Kenya could lose more than other East African Community member states if the trade bloc does not sign a new Economic Partnership Agreement with the European Union.

The EU delegation to Kenya yesterday said it is upon the country to marshal support for the international free trade treaty, whose signing should be concluded by October 1 to retain competitiveness of its exports.

Outstanding issues on the EPA include clauses providing for ‘most favoured nation’, export taxes, and non-execution. “These are the ones requiring political will, as well as the constellation of EAC states, each of which is sovereign, making it more of structural negotiation to ensure convergence,” said Lodewijk Briët, ambassador and head of EU delegation to Kenya.

“We need to realise that by now there’s a strong political impetus to conclude the EPA negotiations,” he said. The EPA is expected to provide free market access and co-operation support between the two trade blocs. Trade liberalisation will have to be compatible with the World Trade Organisation’s rules. Presently, Kenya exports to the EU under the Market Access Regulations since 2007, but this will be repealed on October 1.

Kenya is categorised as a developing country, while Uganda, Rwanda, Burundi and Tanzania are considered Least Developed Countries. The LDCs will continue to gain favourable access to the EU market under the ‘Everything But Arms’ scheme, which grants ‘duty-free, quota-free’ access to imports of all their products.

Tariffs will be hiked in October, with flower exports attracting a duty of 8.5 per cent, which will make them uncompetitive against other exporters such as Colombia.

“The purpose of these negotiations was to sign the EPA between regions. Kenya cannot therefore sign separately … the EAC rules do not allow that,” said Christophe De Vroey, the trade and communication counsellor at the EU delegation to Kenya.

“If we sign the agreement before October 1 … we will apply the tariffs but possibly refund once ratification is concluded,” said De Vroey. The EU is a 28-member states trade bloc, offering access to a potential 0.5 billion consumers. The region makes up Kenya’s biggest export destination, taking up loads of cut flowers, French beans, coffee and tea, fruits, fish and textiles.

“What we (EU) stand to lose is in terms of quality and the comprehensiveness of our relations. The longer these negotiations drag on, the stronger the trade erosion that occurs,” said Briët.

According to the delegation, 23 per cent of Kenya’s exports – worth Sh110 billion – went to the EU. EPA negotiations have been on-going for 12 years now, initially dragged by “lack of political will”.

“Time is of essence. We must provide certainty and predictability to operators and potential investors. Economically, ambiguity is the worst enemy of investment and growth,” the delegation said.

EAC states will be expected to open up their markets gradually to EU imports – phasing out duties – over 20 years to 2033 if the EPA is concluded this year.

While EAC exports are expected to have 100 per cent access to the EU market, the latter will be allowed access of up to 83 per cent of the EAC trade bloc. About 17 per cent of EU goods are labelled ‘sensitive’ and will continue to taxed to avoid “undue competition”.

Source: http://www.the-star.co.ke/news/article-155743/kenya-lose-export-edge-if-new-epa-delays-says-eu