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22nd Ordinary Meeting of EAC Council of Ministers Concludes

PRESS RELEASE

EAC Secretariat, Arusha, Tanzania, 15 April 2011 : The 22nd Meeting of the EAC Council of Ministers concluded today after deliberating on a wide range of matters, that included the proposed amendment of the EAC Treaty ; the status of EPA negotiations ; the establishment of a Single Customs Territory and the EAC Budget Estimates for FY 2011/2012.

The Meeting, which was held from 11 – 15 April, 2011 in Arusha, Tanzania, adopted several policies and directives geared at enhancing and strengthening the regional integration and development process.

Some of the decisions/directives taken at the 22nd Meeting of the EAC Council of Ministers are in the following areas :

Amendment of the EAC Treaty

The Council recalled that the amendment of the Treaty for the Establishment of the East African Community was a long outstanding issue on the integration process with a bearing on the progress of the Community. It also noted that the proposed amendments were dispatched to the Partner States on 1st December, 2010 for consideration and submission of comments to the EAC Secretariat by 31st March, 2011. Some Partner States had already submitted their inpyts to the Secretariat.

The Council therefore directed the Secretariat to consolidate all Partner States’ comments and prepare a revised Matrix on the proposals for amendment of the Treaty. The Secretariat was also directed to convene a meeting of the High Level Task Force on the Amendment of the Treaty to consider the proposed amendments on the Treaty and thereafter submit the proposals to the Sectoral Council on Legal and Judicial Affairs for consideration. The Council directed those Partner States that have not submitted to the Secretariat comments on the amendment of the Treaty necessitated by coming into force of the EAC Common Market Protocol to do so by 7th May, 2011.

Status on EPA Negotiations

In regard to the stalled EAC-EU-EPA Negotiations, the Council took note that during its Fourth Meeting of the 4th Session held in Kigali, Rwanda in March 2011, the East African Legislative Assembly (EALA) once again declined to approve the request by the Secretariat to utilize the EAC-EPA-SIDA Grant of US$ 3.48 million for the Economic Partnership Agreement (EPA) in November 2010.

The Assembly had expressed their concerns regarding the funding of the EPA negotiation process. EALA had been disconcerted that pursuant to the directives of the Council the Secretariat had mobilized funding from a Member Country of the European Union (EU) yet the EPA negotiations are between the Partner States and the EU.

EALA had argued that mobilization and receipt of funding from the Party the Partner States were negotiating with is unacceptable and that funding from Swedish International Development Cooperation Agency (SIDA) would not only compromise the negotiations to the Partner States’ detriment but would as well prejudice and weaken any stronger stance the latter may adopt on the negotiations. As a way of addressing the funding challenges associated with the EPA negotiations, EALA had recommended to the Council to directly allocate funding from their national budgets.

The Council of Ministers recommended to continue its engagement with EALA in reconsidering the latter’s position on the subject of the EAC-EPA-SIDA grant. It also directed that in the event that it is ultimately established that the EAC-EPA-SIDA grant is not approved by EALA, the Secretariat should engage SIDA and renegotiate the feasibility of utilization of the EAC-EPA-SIDA grant for other priority activities of the Secretariat.

The Council of Ministers directed the Secretariat to ensure that in the event that no success is registered, the Ministers of Finance were to be requested to allocate and earmark funds for EPA negotiations when the Ministers meet in May 2011 during their pre-budget consultations. This would enable the Partner States resume the EPA negotiations and stay within the deadline of December 2011.

The Council noted that the EPA negotiations was a policy issue and that EALA had no mandate to take a position on the basis on which it had now used to block the EAC-EPA-SIDA Grant intended for funding the negotiations. The Council directed the Secretariat to ensure that THIS issue was brought to the attention of the Summit at its 9th Extraordinary Session on 19 April 2011 in Dar es Salaam, Tanzania.

Establishment of a Single Customs Territory

The EAC Heads of State Summit at its 12th Ordinary meeting held on 3rd December 2010 among others ; directed the Council to expedite the realization of the fully fledged customs union and it (the Summit) further decided to hold a special Summit meeting in April 2011 to consider specific matters including ‘consideration of recommendation on how to attain a Single Customs Territory.

The EAC Secretariat prepared a concept paper on the attainment of the Single Customs Territory which identifies salient issues on the attainment of the Single Customs Territory and provides a brief overview on the status of the Customs Union drawing lessons from other Customs Unions. It identifies and briefly examines the critical pillars and modalities for a Single Customs Territory. The note makes recommendations on interventions that can be undertaken immediately for the consolidation of the Customs Union. It further recommends the need for a comprehensive study to provide appropriate options that informs policy decisions on the attainment of a Single Customs Territory.

The Extra-Ordinary Meeting of the Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) was held on 10th - 14th April 2011 and considered this issue. The Sectoral Council directed the Secretariat to undertake a comprehensive study which should, among others, take stock of all the aspects on the implementation of a fully fledged Customs Union including all previous relevant studies ; identify gaps in the implementation of the Customs Union taking into account the roadmap towards attaining a fully fledged Customs Union ; and propose best options and modalities for the implementation of the outstanding areas and the required interventions for a fully fledged Customs Union.

The Council adopted the decisions of Sectoral Council on Trade, Industry, Finance and Investment and will be forwarding the progress report on the implementation of the Customs Union and the recommendations therein to the 9th Extra-Ordinary Summit consideration

EAC Budget Estimates for the Financial Year 2011/2012

The Council approved the EAC Budget Estimates for the Financial Year 2011/2012 amounting to US$109,680,319 comprised as follows : the Secretariat : US$50,220,383 ; East African Legislative Assembly : US$11,679,682 ; East African Court of Justice : US$3,289,104 ; and Lake Victoria Basin Commission : US$44,491,150.

The Budget Estimates presented were 24% above the approved budget for the Financial Year 2010/2011 which amounted to US$77,664,443. Increase in Partner States contribution was 31% from the Financial Year 2010/2011.

The sources of funding for the FY 2011/2012 budget are : Partner States US$33,666,700 ; Development Partners US$75,807,769 and other income US$205,850. In the FY 2010/2011, Partner States contributed US$30,748,369 ; Development Partners US$46,842,454 ; and other income was US$73,620.

The Council directed the Secretariat to regularly submit priority activities to the Sectoral Council of Ministers Responsible for EAC Affairs and Planning for purposes of ensuring that all activities are catered for. The Council also approved the Annual Programme of Activities and the Budget Estimates for the Civil Aviation Safety and Security Oversight Agency (CASSOA) as approved by the Board and directed CASSOA to present the request for additional funding amounting to US$525,000 to the CASSOA Board for further consideration.

The Council further directed Partner States to expedite the process of approving the proposed funding mechanism for the Agency by 31st July 2011. At the same time the Council took note of the IUCEA Budget estimates amounting to US$12,444,241 of which US$6,391,389 is expected contribution from Partner States for both recurrent and capital expenditures to be funded by Ministries of Education and US$6,052,852 being contribution from the Development Partners and refer it to the Legislative Assembly for debate and approval.

The Council directed Partner States’ Ministries of Education to expeditiously remit the IUCEA budget. Partner States were also directed to expedite remittances of arrears to IUCEA and referred the matter of arrears to the Sectoral Council on Education, Science and Technology, Culture and Sports, for appropriate action.

The Council directed the Secretariat to ensure that the budget is priority based and must be prepared in advance to enable Partner States accommodate them in their respective budget cycles.

Establishment of a Sectoral Council on Finance and Economic Affairs

The Council deferred the establishment of the Sectoral Council on Finance and Economic Affairs pending the review of the TORs and directed the Secretariat to present the matter to the 23rd Council of Ministers.

The Ministers responsible for Finance had recommended that a Sectoral Council on Finance and Economic Affairs should be constituted as integration deepens and the financial obligations increase based on the need to mainstream the role of Ministers responsible for Finance in the decision-making process of the EAC to address issues of economic management.

This was partially founded on the premise that the EAC is closely linked to Partner States’ Governments, and therefore the decision-making process on all economic issues should follow similar procedures adopted in Partner States where all Cabinet Memoranda with economic and financial implications must be approved by the Ministers responsible for Finance.

Secondly, the Ministers assert that as EAC enters into a fully fledged Customs Union, implementation of the Common Market and subsequently a Monetary Union which require deeper economic convergence, it was imperative that the current decision-making process of the EAC be accordingly reviewed ; and lastly, the need to fast track decisions relating to Common Market and Monetary Union necessitated that a Council of Ministers responsible for Finance be established and granted the authority to approve all economic and financial matters of EAC.

The Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) had observed that there was merit in the proposal of the Ministers of Finance to establish a Sectoral Council on Finance and Economic Affairs and that there was need for rationalizing the roles of the existing SCTIFI, Sectoral Council on EAC Affairs and proposed Sectoral Council on Finance in order to minimize duplications and overlaps in scope and roles.

The SCTIF had also observed that in order to retain the synergy between trade, investment and industrial development with finance, issues related to the Common External Tariff should remain within the mandate of the Sectoral Council on Trade, Industry, Finance and Investment ; and that the Sectoral Council on Finance and Economic Affairs would handle issues which are under the purview of finance and economic management such as monitoring the trend of the global economy, capital markets integration, monetary policy management, fiscal policy management, macro economic convergence criteria and Statistics and budgetary processes ; and lastly the Sectoral Council on Finance and Economic Affairs should have powers of making decisions, policies and strategies peculiar to monetary, fiscal, statistics, planning and financial matters of the Community and also provide guidance to facilitate the establishment of a Monetary Union which is a milestone in the integration process of the EAC.

Human Resource Matters

The Council approved renewal of employment contracts of Hon. Wilbert T. K. Kaahwa (Counsel to the Community) ; Dr. John E. Ruhangisa (Registrar/EACJ) ; Mrs. Sarah K. Batuwa (Principal Librarian) ; Mr. Aggrey Nkondola (Principal IT Officer) ; Mr. Charles N. Mukiri (Principal Internal Auditor ; and Mr. Charles N. Kadonya, Senior Research Officer/EALA for a five-year term with effect from 1st July 2011 in line with the provisions of the Staff Rules and Regulations.

Executive Secretary for Lake Victoria Basin Commission

The Council appointed Dr. Canisius Kanangire from the Republic of Rwanda the Executive Secretary of Lake Victoria Basin Commission with effect from 15th April, 2011.

Civil Aviation Safety and Security Oversight Agency

The Council took note of the progress Report of the Civil Aviation Safety and Security Oversight Agency and directed the Republic of Uganda to expedite the issuance of title deed, grant tax exemption and recognition of Civil Aviation Safety and Security Oversight Agency as provided for in the Headquarters Agreement.

Tribute to Hon. Amb. Juma Volter Mwapachu

The Council noted with appreciation the exemplary and dedicated service which the outgoing Secretary General, Hon. Amb. Juma Volter Mwapachu had rendered in widening and deepening the integration process, especially in advancing the Community’s projects and programmes, projecting the image of the Community internationally and supporting institutional development during his tenure. The Council wished him well in his future engagements.

While reciprocating, Amb. Mwapachu thanked the Council for the support and visionary leadership which enabled him to serve the Community, its Organs and Institutions. He thanked the Council, Co-ordination Committee and all members of Staff for supporting him in discharging his responsibility as Secretary General. He stressed the need to maintain the momentum of integration so far attained and to render support to the incoming Secretary General.

The Council of Ministers’ meeting was attended by Hon. Hafsa Mossi, Minister, Ministry to the Office of the President in Charge of East African Community Affairs, Republic of Burundi and Chairperson of the Council ; Hon. Prof. Helen Sambili, EGH, MP, Minister of East African Community, Republic of Kenya ; Hon. Monique Mukaruliza, Minister for East African Community Affairs, Republic of Rwanda ; Hon. Dr. Cyril Chami, Minister for Trade and Industry, Tanzania ; and Rt. Hon. Eriya Kategaya, 1st Deputy Prime Minister and Minister for East African Community Affairs, Uganda.

In attendance were several Ministers, Permanent Secretaries, Heads of EAC Organs and Institutions, EAC Observer Organizations as well as officials from the EAC Secretariat.

For further information contact : Owora Richard Othieno, Head of Department, Corporate Communication and Public Affairs ; Tel : +255 784 835021 ; Email : othieno@eachq.org

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