EU Trade and Communication Counsel Mr Christophe De Vroey (left) with
Ministry of Foreign Affairs and International Trade Director-General
Nelson Ndirangu. Kenyan exporters to the European Union countries will,
from Wednesday, be slapped with a duty of between four and 24 per cent.
PHOTO | FILE | NATION MEDIA GROUP
Kenyan exporters to the European Union countries will, from Wednesday, be slapped with a duty of between four and 24 per cent.
This
follows the expiry of a 30-year trade agreement between the country and
the union, and failure by Kenya, and other East Africa Community
countries, to conclude new trade pacts. Experts fear that this will make
some of the products uncompetitive, leading to market loss.
“It is a very punitive effect to the industry,” Ms Jane Ngige, the chief executive of the Kenya Flower Council, said in a telephone interview yesterday.
Kenya
failed to beat the Economic Partnership Agreement negotiations deadline
which would have accorded its horticulture products duty-free access to
European markets.
It
means trade between the EU and Kenya now enters a higher tax bracket
than the previous one where developing countries are granted
preferential market access for their goods with duty zero-rated.
Sixty
seven per cent of Kenyan exports to Europe will be affected, thus
threatening competitiveness of local products to the market.
The flower council yesterday said it would start evaluating what effects the new regime would have to the Sh7 billion a year industry.
The flower council yesterday said it would start evaluating what effects the new regime would have to the Sh7 billion a year industry.
Cut
flowers will be subjected to tariffs of 8.5 per cent, fish six per cent
import duty, pineapple and other fruit juices 11.7 per cent.
Processed
vegetables and fruits will attract more than 15 per cent and
conservative estimates project competitiveness of Kenyan goods to
European markets to be eroded by up to 20 per cent.
NO ESCAPING
Last
week, head of communication at the EU delegation in Kenya Christophe De
Vroey said the lengthy process required before ratifying a deal at the
East Africa Community level and later handing it to the EU for scrutiny
and approval, means there was no escaping higher taxes.
“If
exports continue at the same pace, duties to be paid would amount to
some Sh100 million a week,” Mr Vroey said last week. Negotiations to
sign the EPAs started in 2004 and were expected to have been ratified in
2007 to safeguard the horticulture sector.
Kenya has,
however, been pushing EAC member states to include a provision for
special export taxes to protect certain sectors that it considers
sensitive to discourage sale of raw materials to Europe.
“The
main concerns being that signing EPAs will hurt domestic
industrialisation and turn us into a dumping ground for cheap goods,”
Kenya Association of Manufacturers chief executive officer Betty Maina
said.
The association estimates the cost of the new
duty to be around Sh7.64 billion annually in taxes or about Sh637
million per month. “The reality of the delay in signing of EPAs is here
to bite industries,” Ms Maina said.
The country’s
position is, however, said to be more risky since the other EAC states
are classified as least developed countries, and will continue to enjoy
duty-free and quota-free exports to Europe even without EPAs.
Hope is now pinned on the joint EAC/EU meeting scheduled for October 15 to finalise the negotiation.
“If both parties agree, the process takes between three to six months but there is consensus to fast-track the procedure,” said Ms Ngige.
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