By ADAM IHUCHA
China
is seeking a free trade agreement with the East African trading bloc,
becoming a third global super economy in a row after European Union and
America.
EAC
has already inked the cooperation agreement on trade facilitation,
sanitary and phytosanitary measures and technical barriers to trade as
well as Economic Partnership Agreement (EPA) with United States and
European Union (EU) respectively.
This
implies that an expanding EAC is becoming more attractive to the
superpower economies, seeking market for their goods, and exploitation
of natural resources for their hungry-industries.
Recently China wrote
to the EAC Secretary General proposing to negotiate with the EAC
Partner States a comprehensive Free Trade Agreement (EAC-China FTA).
China also requested to undertake a joint feasibility study with the EAC on the proposed FTA, the EAC immediate former Secretary General, Dr Richard Sezibera informed the Council of Ministers meeting recently in Arusha.
After
deliberations, the EAC Council of Ministers meeting noted that there
was need for EAC to undertake a comprehensive cost-benefit analysis on
negotiating FTAs with other third parties.
The
Council directed secretariat to mobilise resources to undertake a
comprehensive cost-benefit analysis on the implications of negotiating
FTA with third parties, before negotiations.
EAC
spokeperson, Richard Owora says; “We are working on the directive of
the Council in regard to undertaking a comprehensive cost-benefit
analysis on negotiating FTAs with other third parties including China”.
Mr Owora said that they expect to conclude the work on the Council directive before the end of this Financial Year (30thJune).
However, the East African Business Council (EABC)
Chief Executive Officer, Ms Lilian Awinja cautioned the EAC over the
issue, arguing that free trade with China would hinder EAC
industrialisation.
“EAC
shouldn’t rush to negotiate FTA with China. We need to study, consult a
wide range of stakeholders and establish the impact of such a deal on
EAC industrialization blueprint” Ms Awinja said.
She
was of the view that EAC needs to protect its investors in
manufacturing industry, rather than expose them to unfair competition.
Ms Awinja argues that currently China floods the EAC market with their products, what if the region inks the FTA with Sino.
Analysts also warn the EAC, saying if need be, it should allow China to bring some few products, but not FTA as China proposes.
“China
is the world of its kind, it has capacity to flood the whole world with
their products, forget about EAC market. If we are to protect our
industries, lets choose few products from China” says Tumaini University
development studies lecturer, Dr. Gasper Mpehongwa.
The
EAC has become one of largest free trading bloc in Africa, offering
crucial opportunities for business and investments, thanks to admission
of South Sudan.
The
World Bank data show South Sudan would add 11 million plus people and
Gross Domestic Product of $13.28 billion to the EAC market that has 140
million populations and combined GDP of $110.3 billion.
Now,
the 17-year-old EAC with six partner states of South Sudan, Kenya,
Uganda, Burundi, Rwanda and Tanzania, offers one of Africa’s largest
integrated market and combined GDP of $123.58 billion.
China
plans to develop free trade areas with African countries - to upsurge
the continent’s exports to the far-east nation and offset the huge trade
imbalance.
Prof
Hu Hailiang, the Vice-Chairman of the Social Sciences of the Ministry
of Education in China, who was in Dar es Salaam recently that the
envisaged free trade area falls under its new five-year development plan
slated to begin this year.
The
free trade area agreement is expected to increase exports of goods from
Africa to offset huge trade imbalance between the continent and China,
he said.
“China
will negotiate with individual African countries and regional blocks to
develop free trade area agreement to promote exchange of goods and
services and investments,” said Prof. Hailiang.
China’s
policymakers are compiling the 13th Five-Year Plan (2016-2020), whose
proposal was adopted at the Fifth Session of the 18th Communist Party of
China (CPC) Central Committee in October 2015.
The
new five-year national socio-economic development will charter an
explicit blueprint for the country’s development over the next five
years - and provide more opportunities for the development of other
countries.
There is no doubt that U.S and China are competing ferociously on the global scene for economic dominance.
China has made some pretty good encroachment in the global share of American market place.
For instance China has surpassed United States as the largest African trading partner.
Five
years ago China surpassed the United States as Africa’s largest trading
partner, with Beijing’s trade quantifying at the excess of $200
billion.
There
are an estimated 800 Chinese corporations doing business in Africa,
most of which are private companies investing in the infrastructure,
energy and banking sectors.
Unconditional
and low-rate credit lines rates at 1.5 percent over 15 years to 20
years have taken the place of the more restricted and conditional
Western loans.
Since 2000, more than $10bn in debt owed by African nations to the China has been canceled.
No
nation has been more aggressive in Africa than China. Its direct
investment in sub-Saharan Africa has jumped from virtually nothing in
2002 to $18.2 billion in 2012.
China
is hungry for oil, coal and other resources and eager to develop the
roads, bridges and ports needed to pull them out of Africa.
Africans
tend to favor doing business with China in part because it’s less
likely than Western nations to demand economic and political reforms to
accompany trade and development deals.
