EABC in fresh push for EPA deal

DAILY NEWS Reporter

The EABC Chief Executive Officer, Ms Lilian Awinja.

THE East African Business Council (EABC) has underscored the importance for the East African Community (EAC) partner states to fast track the signing of a new trade regime with the European Union (EU).

Though EAC partner states have proposed the Economic Partnership Agreement (EPA) signing ceremony to be in the first week of the August, this year, the EABC recommends18th July, 2016 to take advantage of the EU Commissioner for Trade who will be in Nairobi attending UNCTAD XIV Conference.

The EABC expectations are that ministers for trade from all EAC member states will also attend the UNCTAD Conference and therefore could be able to sign the EAC-EU-EPA on the same date in order to project the region as a functional Customs Union.

The EABC Chief Executive Officer, Ms Lilian Awinja, says further delay in signing the pact will hamper exports from EAC partner states to the EU market.

“Failure to meet EU deadline on ratification will force EAC exports to EU attract import duty especially for Kenya which is considered as developing country while other four countries Tanzania, Uganda, Rwanda and Burundi which are considered Least Developed Countries (LDCs) may force to opt for Everything But Army (EBA) trade arrangement which has more complicated rules of origin,” Ms Awinja explains. According to EABC boss, the July 18th signing will give EAC Partner States ample time to ratify the Agreement, before 1st October, 2016 the deadline set unilaterally by EU.

To make the matter worse, come 1st January 2017 Kenya will be removed from the EU’s Generalised Scheme of Preferences (GSPs) trade regime for live plants and floriculture products, hence attracting even more duties under the Most-Favoured Nation (MFN) rates. This means Kenyan exporters would be subjected to import duties of between 5 per cent and 8.5 per cent.

“The economic and social loss to Kenya will be catastrophic, worsening the consequences of missing the deadline for EACEU EPA ratification,” Ms Awinja stressed. Interacting with EABC delegation in Brussels, the Director General of Business Europe, the formidable business lobby agency, Mr Markus Beyrer said that On 20 June 2016, the Council authorised, on behalf of the EU, the signature and provisional application of the EPA between the EU and the EAC comprising Burundi, Kenya, Rwanda, Tanzania and Uganda.

The EPA intends to enhance regional integration and economic development in the African, Caribbean and Pacific (ACP) countries. The agreement based on the principle of asymmetrical market opening, meaning that it provides a better access to the EU market for ACP partners. EPA notably offers unprecedented market opportunities for agricultural and fisheries products.

EPAs replace the previous market access regime of unilateral preferences for ACP countries. EABC is currently petitioning the EAC partner states to sign the deal. Kenya is facing a tough choice as the clock ticks towards the October 1 deadline for the ratifying of the EPA with EU.

It is not clear whether it possible for Kenya to ratify it alone so that its exporters can benefit from duty free exports to the EU market or must be ratified collectively with other EAC partner states. Burundi, Rwanda, Uganda and Tanzania have option to rely on the EBA trade regime where they have duty-free market access to the EU.

But, Kenya, the biggest economy and the only non-Least Developed Country (LDC) in the EA region, heavily relies on the EU - which represents 30 per cent of its export market - for selling its cut flowers, tea, vegetables and fish. For instance, Kenya earned $495 million in sales of roses exported to Europe 2014, which is equivalent to 30 per cent of the total exports to Holland, Britain, Germany, France and Switzerland.

This was among the key trade issues featured prominently during the EABC engagement with the Kenya’s deputy President William Ruto in Nairobi last week.

After hot deliberations, it was decided that the EABC should also engage all the EAC partner states to enlighten them on the importance of ratifying the comprehensive EPA. “The EABC will write a letter to EAC partner states respective trade and industry ministers to underline the urgency of signing the deal, well before 18th of July,” Ms Awinja said.