The East African Community has accepted a draft agreement for fresh produce exports to the European Union market.
On Saturday evening, the EAC Council of Ministers accepted a proposal by the EU to sign a deal before October 1.
The agreement, known as the Economic Partnerships Agreements (EPAs), means that Kenya will avoid heavy taxation, which its exporters would have faced in the EU had the regional bloc failed to reach consensus on outstanding issues.
“This breakthrough is good news and a clear indicator that integration has taken root,” said Commerce and Tourism Cabinet Secretary Phyllis Kandie, who chaired the Arusha meeting.
“The agreement is particularly significant to Kenya who stood to lose billions in exports to the EU if a deal was not finalised by October 1,” she said.
However, the decision appears to have been reached too late, since Kenyan flower exporters will have to pay taxes from October 1 after all. This is because the time available will not be enough to implement the provisions of the deal.
Foreign Affairs Cabinet secretary Amina Mohammed said the EAC had written to the EU informing it that they had reached an agreement.
“I must caution that because of the delays, we may have to meet a higher degree of taxation, because of the process it will have to go through to be implemented,” Ms Mohammed said on Sunday.
“We still have a gap of one to two months, but that is not big because we would have faced a gap of one to two years,” she added.
Under the terms given to the bloc, an agreement reached before the deadline means the EU will impose taxes but will refund the fees after the deal is implemented.
EPAs govern trade relations between African countries and the European Union. They allow developing countries to export products to the EU market without paying duty. EAC was lagging behind other blocs such as SADC and Ecowas, which had already signed deals with the EU.
Kenya says it will lead EAC members in lobbying to be put at the same level with countries from other blocs.
Representatives from the regional bloc will now travel to Brussels, Belgium, to sign the agreement with the EU.
The two sides were expected to have signed the deal by Monday, but issues to do with export taxation regime and rules of origin delayed the plan.
Kenya wants a flexible regime to enable the country introduce preventive measures especially in times of drought, without burdening the farmers.
Kenya could have chosen to negotiate alone with the EU, but Nairobi opted to bring in the regional bloc, saying it would accelerate integration.