Trade Negotiations and Development for the EAC: EPAs and the WTO

Trade Negotiations and Development for the EAC: EPAs and the WTO Arusha, Tanzania, 28-29 October 2005 Convened by ILEAP & ECOWAS Consolidated Workshop Recommendations Approximately 60 delegates and experts from Kenya, Tanzania, Uganda, Rwanda and Burundi attended a two-day session on trade and development on 28-29 October 2005 organised by the International Lawyers and Economists Against Poverty (ILEAP) and the East African Community (EAC), in collaboration with the African Economic Research Consortium (AERC). The intention of the meeting was to help inform East African trade policy positions in advance of the December 2005 WTO Ministerial Conference. The meeting forwarded research and expertise from participants and presenters, with a view to forming a series of recommendations to policymakers to highlight development in trade negotiations. The following series of recommendations are to be taken as complementary to those forwarded from the Regional Retreat for the Inter- Institutional Committees of the East African Community Member States in Preparation for the 6th WTO Ministerial Conference, held in Arusha, Tanzania on 3-5 October 2005. The latter are contained at Annex A. The recommendations are structured under three broad clusters: Development, Trade in Goods, and Trade Facilitation & Services. 1. DEVELOPMENT: Special and Differential Treatment and Aid for Trade I. Special and Differential Treatment (SDT) 1. Participants at the ILEAP/EAC/AERC Trade and Development Workshop held in Arusha, Tanzania on 28-29 October 2005 call upon the international community and development partners to provide necessary policy space for governments to strategically intervene to take advantage of and to enhance trading opportunities. EAC countries need flexibility to apply rules that are consistent with their development objectives. They need to have options not to apply WTO rules that undermine their overall development objectives. 2. Governments are urged to enhance skills development and access to finance and grants to the private sector to become more competitive in the global economy. In particular, this should be directed towards acquisition of relevant technology and in human resource skills development.

3. Governments are urged to formulate complementary national policies to take advantage of existing preferences for as long as these are in place. 4. However, current preference schemes need to be urgently reformed with special attention to the following: a. Relaxation of rules of origin b. Expansion of coverage to include all products of interest to developing countries c. Compensation of economies affected by preference erosion (either financially or by providing other types of preferences (e.g., in areas such as mode 4) d. Effort to slow down the rates at which preferences are being eroded in the short run. 5. We recommend the establishment of financing mechanisms to address, among other things, supply side constraints in order to meaningfully utilize available and potential market access opportunities. An Aid for Trade Initiative needs to be launched at the Hong Kong Ministerial Conference and should include the following features: a. Level of funding compatible to EAC members development challenges in the DDA and EPA. Since new liberalization will be undertaken and will generate new adjustment and implementation difficulties, additional resources will be necessary. b. The initiative should give priority to the creation of public goods in the form of conditions for EAC firms to take advantage of new market opportunities and as such a primary grant-base funding mechanism. Where private activities are to be undertaken financial conditions will be in the best possible market terms. c. The initiative should primarily cover four areas; i. Complementary reforms and investment needed to address supply side constraints. ii. Preferences erosion iii. Net food importers iv. Loss of financial revenues d. The initiative, without taking away the resources fro LDCs should have resources earmarked to; i. Regional programs ii. Specific issues such as SPS/TBT and Trade Facilitation. e. The initiative should ensure capacity is enhanced on at least four areas; i. Capacity to negotiate rules necessary to promote their development ii. Capacity to adjust iii. Capacity to produce iv. Capacity to trade. 6. We call upon international institutions to ensure policy coherence, especially the World Bank, the IMF and the WTO. 7. EAC integration in the multilateral trading system will be smoothly done if it relies on strong regional integration process. Governments are also urged to work closely with other developing countries to intensify negotiations of S&D and other development related issues. II. Aid for Trade 2

1. We stress the importance of involving all stakeholders in the negotiation process for aid and its utilization. 2. We call upon development partners to urgently streamline and simplify procedures of accessing aid (including reduction of administrative costs) by the Hong Kong Ministerial Conference. Economic Partnership Agreements 1. EPAs must be a tool for development. The objectives of poverty eradication, regional integration and strengthening competitiveness and value addition of ACP economies, already included in the Cotonou Agreement (CA), should be expeditiously reflected in the negotiations as pre-condition for ACP integration in the multilateral trading system. ACP development concerns must be addressed by immediately assessing EPA negotiations through explicit development benchmarks (on market access, policy space, resources for development support) and the establishment of an appropriate and effective Monitoring Mechanism. These benchmarks must also ensure that beneficiary countries improve access to EDF funds. In addition, further strengthening is needed to enable the full use of available EDF funding. 2. Therefore EPA negotiations should immediately ensure greater coherence and complementarity between: the trade-related content of EPAs; the necessary accompanying and adjustment measures; and the timely and effective delivery of support (through improvement of development cooperation procedures but maintaining positive CA principles: partnership principles, joint management of cooperation instruments, multiannuality of funds) 3. Greater coherence and complementarity should be ensured by: strengthening the role of RPTFs as part of the formal negotiations; binding commitments by the EU, including on additionality of development resources; and careful sequencing of development cooperation delivery and liberalization implementation. 4. The priority areas for TRA as identified by the RPTF should be mainstreamed in all ACP countries, i.e. through the 10 th EDF programming exercise. The responsibility of EC Delegations to liaise with National Authorising Officers in this process should be clarified and strengthened, particularly to link the EPA negotiations to the RPTF, which in turn must be translated concretely in the 10 th EDF programming process. 5. In order to maximize the benefits from EPAs and EU s Aid for Trade initiatives, ACP negotiators in Brussels should meaningfully and urgently contribute to the process of reform of ACP-EU cooperation instruments (including: 10th EDF negotiations; discussion on different envelopes-all ACP, regional, national levels; and revision of the financial regulations) and link those to such trade initiatives 2. TRADE IN GOODS: Agriculture and Non-agricultural Market Access (NAMA) 3

I. Agriculture Offensive strategy 1. A key element of an offensive strategy on agriculture negotiations at the WTO for East African countries should be in negotiating to reduce market access barriers (i.e. tariffs and non-tariff barriers), as this holds out the greatest prospect to open up export markets. This should be supplemented by elimination of trade-distorting OECD agricultural subsidies, particularly in sectors of export interest such as cotton. Towards this end, identify a list of products for which there should be frontloaded export subsidy eliminations. Advocate that OECD subsidy reductions be reoriented to help finance required adjustment and compensation in East African countries. Further ensure that EU CAP reform that increases Green Box subsidy allocations is minimally tradedistortive. 2. Ensure that EU rural development measures (i.e. quality assurance, meeting EU health and animal welfare standards) do not disadvantage African exporters. Adequate Aid for trade must be made available to meet existing and emerging SPS and TBT-related standards (both official and private sector). This should be directed to related infrastructure such as laboratories and agricultural extension services, and to assistance for countries to participate in standard-setting bodies such as Codex and ISO. 3. Come forward with submissions to the WTO negotiations that are based on national / regional agricultural economic realities. Analyze proposals submitted from other WTO members and elaborate offensive and defensive positions in response. 4. Seek more lenient rules of origin in both WTO and EPA negotiations. 5. Consider the benefits and costs of bringing forward a regional position on agriculture. 1 Defensive strategy 1. East African countries should strongly support special and differential treatment in the agriculture negotiations, particularly on special products (SP) and the special safeguard mechanism (SSM). SP and SSM should be addressed in the immediate term (i.e. for Hong Kong), rather that later on. 2. Maintain policy space to support East Africa s agriculture sector in future: push for maintenance of de minimis levels of support. 3. In the export competition pillar, put in place a mechanism to ensure that negative effects of OECD subsidy reductions on net food-importing developing countries and LDCs are avoided. 4. Resist proposals that would erode preferences by margins that threaten East African agricultural prospects. 1 Towards this end, the EAC has already developed an agricultural policy and strategy and will hold a Congress on agriculture and development in 2006 to discuss these two documents. 4

5. Ensure that East African products benefiting from preferences be designated as sensitive by the EU to enable continued ACP exports. Governments in the region should specify which products these are. Aid for Trade - Agriculture 1. Market access commitments made in the Doha Round negotiations alone will not be enough to deliver on the Round s development promises. As such, they must be accompanied by adequate Aid for trade in East African developing countries and LDCs to enhance agricultural productivity and build productive capacity. 2. Put greater emphasis on supply-side issues in agriculture to increase basic valueadded in agricultural products and make the linkage with poverty reduction. Studies need to be undertaken to look at what products from the region could become competitive under a more liberal global agricultural regime, and build in Aid for trade for this. Assist in particular landlocked countries facing transport and transit challenges. II. Non-agricultural Market Access (NAMA) Offensive strategy 1. Base support for tariff reduction formulae (whether linear, Swiss formula or otherwise) or coefficients on criteria around poverty reduction and economic development. Conduct studies to determine how proposals submitted thus far in the WTO NAMA negotiations would impact East African countries industrial sectors and government revenue. 2. Identify an appropriate formula that would maintain policy space and flexibilities for industrial policy instruments, including for economic diversification. 3. Conduct negotiations on NTBs in tandem with those on tariff reduction. 4. Developing countries able to do so should also extend duty free and quota free market access to LDC products. Defensive strategy 1. Resist the inclusion of the sectoral initiative for East African countries, due to the threat it poses to reducing policy space for sectors such as textiles and clothing, fish and fish products, footwear, leather goods and environmental goods, and to effective use of preferences. 2. Take full advantage of spaces for special and differential treatment for developing and least-developed countries, and articulate how less than full reciprocity should be operationalized in the negotiations. Resist formulas that could lead to deindustrialization. 3. Provision for mechanisms for addressing preference erosion and respect for LDC exemptions. 5

4. For EPA negotiations, ensure the following elements are brought forward: the principle of asymmetry shall apply; product coverage and trade liberalization periods shall be defined; appropriate safeguard measures shall be developed; and a transitional period of 20+ years, incorporating a five-year grace period, shall be sought. Aid for Trade - NAMA 1. Support negotiations with appropriate studies and capacity building, i.e. national level studies to identify particular commodities or sectors (i.e. horticulture) and specify requirements to address respective supply-side issues. Move beyond recommendations to implementation. 2. Enhance the resource envelope for Aid for Trade along the lines of the Commission for Africa and invest in socio-economic and physical infrastructure (including raising OECD ODA to 0.7% GNP) 3. Strengthen TRTA instruments such as the Integrated Framework, including expanding the IF to more countries beyond LDCs. Other issues General Market Access 1. Ensure that parallel negotiations in EPAs are compliant with WTO commitments. 2. Link the EAC position on Agriculture and NAMA to a wider AU position. Consider coordinating this through a strong regional authority sufficiently mandated and empowered. Supplement with a strong regional industrial policy. 3. Use the regional East African market as an opportunity to build competitiveness, trading experience and larger regional markets, while continuing to take advantage of all global market opportunities. 3. TRADE FACILITATION & SERVICES I. Trade Facilitation 1. Isolate Trade Facilitation components within national trade policies so as to amplify the issue s importance. 2. There is a need for a regional system that coordinates all of these so as to avoid a disconnect among countries. 3. Enhance customs and other related agencies that are directly involved in Trade Facilitation. This involves institutional coordination, enhanced roles of relevant stakeholders such as relevant ministries, and setting up of enquiry points. 4. Document regional legal systems on Trade Facilitation (e.g. advance rulings, appeals, interpretation of laws, judiciary) in order to inform the negotiating process and enable implementation of potential forthcoming commitments. 6

5. Develop infrastructural capacities at the regional and national level on TF, including ICT, transport, institution building and coordination 6. Train officials on Trade Facilitation through, for instance, participation in country exchanges and attachment programs to provide exposure. 7. TACB should be the cornerstone in the negotiations. Costs of implementation are extremely important and the EAC region needs an a priori assurance of how funding will be delivered and by whom. Accessibility to donor funding dedicated to Trade Facilitation is critical. A defined, predictable, and transparent mechanism for channeling the funds should be put in place. The funding could have a regional dimension so as to benefit regional programs including on transit management, border procedures, and information exchange. 8. Seek opportunities to address the issue of Technical and Financial Assistance for Trade Facilitation within the EPA negotiations. 9. Clearly define East Africa s ambitions within the scope of negotiations at the WTO. Recognize the need to deal with TF in a broader context at the national and regional level, which will encompass aspects that are not covered by the three WTO Articles. 10. The WTO Dispute Settlement Mechanism should not be applied in the context of Trade Facilitation. 11. Assessment of needs and priorities must be done in the course of negotiations. Technical Assistance should be made available in this regard. 12. There is need for clear demarcation of the regional, EPA, and multilateral dimension to recommendations. 13. Extract the urgent priorities arising from the case studies presented at the ILEAP / EAC Workshop. 14. East African countries should articulate proposals according to: -Which TF provisions can countries from the region implement easily? -Which can be implemented with TFA and CB? -Which are simply not acceptable? II. Services 1. There is need to clearly and strongly resist and reject proposed benchmarks in services, as EAC members have not had adequate time to reflect on the implications of the new approach. It is also not clear how the approach fits within the GATS architecture, and it seems to erode flexibilities given to developing countries in the GATS. The focus should rather be on the Guidelines and procedures for negotiations, the Modalities for the Special Treatment of LDCs, and relevant aspects of the GATS such as Article IV (increasing participation of developing countries). 7

2. The EAC must continue to push for liberalization in Mode 4 (Movement of Natural Persons), both for skilled and semi-skilled categories of service providers. The EAC should push for Mode 1. In parallel, there should be an expeditious movement on dealing with the movement of natural persons within the context of the EAC itself. 3. There is need for dedicated and targeted technical assistance and capacity building for services as contained in Article IV of the GATS, so as to enhance the region s domestic capacities to participate in, and benefit from, international trade in services. There is a further need to clearly identify where this assistance should come from, and what precisely it will support. 4. Design a regulatory framework in countries for the sectors that they envisage to liberalize. This stage must come before assumption of obligations, be it at the WTO or EPAs. 5. Specific legal instruments that cover sectors considered for liberalization should be created to provide the framework guiding application of such liberalized measures. 6. Harmonized regional policy must be put in place to guide reform, to attract investment and encourage domestic participation in opportunities that will emerge resulting from this liberalization. Build synergies in the region to capitalize on human resources capacity. 7. For liberalization of trade in services, countries should prefer a GATS-type approach, i.e. bottom-up, positive list, together with the ability to maintain limitations and flexibilities. In parallel, national assessments should also be undertaken so as to have greater information on the impact of liberalization of trade in services under the EPAs. 8. In considering regional approaches to projects on services, there should be clear guidelines on benefit-sharing so as to hasten capacities and implementation. 8

ANNEX A REGIONAL RETREAT FOR THE INTER-INSTITUTIONAL COMMITTEES OF THE EAST AFRICAN COMMUNITY MEMBER STATES IN PREPARATION FOR THE 6 TH WTO MINISTERIAL CONFERENCE ARUSHA, TANZANIA 3-5 OCTOBER 2005. OPENING SESSION The meeting was officially opened by Mr. J.S.K. Mhina, Director of Trade, on behalf of the Permanent Secretary, Ministry of Industry and Trade, United Republic of Tanzania, who highlighted the importance of going to Hong Kong with a concrete EAC regional position that reflects the interests of member states and ensures commitment to the objectives of concluding a successful round by the end of 2006. Mr. Aime Murigande of UNCTAD also made opening remarks on behalf of the three executing agencies of the JITAP II Programme in which he emphasized the need for the IICs to provide technical inputs into the preparations for the Hong Kong Ministerial Conference. Capital-based officials and one representative from the Geneva-based missions attended the meeting. Officials from UNCTAD facilitated the workshop (list of participants is attached). The meeting adopted the agenda and the proceedings started with a presentation and discussions on the state of play of the negotiations at the WTO presented by a representative of the Geneva EAC missions. 1. DOHA DEVELOPMENT AGENDA NEGOTIATIONS: STATE OF PLAY CONCLUSIONS AND RECOMMENDATIONS i. Focus on bringing adjustment support into the mainstream of the WTO agreements in view of emerging experiences on the ATC and on preference erosion; ii. Preparations for the 6 th WTO Ministerial should aim at producing a negotiated text that effectively reflects the views of all WTO members and provides the basis for further deliberations and decision-making at the Hong Kong Conference. iii. Need to recognize and maintain the primacy of the Geneva based negotiating process to ensure that the negotiations are inclusive and fully transparent to provide political ownership to all WTO members of both the process and the outcome of the negotiations. iv. EAC countries position should aim at balancing the need for conclusion of the round by the end of 2006 and the attainment of its developmental and trade interests in the negotiations. 9

v. Ensure coherence between EPAs negotiations and the WTO negotiations to avoid undermining the MTS through agreeing to WTO++ agreements in regional arrangements. Strengthen coordination and linkages between Geneva and Capitals. vi. Need to enhance the technical, human and financial capacities of the Geneva and Brussels missions to undertake the negotiations; vii. Sensitization of the international and national media on the developmental and trade interests of EAC countries in the MTNs and regional negotiations to publicize and stimulate awareness of those interests. viii. Ensure frequent and closer collaboration and cooperation in preparations for negotiations between the EAC member states both in Geneva, Brussels and at the Capital level to enhance coherence and harmonization of negotiation positions. In this regard, build on the IITC and other institutional structures inherited from the JITAP programme. 2. AGRICULTURE CONCLUSIONS AND RECOMMENDATIONS The discussions on agriculture focused on the 3 pillars and S&D elements for developing countries. Reiterated the importance of major movement on all the three pillars and achieving a level of ambition that reflects the need for major liberalization while taking into consideration the interests of developing countries in terms of non-reciprocity and SDT as well as disciplining the domestic support instruments that are market distorting. A balance between the three pillars, particularly as relates to the relationship between disciplines on domestic support and market access. Concerns were also expressed about the effectiveness of reforms and development provisions that cut across all the issues in the agriculture negotiations. It was considered that there should be a link between agricultural and industrial policies. (a) Market Access i. Tariff reduction formula: The level of ambition of the tariff reductions and especially the level of proportionality should not be linked to any other special and differential treatment provision given to developing countries. These include SP, SSM and the special tariff structure of EAC countries. The effects of the formula can only be determined when the parameters are identified. Tariff escalation issues should be addressed fully in accordance with the July Package agreement. ii. Conversion of non-ad valorem tariffs to ad valorem: Concerns were raised on whether all AVEs will be converted back to non-ad valorem tariffs after the reduction. AVEs should be bound in ad valorem tariffs and not reconverted after the reductions. 10

iii. Sensitive products: The designation and number of Sensitive Products could have implications for market access for EAC countries. Therefore the flexibilities regarding sensitive products should be linked to an expansion of market access for EAC countries. iv. Special Products : The concept of SPs should be flexible enough to address issues of food security, livelihood security and rural development in EAC countries. SPs should include tropical products produced in EAC countries. The products should be exempted from tariff reduction commitments. v. Special Safeguard Mechanisms: It was considered that the SSM would help to correct the current imbalance in the use of safeguard measures in agriculture. The price and the volume trigger are both considered relevant. vi. Preference erosion: The issue of preferences erosion is a very important component in the market access pillar from the EAC countries perspective. The importance of specific and concrete mechanisms and solutions to the problem of preference erosion should be devised within the WTO context to fully address these concerns. vii. Non-Tariff Barriers (NTBs) and Market entry: It was expressed that NTBs were a major obstacle to EAC exports and needed to be addressed, in particular standards and anti-competitive practices. A decision to negotiate on NTBs in agriculture in or by the 6 th WTO Ministerial Conference should be considered. (b) Domestic Support i. Overall reduction of trade distorting support: The reduction of the overall level of support should be meaningful and effective. The tiered formula for reductions should guarantee the achievement of this goal. To prevent circumvention, disciplines on domestic support should not lead to box shifting of subsidies. ii. De minimis: EAC countries should be exempted from the reduction of de minimis ceiling levels. iii. Blue box: For the blue box to be a genuine tool for reform it should be subject to disciplines that guarantee that it is less trade distorting. iv. Green box: The review and clarification process of the green box should ensure that the measures are not or at most minimally trade distorting and take account of the developing countries realities such as food security, rural development and livelihood security concerns. (c) Export Competition i. Elimination of export subsidies: All forms of export subsidies should be eliminated by 2010. ii. Net Food Importing Developing Countries (NFIDC): Effective mechanisms should be put in place in order to avoid negative effects of the elimination of export subsidy elements in the export credit and insurance guarantee schemes on EAC countries. iii. Food aid: New disciplines on food aid should take into consideration the special needs of EAC countries. Food aid intended for humanitarian and emergency cases 11

iv. (d) should be permitted by the disciplines to be developed. Food aid should be denominated in monetary terms rather than in kind except in cases of genuine emergency aid to avoid displacement of domestic commercial production. State Trading Enterprises (STEs): New disciplines on STEs should take fully into account their important role in areas of food security and livelihood concerns and poverty reduction. Cotton A decision by the 6th Ministerial Conference of the WTO in Hong Kong should be taken on: i. Trade aspect: The importance of the improvement of the market access opportunities for cotton and by-products of cotton, and for LDCs consolidated duty free and quota free market access should be considered. ii. Development aspects: The effectiveness and the necessary amount of an emergency fund to support cotton producers to meet the loss of revenues should be addressed expeditiously. The importance of mobilization of resources and technical assistance to support the cotton sector and other commodities of interest to EAC countries should be considered. (e) Food Aid Food aid should be denominated in monetary terms rather than in kind except in cases of genuine emergency aid to avoid displacement of domestic commercial production. 3. NON-AGRICULTURAL MARKET ACCESS CONCLUSIONS AND RECOMMENDATIONS The core issues in the NAMA negotiations include the tariff reduction formula unbound tariffs and flexibilities for developing countries. EAC countries could derive benefits from MFN tariff reduction provided that their supply side constraints and market entry barriers are properly addressed. However, the interests of EAC and other developing countries lies in the adoption of a non-linear formula and exclusion of the sectorial approach from the negotiations. In considering tariff reduction formula, EAC countries may derive greater advantages from deepening South-South relations especially at the intra-regional level. The following recommendations were made: i. Identify an appropriate formula that would allow African countries to pursue industrial policy and diversification objectives and take as priority the principles of special and Differential Treatment and less than full reciprocity; ii. Provide policy space and flexibility that fully takes account of African countries developmental, financial and industrial needs and minimizes the risk of 12

de-industrialization with its attendant negative consequences on poverty reduction. Maintain the flexibilities for EAC Member States to determine their binding coverage commensurate with their development objectives; iii. Preferences are important development instruments for EAC countries and should be made more effective through simplified rules of origin, standards and administrative processes. iv. For developed countries, and developing countries in a position to do so, to provide binding commitments for duty and quota free market access to products originating from LDCs with realistic and flexible rules of origin; v. Do not include the sectoral initiatives because of their potential detrimental effects on African countries; vi. The NTBs negotiations should be conducted in tandem with those for tariff reduction in NAMA negotiations. Ensure that environmental issues are not used as NTBs against EAC non-agricultural exports. 4. INTELLECTUAL PROPERTY RIGHTS CONCLUSIONS AND RECOMMENDATIONS On TRIPS and related issues there is cognizance of the fact that for most developing countries, the major concerns lie in effective implementation and utilization of existing flexibilities, rather than in the negotiations. Nevertheless negotiations in the form of addressing the development issues remain critical. The EAC region is endowed with a rich heritage of both traditional knowledge and genetic resources and initiatives towards establishing a regional legal and institutional framework as well as a regional register for these resources should be considered. This should be the starting point for the protection of these resources and ensuring that EAC member states share from the economic benefit accruing from R & D on these resources. Specific recommendations include: i. EAC countries stress the importance the Decision on TRIPS and Public Health adopted in August 2003 and call for its effective implementation and finalize by the Hong Kong Ministerial Conference. Article 31 of the TRIPS Agreement should be amended expeditiously, to address the issues of interest for developing countries and LDCs that have insufficient or no manufacturing capacity in the pharmaceutical sector are able to access affordable medicine. ii. The negotiations should focus on actions on the development dimension of the TRIPS agreement as a means of expediting the emergence of capacity to make effective use of the TRIPS flexibilities and make advances in other areas of the TRIPS agreement. iii. Review of Article 27.3(b) of the TRIPS Agreement should be concluded as a matter of priority as this holds the key to the main concerns of EAC and other developing countries with respect to traditional knowledge protection and genetic resources and also to remove the ambiguities in the text of the TRIPS Agreement. 13

iv. Establishment of an international legally-binding regime on protecting traditional knowledge under the WTO in close consultation and collaboration with the UN Convention on Biological Diversity and the International Treaty on Plant Genetic Resources. v. Sufficient support should be extended to EAC countries to enable them to undertake IP audits and build capacity to implement the TRIPS Agreement by building the legal framework in terms of institutions, laws and policies. The transition period for developing countries to enable them to build capacity to fully implement the TRIPS Agreement should be extended beyond 2006. 5. NEGOTIATION IN TRADE IN SERVICES CONCLUSIONS AND RECOMMENDATIONS There has been limited movement on negotiation in services perhaps because of linkages to negotiations in other areas. However the EAC believes that liberalization of trade in services is of benefit to both developed and developing countries. Hence the following recommendations target the adoption and implementation of a proactive involvement in the negotiations. In view of this conclusion the EAC countries jointly make the following recommendations: i. Initiatives to introduce the concept of benchmarking in the negotiations for on Trade in Services, may create or maintain imbalances in the negotiations as it will lead to departure from the positive list approach that allows for progressive liberalization and flexibility which are key features of the architecture of the GATS and also embodied in the Guidelines and Procedures for the Negotiations and the LDC modalities. ii. Reaffirm commitment to the objectives of Articles IV and XIX of the GATS, which emphasize the flexibility for developing countries to open sectors in line with their developmental objectives, liberalizing fewer types of transactions and modes of supply and provides for the right to regulate and introduce new regulations relative to their development interests and objectives. iii. Request for full market access and national treatment for all sectors and iv. modes of supply of export interest to EAC member states. Pursue the placement of offers on Mode IV services and call upon developed countries to make firm commitments towards the removal of barriers to the movement of natural persons and provision of greater market access in particular for semi-skilled and non-professional service providers on a temporary basis. v. Call for full implementation of the modalities for SDT for LDCs in the negotiation on Services. Ensure that Special Modalities for Treatment of LDCs and Guidelines and Procedures for Negotiations in Services form the basis for negotiations. 14

vi. vii. Intensify EAC member participation in the rules making negotiations particularly as relates to the development and application of domestic regulation disciplines and emergency safeguard measures. Increased and targeted technical assistance to facilitate undertaking of assessment of trade in services so as to take informed and strategic decisions on liberalization including sectors that can be opened up, the pace and sequencing of liberalization and development of capacities in trade in services. 6. TRADE FACILITATION CONCLUSIONS AND RECOMMENDATIONS EAC countries give importance to the work of the Negotiating Group on trade Facilitation particularly since one member is a transit and landlocked country. EAC countries need to take part in the negotiations themselves and effectively implement the resulting obligations. It was noted that while the focus of the trade facilitation negotiations is on the simplification and improvement of customs procedures and facilitates including for transit, for African countries bottlenecks arise from backward and forward linkages such as physical, ports and transport relating to trade efficiency and these need to be addressed as well in the wider development framework. EAC countries should take initiatives at the regional level in the areas of trade facilitation that cater for their needs, before engaging into deeper negotiations within the WTO framework In regard of the negotiations, the key recommendations are: i. Careful analyses of the implications of proposals submitted so far, to ensure that negotiations are confined within the mandate as some proposals tabled tend to go beyond the scope of the mandate and that the policy space for developing countries and LDCs are maintained. The negotiations on trade facilitation should not impinge against the sovereignty of states; ii. Trade facilitation agreement should seek to reach greater harmonization and transparency of related laws. For this purpose, member states of the WTO should establish enquiry points, in order to facilitate the flow of necessary information; iii. The outcome on trade facilitation negotiations should not be subject to dispute settlement mechanism, particularly for developing countries, including LDCs; iv. Technical assistance and capacity building assistance should be provided during the negotiations and the implementation period. Such capacities should be clearly defined so as to be effectively addressed. The capacities should extend beyond customs procedures to include infrastructure development strengthening human and institutional capacities; v. There should be a reasonable interval between the provision of technical assistance and the implementation of the outcome of the negotiations. ; 15

vi. vii. The cost implications for proposed commitments and obligations on trade facilitation should be assessed and the corresponding support measures and funding sources identified. Such disciplines may result in significant costs which should be met by the developed countries; Work on trade facilitation is already being undertaken at the EAC level in the context of economic integration. There is need to ensure coherence and coordination between the WTO negotiations and the regional integration efforts. 7. DEVELOPMENT ISSUES CONCLUSIONS AND RECOMMENDATIONS Development issues at the multilateral trading system are at the core of the negotiations for EAC countries. These include special and differential treatment, implementation related issues and concerns, technical assistance, special concerns of LDCs, and other development related issues. Hence all development concerns are valid and should continue to be pursued in the negotiations to their logical conclusion. Elaboration of the conceptual and practical relation between trade and economic development, and the adoption of principles to facilitate the role of trade in the promotion of the social economic development and poverty elimination of developing countries, including LDCs. Developing countries should maintain unity and alliance between them both at Geneva and capital levels, as well as regional groupings like EAC, SADC and COMESA, while continuing to present clear and reasonable proposals during the negotiations with other WTO Members. In this regard the following recommendations were considered: i. Broaden the development perspective beyond the current focus on SDT and the implementation issues. Development issues should be mainstreamed into the core agreements i.e. Agriculture, NAMA, Services, TRIPS, Trade Facilitation and Rules and other instruments; ii. Political will, coupled with technical work, should be intensified by all WTO Members, particularly developed countries, upholding the development dimension enshrined in the Doha Development Agenda and the July Package in iii. favour of developing countries, including LDCs; Classification of WTO Members on the basis of trade performance over an appropriate representative period. It will be important to elaborate key measures to address unsatisfactory implementation of the development provisions of the WTO Agreement; iv. ; v. While the negotiations are continuing, donor and development agencies like UNCTAD should be requested to assist in technical studies and training, as well as needs assessments for capacity building on possible implications of various proposals being floated in the negotiations. Such assistance should aim at assisting the protection, development and promotion of the offensive and 16

vi. defensive needs and interests of developing countries including on market access, flexibility and capacity building. Creation of working group on Implementation and development issues. 17