EA fights to save exporters from losses

East Africa is making last-ditch efforts to save Kenyan exporters from incurring losses of more than $140 million a year following failure to broker a trade deal that would have allowed continued free access to the European Union market.

East African Community (EAC) ministers who met in Arusha, Tanzania, on September 20 agreed to push for a meeting with their EU counterparts, possibly before the September 30 deadline, to discuss the latter’s new proposals.

Top on the agenda is to convince the EU to prepare a legal instrument to enable a smooth transition of Kenya’s exports from the duty-free regime of the Market Access Regulation (MAR) to the Generalised System of Preferences (GSP) regime.

“We want the EU to prepare paper work to enable us go to the GSP. We must lobby for Kenya to be put in that GSP category. This is because it is not practical for the two teams to ratify EPA (Economic Partnership Agreement) by Tuesday (September 30). So we need a document that will enable us  to be included in the GSP category so that business continues smoothly,” said Kenya’s Principal Secretary Karanja Kibicho, who is EAC’s negotiation team leader.

Although Kenya’s exports to the EU will no longer enjoy duty-free, quota-free access to the EU market until the EPA agreement is ratified by the two trade blocs,  products under the EU GSP tariff are subjected to less taxation than those under the normal EU tariff.

The import duty for Kenyan products under GSP would range between five and 12 per cent, about half those under the normal EU tariff. Outside GSP, fresh roses and cut flower will attract import duty of between 5 and 8.5 per cent and roasted coffee 2.6 per cent.

“We  expect to meet with our European Union counterparts probably on Monday (September 29)  to discuss the issues and pave the way for further engagements and eventually the signing of the final document,” Dr Kibicho added. However, the two teams still have some work to do before a final deal is reached.

NO AGREEMENT REACHED

Though the  EU Mission in Kenya confirmed that the EAC indeed forwarded their new document to the EU on September 22, it said no meeting had been agreed on.

“We understand that these texts were agreed amongst EAC members at the EAC Council meeting in Arusha. EU Trade Commissioner De Gucht extensively replied to the proposals on September 23,” Christophe De Vroey, the Trade and Communication Counsellor at the EU Mission in Kenya said.

Mr De Vroey reiterated there was no deal yet, saying a senior officials’ meeting was not held on September 24. He added that there would be no ministerial meeting between the two teams on September 29.

On the legal instrument requested by the EAC, the Trade and Communication Counsellor said there was no such provision under the EU law.

“EU law likewise does not authorise the reimbursement or other compensation mechanism for import duties paid,” Mr De Vroey added.

The partnership agreements between EU and African countries are expected to come into force on Wednesday, October 1, after the lapse of the period set aside for negotiations and ratification of the agreement. The EAC is the only trade bloc in Africa that is yet to sign an EPA agreement with the EU.

The EPAs are trade and development agreements negotiated between EU and African, Caribbean and Pacific regions, aimed at strengthening integration.

The change of trade regime will see Kenyan exporters lose millions of dollars in foreign exchange as their products, mainly flowers and fresh vegetables, will become more expensive than those of their competitors from Tanzania, Ethiopia and Colombia, among other countries.

By Christabel Ligami, Jeff Otieno and Yvonne Kawira. The story is published in the current edition of The East African