Kenya wins bid to protect its exports to EU from taxes

Kenya has secured safeguards to protect its primary industries from the European Union after it ratified a trade deal with Brussels allowing continued unrestricted access of its exports to the bloc. PHOTO | FILE | NATION MEDIA GROUP 

By JAMES ANYANZWA

Posted  Saturday, October 1   2016 at  17:30

In Summary

• The EPA Kenya ratified on Wednesday protects sensitive products such as dairy products, fruits and vegetables, fish, textiles and clothing, footwear, and vehicles from competition from European exporters for 15 years.
• The EPA will see Kenya allow EU imports to compete across 80 per cent of its tariffs, going by value.
• Tanzania, Uganda, Rwanda and Burundi are classified as Least Developed Countries (LDCs) and therefore already have duty-free and quota-free access to the EU under the Everything But Arms agreement even without signing the EPAs.

Kenya has secured safeguards to protect its primary industries from the European Union after it ratified a trade deal with Brussels allowing continued unrestricted access of its exports to the bloc.

The deal signed by Kenya offers insights to other East Africa Community members, notably Tanzania and Burundi, which have hesitated to sign the EPA for fear that it will derail their industrialisation plans.

Tanzania has asked for more time to assess the potential impact while Burundi insists it will not sign the agreement until the EU lifts economic sanctions against it. The sanctions arose from President Pierre Nkurunziza’s successful push for a third term amid protests over its legitimacy.

The EPA Kenya ratified on Wednesday protects sensitive products such as dairy products, fruits and vegetables, fish, textiles and clothing, footwear, and vehicles from competition from European exporters for 15 years.

Other products excluded from liberalisation include chemicals, plastics, wood-based paper, ceramic products, glassware, articles of base metal, and wines and spirits.

The EPA will see Kenya allow EU imports to compete across 80 per cent of its tariffs, going by value.

Tanzania, Uganda, Rwanda and Burundi are classified as Least Developed Countries (LDCs) and therefore already have duty-free and quota-free access to the EU under the Everything But Arms agreement even without signing the EPAs.

Last week, Kenya legalised the trade pact it signed with the EU on September 1 as it sought to protect its exports to the EU market from taxes and quota restrictions.

The EU had given Kenya four months from October 2 until February 2, 2017 for its lawmakers to approve the agreement as a demonstration of the country’s commitment to the trade deal. Rwanda also signed the agreement but it is yet to ratify it while Uganda has expressed a commitment to sign.

READ: Sigh of relief as Europe gives East Africa four months to sign EPA

Tanzania has refused to sign saying the EPAs could have serious consequences for its revenues and growth of its industries. Burundi said it would not sign the trade deal given its fading relationship with Europe. The trade deal requires that all EAC member states commit to it for it to take effect.

In early September, the EAC heads of state requested three months to address the concerns of some of the hesitating partner states before signing as a bloc. It is, however understood that EAC Council of Ministers is considering a proposal for variable geometry where member states would be allowed to sign the agreement at different times if a common position is not achieved.

Kenya is considered a developing nation and failure to sign the agreement would have seen its preferential market privileges to the EU withdrawn.

EPAs provides for duty- and quota-free access for EAC products to the EU market.

A statement by Kenya’s Ministry of Foreign Affairs said that with the ratification of the agreement, the country will continue to benefit from EC Market Access Regulation No 1528/2007

These regulations govern the EU preferential market access regime for African, Caribbean and Pacific countries that have negotiated Economic Partnership Agreements with the EU.

The agreement covers trade in goods and development co-operation and the EAC has committed to liberalising an equivalent of 82.6 per cent of imports from the EU by value while 17.4 per cent will be progressively liberalised within 15 years from the moment the EPA comes into force