The technical experts engaged in the EAC-US exploratory meeting made comments and clarifications on the terminologies and derogatory provisions in the proposed text for negotiations. Accordingly, both Parties are still consulting on how to treat terminologies "like circumstances" as used in the National Treatment and MFN provisions; "Customary International law" as a minimum standard that the Parties should apply in ensuring fair and equitable treatment to the covered investment; "prompt" in relation to compensation of expropriated investments; "indirect expropriation" in relation to what would constitute actions of Government which in turn would result into in direct expropriation; and "Senior Management" in the context that Parties should not condition an investor to employ a person of a particular nationality in the senior management level.
The EAC-US meeting discussed examples of some of the non-conforming measures that can be derogation from the application of the provisions on National Treatment and Most Favored Nations, performance requirements and senior management obligations. The meeting looked at three areas as some of the possible categories in which such measures can be derogated: (i) Existing policies, laws and regulation that would contradict the Treaty, (ii) the sectors which either Party would want to protect for purposes of public interest and (iii) those relating to the promotion of financial prudence in the economy.
The parties continue to also consult on other provisions in the draft text for EAC-US Investment Treaty including: limitations on performance requirements; denial of benefits to shareholding investors originating from third parties, subjecting taxation to indirect expropriation provision and exit clauses on the duration and termination of the Treaty, and the dispute settlement mechanism, among others.
The Parties agreed to consult on using Action Plan approaches under which the U.S would extend capacity building support to the EAC Partner States to enable them comply with their obligations under the related WTO agreements. The EAC-U.S consultative meeting observed that capacity building support by the more developed countries to developing countries is envisaged by the WTO agreements. Both parties are to continue with internal consultations on the matter.
As part of the capacity building partnership, the EAC-U.S consultative meeting reflected on the Obama Trade Africa initiative, the East Africa Trade and Investment Centre (TIC) in Nairobi and USAID partnership with Trademark East Africa. The parties are however yet to harmonize position on specific outcome of the negotiations under the Capacity Building component. While the EAC seems to be insisting on an outcome that includes a mutually agreed mechanism of delivery of support under the capacity building component, the U.S which is the target donor does not seem to be taking the same direction.
