Kenyan exporters to EU to pay taxes from October

 

Roses at a greenhouse in Ruiru, Kenya. Once the deadline lapses on October 1, Kenyan exports, meaning its flowers and other horticultural products will attract a tax of between five and eight per cent and fish products about 12 per cent. PHOTO | FILE 

By JEFF OTIENO The EastAfrican

In Summary

• Negotiations for the EPAs between the EAC and the EU started in 2007 with the initialling of the Framework EPA happening on November 27, 2007. However, the two blocs have failed to agree on a number of issues, causing the deadline to be postponed several times.
• With an EPA, exporters from Kenya will continue selling produce to the EU duty free, instead of being at a price disadvantage against rivals like Ethiopia and Colombia, which have signed the agreements.
• It is not known when the two economic blocs will hold a ministerial meeting to thrash out the remaining contentious issues as had been recommended in the last EU-EAC meeting held in Kigali.

Kenyan exporters will from October start paying taxes on goods entering the European Union, until the ratification of the Economic Partnership Agreements — which could take months — is complete.

According to the EU delegation in Nairobi, it is now too late for the process to be completed between now and October 1, meaning that even if an agreement is reached before the deadline,  Kenya’s exports will still have to be subjected to import duties for unspecified period of time before the deal is fully implemented.

“The EU regulations require that any trade agreement made will have to be discussed at the Council of Ministers level and ratified by the EU parliament before it is implemented — and that takes time,” said Christophe De Vroey, the trade counsellor at the EU mission in Nairobi.

He would not say exactly how long it would take for the agreement between the EU and the East African Community to be ratified, but noted the process normally takes three or more months.

“It is the ratification that will allow Kenyan products to be added to the list of goods that are tax exempt,” he said.

READ: EAC-EU deal could be sealed by October

Negotiations for the EPAs between the EAC and the EU started in 2007 with the initialling of the Framework EPA happening on November 27, 2007. However, the two blocs have failed to agree on a number of issues, causing the deadline to be postponed several times.

Last month in Kigali, the two sides yet again failed to agree on provisions for agricultural subsidies that farmers in the EU benefit from, duties, taxes on EAC exports and non-trade issues such as good governance and transparency in the Cotonou Partnership Agreement. The three remain pending out of 11 issues.

It was the reason the delegates resolved that the discussions be moved to the ministerial level for a political solution to be found.

READ: EPA talks collapse, need ‘political solutions’

The EPAs are trade and development agreements negotiated between EU and the African, Caribbean and Pacific (ACP) region.

With an EPA, exporters from Kenya will continue selling produce to the EU duty free, instead of being at a price disadvantage against rivals like Ethiopia and Colombia, which have signed the agreements.

Mr De Vroey said it was only Kenya in the list of top countries doing trade with the EU but not classified as a least developed country that was yet to sign the agreement. Least developed country status means other member states will continue benefiting from tax exemptions, even if the signing of the EPA is delayed.

Deadline lapse

Once the deadline lapses on October 1, Kenyan exports will fall under the GSP (Generalised System of Preferences) standard regime, meaning its flowers and other horticultural products will attract a tax of between five and eight per cent and fish products about 12 per cent.