EU-East Africa trade deal may cause revenue loss, unemployment: Oxfam

(NAIROBI) - The aid charity Oxfam on Wednesday warned that an European Commission-East Africa interim trade deal may spur revenue losses and unemployment.

The accord initialled Tuesday is to replace preferential tariff agreements due to expire at the end of the year because the World Trade Organisation (WTO) has ruled they are illegal.

Under the new deal, East African Community (EAC) states Burundi, Kenya, Rwanda, Tanzania and Uganda will enjoy duty-free, quota-free access to the European Union for all products -- except sugar and rice -- from January 1.

Services and investments, which are not covered in the interim agreement, will be negotiated next year.

Oxfam International's EU Office Luis Morago lamented that the five east African nations signed the accord under pressure, opening up 80 percent of their market to European products in 15 years.

"This agreement will oblige the East African region to remove 80 percent of its tariffs on EU goods over 15 years, possibly more quickly, which could lead to unemployment and loss of vital government revenue that might otherwise be spent on health and education," Morago explained.

The deal will in particular aid Kenya's cut flowers industry, Tanzania's fisheries and the coffee and tea trade in all five nations.

"Despite concerns raised by many, including the IMF (International Monetary Fund) African civil society, trade unions, and academics, the Commission has ignored possible alternatives and insisted on the deadline," Morago added.

"They have essentially forced the East Africans to choose between guaranteeing markets for their agricultural exports today, and maintaining a degree of protection to promote future industrial growth - which all developed countries have done in the past."

The EU is pushing economic partnership agreements (EPA) with 78 nations in the African, Caribbean and Pacific group in a bid to clinch deals that replace the preferential accords.

The new deal is designed to help EAC countries develop while diversifying their economies and meeting WTO requirements that they allow some access to European goods and services, regional officials say.