UK to offer Rwanda tariff-free trade deal if EPAs fails

Tuesday October 2 2018


Rwanda currently exports agriculture commodities to different European countries. PHOTO | CYRIL NDEGEYA 

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The United Kingdom will consider a tariff-free trade deal with Rwanda if the Economic Partnership Agreement (EPA) between the East African Community and the European Union is not signed by 2020.

This comes at a time when many developed countries are keen to pivot away from a long-standing strategy that focused on providing development aid, to instead focus on trade partnerships — a move that experts say emulates China.

The UK, a European powerhouse, now plans to increase its investments across Africa through bilateral and regional pacts when it officially breaks away from the European Union in March 2019, officials say.

“If an EPA was to come into force in whatever form in the next two years, then our aim is to transition into that arrangement. But if there isn’t, then the UK is coming up with its own Everything but Arms trade agreement,” said Jo Lomas, the British High Commissioner to Rwanda.

“We see this as a major change in our relationship with many of our African friends, which we are going to meet with increased staff and investment.”

Ms Lomas added that the UK will support Rwanda’s ambitions to benefit from the EPA with the EU, even when the UK is no longer be a member, and also when the trade pact lacks consensus in the EAC.

“In the long-term, our plan is to negotiate our own trade agreements, be it with bilateral or regional groups, and we hope that they will be fairer.”

The UK still trades with the EAC under EU’s Everything but Arms agreement, a pact that enables exports from countries like Rwanda to access EU markets under a duty-free arrangement.

Plans to upgrade the agreement have stalled for over a decade and UN experts have argued that the deal in its current state offers the region very little.

The deal was signed by both Kenya and Rwanda, but was rejected by Tanzania, Uganda and Burundi. It can only come into force if all members sign it.

“Our aim is to be the number one trade partner for Rwanda and we want to be the largest G7 investor in Africa by 2020 through a $26 billion package. Our offer focuses on sustainable high quality investments. British companies generally employ local staff on the ground and they partner with local companies.”

The UK, the second largest investor in the country, invested over $203 million in Rwanda last year, according to statistics from the Rwanda Development Board.

According to Andrew Mold, the acting director of the sub-regional Office for Eastern Africa of the United Nations Economic Commission for Africa, there may be new opportunities opening up for African exporters to markets in the UK and Europe.

The longer term impacts, he argued, are more important and are related to the shock Brexit provides to regional integration processes in general — it contributes to undermining confidence in deeper regional integration processes globally.

There are many potential downsides to Brexit, but from an African perspective, it does at least allow countries to negotiate trading arrangements with the UK on a clean slate.

“The UK is clearly keen on reaching such deals right now with all its external trading partners, so it is up to African countries to clearly articulate what they would like and expect from the UK,” Mr Mold said.

The EU recently unveiled a plan to boost its investments in Africa, with the European Commission president Jean-Claude Juncker, proposing a “new alliance” that will help create 10 million jobs in Africa in the next five years.