Rwanda and the United Kingdom (UK) will restart negotiations of a potential deal early next year, which would determine the future trade relations between the two countries, a source at the Ministry of Trade revealed.
Rwanda currently trades with the UK under the protocols of the European Union, but Britain is entering into a new chapter in its relationship with the rest of the EU members.
This follows an announcement by British Prime Minister Boris Johnson last week that his country had reached a trade deal with Europe after nine months of tortuous talks.
It means that countries that were trading with the UK as a member of the EU will no longer do so. Instead, the UK will be negotiating its own trade rules with the rest of the world.
Already, the country has been negotiating bilateral trade deals with different countries including those in Africa. Kenya, a member of the East African Community (EAC), secured a deal with the UK.
The rest of EAC members haven’t made any progress partly because they were opposed to Kenya’s decision to go for a unilateral deal rather than negotiating as one bloc.
Currently, EAC countries do business with the UK under EU trade protocols.
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Under the current arrangement, Rwanda has been exporting to EU markets without paying duties on many products. This is thanks to the Generalised Scheme of Preferences (GSP).
The scheme makes it easier for traders from developing countries to export their products to the European Union. This is done in the form of reduced tariffs for their goods when entering the EU market.
The UK government said it will introduce its GSP scheme on January 1, 2021, under which developing countries like Rwanda will continue to access duty-free markets of the UK.
However, countries are hoping to secure a trade deal that will determine the long-term relations with the UK.
Negotiations between Rwanda and the UK for a potential trade arrangement have been ongoing, at least since March, but were halted due to Covid-19.
The negotiations were happening through the EAC customs union framework.
As a member of the Customs Union and the current chair of the EAC, Rwanda’s position has been to negotiate a regional trade arrangement with the UK post-brexit and the end of the transition period for the UK.
“In this regard, Rwanda is looking forward to re-engaging our partners in the UK, alongside other EAC member states to conclude on a regional trade agreement,” an emailed response from the Ministry reads in part.
According to a source at the Trade and Industry Ministry, the projected timeline is to restart negotiations early 2021 and conclude an agreement by December 2021.
The current arrangement through which Rwanda trades with the UK is a unilateral market access mechanism, which can be modified at any time by the UK government.
At the same time, it applies to a large extent to the Least Developed Countries (LDC).
“Therefore, given Rwanda’s development trajectory, once we graduate from an LDC, the ‘Everything but Arms’ arrangement will be greatly impacted,” the Ministry noted.
A trade arrangement or regional trade agreement with the UK offers more predictability, reciprocal trade arrangement, and guarantees Rwanda’s Duty Free, Quota Free market access irrespective of economic classification.
Rwanda hopes a potential trade deal would ensure trade continuity for years to come, and allow for the country’s nearly £30M\1 of exports to continue increasing in the UK market.
Total Rwandan exports to the UK averages at £11M.
At the last meeting of the EAC’s Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) in September, the EAC concluded they will be negotiating with the UK afresh, not just acceding onto the UK-Kenya Free Trade Agreement.
“Both Uganda and Tanzania wish that negotiations commence in February 2021, as EAC bloc,” Africa Kiiza, the programmes coordinator at the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) said.
Kiiza indicated that the current position is that Kenya cannot ratify the agreement as it will go against the Customs Union Protocol.
The EAC is developing a study on Implications of negotiating Free Trade Agreements (FTAs) with third parties, which will inform her and individual partner states’ negotiations of FTAs with third partners.
Source: The New Times