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Kenya should push for concessions in EPA negotiations

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Kenya should push for concessions in EPA negotiations

Kenya should use its geopolitical standing in the East Africa region to get concessions from fellow EAC states and the European Union in negotiating the new trade agreement.

Experts at audit and advisory firm KPMG on Tuesday said that Kenya plays a crucial role in the East African context and thus deserves to be heard by all parties on the negotiating table.

“Kenya is especially in a tricky position because ‘we are poor but we are not poor enough’, that’s our challenge, and therefore some of the benefits that fellow EAC members can obtain from these agreements are not accessible to us,” said Josphat Mwaura, chief executive of KPMG East Africa.

“But there’s a perspective that one can present that should enable Kenya to access some concessions, especially the geopolitical issues that we are dealing with as a country. The position we hold in East Africa – in the context of Somalia, DRC, South Sudan – should enable us to obtain some concessions even when classified as a developing country,” he said.

The East African Community and the EU have been negotiating a new Economic Partnership Agreement over the last 12 years, whose deadline is set for this October. If nothing will have been agreed to, exporters and importers in either of the blocs will incur taxes on goods, making them uncompetitive.

“It is unfortunate that they have been negotiating for that long,” said John Scott, KPMG’s global deputy chairman, who is in Kenya as part of his Africa visit.

The EPA is expected to provide free market access and co-operation support between the two trade blocs. Presently,Kenya exports to the EU under the Market Access Regulations since 2007, but this will be repealed on October 1. Flower exports to EU, for instance, will instantly attract a 8.5 per cent tax.

Kenya is categorised as a developing country while Uganda, Rwanda, Burundi and Tanzania are considered least developed countries, and thus stands to lose more. 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.

Mwaura said EAC states must look internally to establish a position and present that at the negotiating table.

“East African economies are at different maturity paths in terms of economic development but when looked at as a whole, there is a lot in comparative advantages that each presents,” he said.

“We have the power of opportunity in this region and it is about defining and refining that case and presenting it with clarity and with conviction. This way we would make a clear case for EAC and whoever sits across the table would want to be part of that case.”

The EAC could also take advantage of the ongoing transition in the EU Parliament, which presents opportunity for dialogue. The parliament will hold elections in May and may usher in legislator who are political-friendly to the EAC region.

“The political environment in the EU is changing slightly… and I think there is an opportunity there for Kenya, East Africa and other countries negotiating trade agreements with the EU,” said Scott.

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