Kenya faults bid by Tanzania, Uganda to opt out of EU deal

Kenya has accused Tanzania and Uganda of being insincere following their hesitancy to join the rest of the East African Community (EAC) members in signing the Economic Partnership Agreement (EPA) which would allow duty free access to the European market.

Trade Cabinet Secretary Adan Mohamed says the issues the two countries raised — especially Tanzania’s claims that the deal would kill local industries — are well taken care of in the agreement with the European Union (EU).

He says the pair knows they have nothing to lose or gain by signing the pact, given that they are listed under Least Developed Countries, exempting them from paying duty to access European markets. Kenya is not classified as a least developed country, hence its only chance of accessing EU markets duty free is through a collective EPA signed by the region.

Mr Mohamed said the East African Community has blocked 17.5 per cent of EU goods from accessing the bloc duty free so as to cushion local industries against stiff rivalry that would affect the growth of some sectors.

“The two nations are being insincere because the terms of the agreement stop agricultural produce and dairy products from accessing our market duty free. This is the only industry that would be affected if the EU had free access,” said Mr Mohamed.

Tanzanian President John Magufuli last week described EPA as a “form of colonialism”, putting into doubt the country’s chances of signing the deal.

READ: Tanzania sues to stop Kenya from concluding EPA deal

His Ugandan counterpart, Mr Yoweri Museveni, warned African countries that EPA might break up their unity.

“It’s better if the signing of the deal is shelved until further consultations are made,” he said.

Kenya and Rwanda signed the agreement last year to renew the terms, although for a short period, to allow Kenyan goods to access the lucrative market duty free. The deal was supposed to end on September 30 last year.

Mr Mohamed said 66.5 per cent of goods from Europe are allowed into the country duty free, but this has no effect on any local sector since none of these goods are produced by EAC member states.

These products include machinery and medical equipment.

He said the EPA agreement has clear terms on trading between the parties and it provides for termination of the pact in the event of trade imbalance.

“It is stipulated clearly in the agreement that when there is a trade imbalance between the two parties, the agreement can be terminated after a one-year notice period,” he said.

The government, however, says Kenya has a window of applying for market access to Europe in the event that the Heads of State summit fails to reach a decision on a joint EPA.

The summit was supposed to be held in January, but was pushed to a later date. It is likely to be convened this month.

All EAC members have been negotiating on the EPA since 2007, leading to conclusion of talks in 2014. For a deal to be struck, all EAC member states have to sign the agreement as a bloc.

If locked out, Kenya will lose out on its current preferential access to European markets, subjecting its exports to higher tariffs in the destination countries.

The exports could attract cumulative tax in excess of Sh100 million a week, as was the case in 2014.