ECR Party

Trade benefits all: it’s not a zero sum game

Part 1 of 2: Highlights from the Great Lakes Trade Summit, Uganda

The Great Lakes Trade Summit, hosted by ACRE in Uganda this month, could not have been more timely. Whilst trade negotiations between the EU and EAC flag, and Europe reconsiders her trade policies post-Brexit, this Summit sought to revitalise the inter-regional discussion on trade.

Worryingly, politicians in Europe and East Africa continue to vex about the consequences of easing tariff and non-tariff barriers. Persuasively communicating David Ricardo’s counter-intuitive but true insight about how comparative advantage can prosper all trading countries is a major challenge of our times. This was the core of message delivered by Daniel Hannan in his keynote to the conference. He also identified three institutions which contribute to effectively optimising trade and its benefits: the definition and protection of property rights; the rule of law; and an independent judiciary.

On this, Freeman Mbowe MP, the leader of Tanzania’s Opposition party, CHADEMA, regretted the fact that in far too many African countries politicians and civil servants were far wealthier than business people. This was often linked to the myriad opportunities in the system to engage in corrupt practices, whereby public officials enriched themselves through the granting of licences and other barriers to entry.

Turning to areas for European reform: Agatha Juma, Head of Public Private Dialogue at KEPSA, the voice of Kenya’s private sector, criticised the way in which overly prescriptive EU standards on such foodstuffs as pineapples had damaged East African growers and left them vulnerable to the withdrawal of major contracts. There was general agreement that EU standards were the biggest non-tariff barrier to trade and these standards were in urgent need of review. Elly Twineyo, Director of the Uganda Export Promotion Board also criticised the unfair bias created by the EU’s Common Agricultural Policy, which he encouraged the UK to drop post-Brexit.

A number of non-tariff, local frustrations to trade were highlighted by David Stanton, Managing Director of Trade Mark East Africa. He judged that it may take at least another 15 years for the East Africa region to firmly establish itself on the road to fulfilling its true potential and achieve middle income status; this path to prosperity hinged critically on economic growth and the eradication of conflict in Burundi and South Sudan. Much of this potential economic growth centred on the textiles and agriculture sectors, both major employers of labour. TradeMark East Africa – a key supporting partner with the Great Lakes Trade Summit – has led the way in reducing border delays in East Africa – down 80% at Taveta (Kenya) and expected to fall by 30% this year in terms of the average time a truck takes to cross selected borders. In Mombasa, import times have been slashed by 41% from 11.2 days in 2010 to 6.56 days in 2015. Similarly, export times through this key port have shrunk from 11.2 days in 2010 to 6.8 days in 2015. In Dar es Salaam, import times reductions have fallen by 35% from 11.2 days in 2010 to 11.2 days in 2015 while export times have fallen from a protracted 14 days in 2010 to only 5.3 days in 2015.

The problems encountered by business people in obtaining visas to visit EU countries, including the UK, were highlighted by several speakers and many more in the audience. This is clearly an issue which needs radical review. Trade opportunities are being seriously threatened by the difficulties and expense of applying for visas – both in terms of EAC citizens visiting the EU and EU citizens visiting the five countries comprising the East African Community.

Rules of origin need to be reviewed, too, since this has hindered exporters from the East African region. Exporters of coffee beans, for example, do not receive fair treatment when it comes to establishing where coffee is supplied. Oni Oviri also pointed out that current EU tariff and non-tariff procedures seriously deters crucial elements in the supply chain, notably in agricultural foodstuffs. In practice, this means, canning, processing, storage and branding. Apart from a few beers such as Tusker the absence of major African brands in the food and beverage sectors is a striking feature of the East African economy.

In the final session of the day, Britain’s Minister for Foreign Affairs and International Development, Rory Stewart MP, argued that East Africa should focus on manufacturing as a means of improving people’s standard of living. Using Ethiopia’s story of growth through manufacturing as an example, he argued not to ‘give up on industrialisation’. The Minister felt there was tremendous potential for East Africa to export manufactured goods to OECD countries, and that concentrating on this tier of the economy would generate jobs for the region’s rapidly growing population.

As ever, the message at the heart of the day remained the sound economics of free trade. As a member of the audience commented “free trade is being impeded by fear” – an irrational fear. Keith Boyfield of the Centre for Policy Studies summarised a response to this fear well: “Trade benefits all: it’s not a zero sum game”.