Kenyan flowers ready to be packaged for export.
Germany is calling for the renegotiation of some of the European Union’s trade agreements with Africa, terming them unfair. Some African countries have been calling for a review of these agreements, which they term as skewed to promote EU interests on the continent.
Speaking at an event for non-governmental organisations in Hamburg, German Chancellor Angela Merkel said that some of the trade contracts between the EU and Africa were “not right.” “We’ll speak again at the EU Africa Summit in November about how we need to renegotiate them,” Chancellor Merkel said, as she sought to drum up global support for African development. She was hosting African leaders on June 19, ahead of next month’s Group of 20 Summit.
African governments and NGOs have said that some of the trade contracts between the EU and Africa do not support development but rather increase hardship on the continent.
Tanzania has called for renegotiation of the Economic Partnership Agreement (EPA) that the EAC signed with the EU, terming it skewed and exploitative. The region’s EPA negotiations hit a deadlock after Tanzania, Uganda and Burundi refused to sign it. Kenya and Rwanda have signed and ratified the EPA, but being a Single Customs Territory, the other EAC members must assent to the agreement to make it enforceable.
A call to Action! End Harmful Tax Holidays in Uganda
SEATINI Uganda alongside members of the Tax Justice Alliance including; Oxfam in Uganda; Civil Society Budget Advocacy Group (CSBAG); Uganda Debt Network(UDN); Action Aid Uganda (AAIU); Citizens Watch-Information Technology (CEW-IT); Women and Girl Child Development Association (WEGCDA); Water Governance Institute (WGI); Africa Freedom of Information Centre (AFIC); Inter University Tax Justice Forum (IUTJF); and Initiative for Social and Economic Rights (ISER) organized a press conference at SEATINI Uganda offices in Kampala this 29th May 2017 to present concerns, observations and recommendations in respect to tax holidays in Uganda.
The Tax Justice Alliance recognises that Foreign Direct Investment (FDI) is critical in fostering economic growth and development. There is awareness that tax incentives such a tax holidays and exemptions can promote investments in the country if they are transparent and equitably accessed, awarded and managed. It’s also a fact that tax incentives when mismanaged can distort internal market dynamics and bleed corruption.
However, an analysis conducted by the Tax Justice Alliance suggests that developing countries do not need to grant tax incentives, exemptions and/or holidays to attract Foreign Direct Investment (FDI), because the decision to invest by genuine multinational corporations is largely based on other parameters such as cost of labour and energy; presence of adequate infrastructure; and the country's overall investment climate. This has also been confirmed numerous times by IMF and the World Bank, which state that countries that are most successful in attracting foreign investors did not have to offer tax holidays, but rather invested in other important factors such as good quality infrastructure, low administrative costs of setting up and running businesses, political stability and predictable macro-economic policy that will encourage growth and expansion of indigenous investments. The same questions abound whether it is relevant and critical to offer tax holidays to attract FDI.
SEATINI-Uganda in partnership with Eco News Africa, Africa Trade Network and Open Society Initiative for Eastern Africa (OSIEA) organized a multi-stakeholder consultative meeting on the continental free trade area from the 16th – 17th May 2017,at the Imperial Golf View Hotel in Entebbe. The meeting brought together members from the Civil Society Organisations, Private sector, Uganda Manufacturers Association, Ministry of Trade, and representatives from Kenya, Tanzania, Rwanda, Burundi, and African Union among others. Objectives of the meeting;
In January 2012, The African Union Summit decided to establish the Continental Free Trade Area by 2017, in a self-proclaimed attempt to fast-track the continental trade integration process as per the 1991 Abuja Treaty. Full negotiations to this end were launched in January 2015 and are expected to come to a conclusion by June 2017.
Once in place, CFTA will create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union. It will also expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation and instruments across the RECs and across Africa in general. The CFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources.
The CFTA Negotiations will evolve around issues addressing the NTBs, Sanitary and Phytosanitary standards, Trade facilitation, among others. It is believed that cooperation in these issues will be a step towards the creation of the African Economic Community as envisioned in the 1991 Abuja Treaty. However, the key guiding principles have tended to over-emphasize the need to build on existing trade regimes, including those between African and non-African countries and regions. This result is a tendency towards an inbuilt bias to trade liberalisation and deregulation are the main motor of Africa’s trade integration.
Some emerging issues;
In conclusion, the CFTA is a great idea, but can & will only become a grand project upon inclusion & action being taken of the views and concerns expressed by none political / none state actors mainly Africa’s Private Sector & Civil Society Organisations.