Nairobi, Kenya; June 21st, 2016 ---The
East African Business Council (EABC) will petition the East African partner
states to ratify a new trade regime with the European Union (EU) as a bloc so
that Kenya can retain its preferences in flowers and fish.
Kenya is facing a
tough choice as the clock ticks towards the October, 1
deadline for the ratifying of the Economic Partnership Agreement
(EPA) with EU.
It
is not clear whether possible for Kenya to ratify it alone so that its exporters
can benefit from duty free exports to the EU market or must be ratified collectively
with other EAC partner states.
Burundi, Rwanda,
Uganda and Tanzania have option to rely on the Everything But Arms (EBA) trade
regime where they have duty-free market access to the EU.
But, Kenya, the
biggest economy and the only non – Least Developed Country (LDC) in the EA
region, heavily relies on the EU -- which represents 30 percent of its export
market -- for selling its cut flowers, tea, vegetables and fish.
For instance, Kenya
earned $495 million in sales of roses exported to Europe 2014, which is
equivalent to 30 percent of the total exports to Holland, Britain, Germany,
France and Switzerland.
This was among the key
trade issues featured prominently during the EABC engagement with the Kenya’s
deputy President William Ruto in Nairobi on 21st, June 2016, the
sources say.
After hot
deliberations, it was decided that the EABC should also engage all the EAC
partner states to enlighten them on the importance of ratifying the comprehensive
EPA.
“The EABC will write a
letter to EAC partner states respective trade and industry ministers to
underline the urgency of ratifying the deal before the doors are closed”
remarked the EABC CEO, Ms Lilian Awinja.
There
has been a delay in ratifying the agreement, Ms Awinja said, adding that the
EABC was concerned that Kenya being the only developing country
in the EAC will be removed from the duty free market access to EU.
To
make matters worse, come 1 January 2017 Kenya will be removed from the EU’s
Generalized scheme of preferences (GSP) trade regime for live plants and
floriculture products hence attracting even more duties under the Most-Favoured
nation (MFN) rates.
This
means Kenyan
exporters would be subjected to import duties of between 5 per cent and
8.5 per cent.
“The
economic and social loss to Kenya will be catastrophic, worsening the
consequences of missing the deadline for EAC- EU EPA ratification” Ms Awinja
stressed.
For
his part, Mr Rutto said that it was high time the EAC countries protect
whatever market, be it EU, Asia or else for the regional products.
“Whatever
market we get, as the East Africans, we must protect it for the regional
interests” Mr Rutto is on record as saying.
Negotiation for the
EPA between EAC and EU started in 2007 with the initialling the framework on
November 27, of that year. Unfortunately, the two blocs have failed to agree,
prompting the postponement of the deadline several times.
However, in October 2014, the
East African Community officials concluded with their EU counterparts on EPA
deal after nearly one decade of grueling negotiations, where the EAC had committed to liberalise
up to 82.6 per cent of all its imports from the EU by 2033.
This extensive liberalisation is based on the argument
that the region needs cheap intermediate goods to be used as inputs in
production processes, thus enhancing competitiveness; and finished products
whose availability at lower costs is deemed to have consumer welfare-enhancing
effects.
Beyond the elimination of customs
duties, the agreement also covers issues such as free movement of goods,
cooperation on customs and taxation, and trade defence instruments, which mirror
EAC efforts to strengthen its customs union and set up an effective internal
market.
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