Only one contentious issue remains in the proposed Economic Partnership Agreement that would see East African states enjoying preferential terms in their trade with the European Union, as the October 1 deadline for ratification fast approaches.
While the countries have agreed to back down on their demands on the domestic support and export subsidies as well as the good governance clauses, they remain firm that the issue of tax on raw materials that are exported to Europe is not negotiable.
The negotiating team also failed to agree on the inclusion of the sections of Cotonou Agreement in the document.
The latest position was reached during an experts’ meeting in Arusha last week attended by representatives from Kenya, Uganda and Rwanda. Burundi and Tanzania did not participate.
“We are now consolidating the EAC’s common position and we will remain firm on the issue of taxes on exports. We want an agreement that will help us manage famine effectively and if we just sign carelessly we might be unable to stabilise our currencies in future and we do not want that,” said EAC chief negotiator Karanja Kibicho.
Dr Kibicho said proceeds from the taxes on raw materials, which normally end up in European markets, would be channelled to the development of infant industries, food security and currency stabilisation.
However, he said, EAC was ready to discuss the duration of the export taxes. The export tax was a policy instrument used by all the World Trade Organisation countries for various reasons ranging from value addition to products, food security to currency stabilization.
Negotiations for the Economic Partnership Agreements between the East African Community and the EU started in 2007 with the initialling of the Framework EPA on November 27, 2007. However, the two blocs have failed to agree on a number of issues, occasioning postponement of the deadline several times.
The EPAs are trade and development agreements negotiated between EU and African, Caribbean and Pacific region aimed at strengthening integration.
With EPAS exporters from Kenya will continue selling produce to EU duty free, giving them a price advantage in the market against their rivals like Ethiopia and Colombia which have signed the agreements.
Kenya is the only EAC member state that will be affected by because it is listed as a non-Least Developed Country, meaning that other members states would continue benefiting from tax exemptions, even if the signing of the EPA is delayed.
Christophe De Vroey, the trade counselor at the EU Mission in Nairobi, said the EU was aware that EAC had agreed to rephrase some of the contentious issues but the absence of Tanzania and Burundi indicated some work needed to be done.
“The participants said they came to a concession but remember Tanzania and Burundi were not represented in the meeting. We are also yet to see the proposals,” said Mr De Vroey.
Dr Kibicho is expected to travel to Burundi to consolidate the trade bloc’s position before flying to Brussels, next week, where he is to submit the new text to the EU officials.
The Arusha meeting resolved that Kenya Foreign Affairs minister Amina Mohammed reaches out to the EU for a meeting later this month to find a political solution on the contentious issues.
The East African Secretariat plans to organise an urgent experts meeting with the EU to conclude the negotiations before a meeting of EAC Ministers on September 20 for the deal to be signed.
Separately, the EAC Secretary General Richard Sezibera radiated confidence that the EPA would be concluded this month. Speaking on the sidelines of a private sector and civil society meeting in Kampala recently, Dr Sezibera said that the EAC was now clear on what it needed out of the EPAs and that there was already a draft which would ease the negotiations process.
“I know this took long but that is because it was the first time EAC is negotiating with Europe on trade,” said Dr Sezibera.
But Mr De Vroey insisted that Kenya’s products will have to be taxed even if an agreement is reached before the October 1 deadline, saying the remaining days weree not enough to complete the whole process.
“The new tariffs will have to be applied on Kenyan exports because we are bound by EU legislative procedures which will take between three and four months for the whole process to be completed to allow the products enter the market duty free,” said Mr De Vroey.
A delay in signing the pact could threaten the incomes of fresh produce exporters and jobs within the horticulture sector. Kenya exports flowers to the EU worth Ksh46.3 billion ($537 million) and vegetables worth more than Ksh26.5 billion ($307 million) annually. The EU takes about 40 per cent of Kenya’s fresh produce exports.
“Kenya is poised to lose about Ksh12 billion ($140million) per year, with the figure rising to Ksh18 billion ($209.3 million) if processed products entering the EU were also factored in,” said Jane Ngige, the Kenya Flower Council chief executive officer.
Ms Ngige, however, said the developments in Arusha had brought the negotiations back on track and that there was a possibility of signing the trade agreement before the set deadline.
The East African
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