the construction of the hardcore surface roads and railways which link the East Africa region to Kisangani, Juba and Addis Ababa is must. 

On energy, President Museveni reminded his counterparts that Africa generates very little energy which cannot enable the continent improve intra-Africa Trade not even meeting its minimum industrial development goals . He noted that the sub-Saharan countries excluding South Africa produce only 28 GW of electricity equivalent to the output capacity of Argentina or just 2 more GW of what is produced by Norway. President Museveni said that whereas countries like the US have a Kilowatt Hour (KWH) Per Capita of about 13000, some countries in Africa only have a KWH per capita of 12. He also compared Africa with some of the emerging economies such as Singapore whose KWH per capita is 7948, South Africa 4532 and Libya 4170. The President noted that although Uganda has achieved the KWH per capita of 200 up from 28, this is not yet enough to enabling the country attain industrial development.

President Museveni called on Africa to wakeup and address infrastructural constraints which he said are hindering intra-Africa trade development. The President called on the friends of Africa to support the continent in building and enhancing infrastructure rather than just talking about other small things such as homosexuals noting that “even the homosexuals need electricity”. The President also highlighted the need for African Governments to improve on connectivity especially in the area of air and maritime transport which he said that their contribution to intra-Africa trade has been insignificant. He also observed that deficiencies in the communication sector are also hindering intra-Africa trade development noting that currently it easier and cheaper for business persons to call their European counterparts than those in Africa, a situation he said deos not facilitate intra-Africa trade.

The meeting also reviewed the progress in achieving the Millennium Development Goals noting that although some progress has been made especially in regard to poverty reduction, education and emancipation of women and youth, the continent has not done well in other areas.

On the conflict situation in Africa, the African Leaders condemned the acts of Al-Shabab in Somalia, the LRA in East and Central Africa, the rebels in DRC and Mali. The leaders resolved to take action on the rebels in Mali. The Summit recognized the efforts of the AMISON, the African Union Mission in Somalia. Countries such as Uganda, Kenya, Burundi and Ethiopia were particularly appreciated for their efforts in ensuring peace and security in Somalia. The leaders also called on Sudan and South Sudan to observe peace and cease hostilities.