South Sudan and Somalia on the spot for delaying key trade pacts

The road heading towards the Kenya and Ethiopia border where people cross and trade freely. [File, Standard]

South Sudan and Somalia are on the spot for causing a delay in implementing two key trade pacts for the region. This is as the private sector lobby urges the East Africa Community (EAC) to expedite the agreements. 

These two countries have neither signed nor ratified the Tripartite Free Trade Area (TFTA).

The trade agreement connects the EAC economies to the different trade blocs in the continent in which individual partner States are members. 

These are the Common Market for Eastern and Southern Africa (Comesa) and the Southern Africa Development Community (SADC).

While Kenya, Rwanda, Burundi, Somalia, the Democratic Republic of Congo (DRC) and Uganda are members of Comesa, Tanzania belongs to SADC. Democratic Republic of Congo belongs to both trade blocs. 

The TFTA is meant to harmonise these differences to facilitate trade among EAC countries and with the two other trading blocs. 

TFTA and the African Continental Free Trade Area (AfCFTA) are two of the key trade agreements in the region which South Sudan has not ratified. 

Economic blocs

The genesis of TFTA is informed by the fact that EAC partner States trade more with Comesa and SADC than the rest of Africa. 

To boost further trade, the three economic blocs Comesa, EAC, and SADC- agreed to establish TFTA. 

“However, the TFTA Agreement has not come into force due to the low number of ratifications,” notes the East African Business Council (EABC), a private sector lobby for the region that Kenya subscribes to through lobbies such as the Kenya Private Sector Alliance (Kepsa) and the Kenya Association of Manufacturers.

So far 11 countries have ratified the agreement and 23 countries have signed.

Six are yet to sign. “In EAC, Tanzania has not ratified while South Sudan and Somalia have neither signed nor ratified the agreement. In addition, Tanzania and Egypt have not finalised their bilateral tariff offer while EAC-Burundi, Rwanda, Uganda, and Kenya and Southern Africa Customs Union (SACU) - Botswana, Eswatini, Lesotho, Namibia, and South Africa are yet to finalise bilateral tariff offers,” says EABC in its policy priority for the 2024-25 financial year.

EABC also notes challenges with the implementation of the AfCFTA, the largest trade agreement on the continent that saw Kenya ship tea to Ghana for the first time. 

“The challenges include the Republic of South Sudan’s delay in signing the Agreement and not implementing EAC Common External Tariff and liberalisation of trade in services,” says EABC.

DRC is also said to have submitted separate and different tariff offers to that of EAC.

Partner States also take too long to agree on common positions on contentions issues under AfCFTA Rules of Origin and treatment of products which are manufactured under Export Processing Zones.

EABC notes that South Sudan is currently in the process of ratifying the AfCFTA Agreement.

“The EAC Partner States and Secretariat should urge the Republic of South Sudan to ratify the AfCFTA Agreement and implement the EAC Common External Tariff and EAC Schedule of Commitments on Progressive Liberalisation of Trade in Services,” says EABC.

The lobby notes that tariff modalities require EAC-sensitive goods (Category B) to be seven per cent of the 5,688 which is 393 tariff lines to be liberalised for 13 years.

Tariff lines

The EAC Partner States have so far converged on 348 tariff lines.

Excluded goods under category C cover three per cent of the 5,688 tariff lines and must meet the anti-concentration clause that not more than 10 per cent of intra-African imports should be excluded from preferential forms. 

So far EAC has converged on 84 tariff lines. 

“The last meeting of Permanent-Principal-Under Secretaries which was held from January 29 to February 1, 2024, directed: i) Partner States to finalise national consultations on the outstanding tariff lines based on the agreed criteria by March 31, 2024, and ii) the Secretariat to convene a meeting of experts and Permanent Secretaries by April 30, 2024, to finalise the EAC tariff categories B and C,” reads the EABC policy priority document.