11 December 2012

Kenya: EU Deadlock Wilts Kenya's Rosy Future

Kenya's flower sector risks suffering a great loss if the East Africa Community and the European Union fail to reach a trade agreement soon.

The Economic Partnership Agreements would see countries in the two blocs liberalise tariffs and duties for imports and exports from both regions.

But the talks between the two blocs seem to have hit a snag as each side has taken hard-line positions on some clauses and conditions in a bid to protect their own markets.

The negotiations have dragged since 2007, and the EU parliament has now imposed a January 2016 deadline forcing countries to sign the EPA or lose access to the market.

"This will mean Kenya's exports to EU will be under Generalised Systems Preferences while exports by other partner states which are [listed as] LDCs enter under Everything But Arms initiative," Permanent secretary of Trade, Abdulrazaq Adan Ali told the East Africa Legislative Assembly yesterday.

Though EAC is negotiating as a bloc, Kenya is the only member that is not classified under Least Developed Countries. EU absorbs 24 per cent of our total exports with flowers, fruits , vegetable and fisheries being our main exports.

The PS asked the EALA to continue lobbying their EU counterparts to remove the deadline as it puts pressure on the negotiators. The EPAs are a continuation of the Lome Conventions of 1975 that allowed countries in Africa, Caribbean and Pacific preferential access to EU market .

This meant most agricultural products entered EU market on duty-free-quota-free basis up to 2007. However, critics say EAC stands to lose more than it will gain from entering the agreement.

"Signing an EPA with the EU will infact dampen EAC exports to its biggest market, that is other African markets, since domestic firms are likely to be squeezed out of this internal market by EU firms,"Aileen Kwa, a Trade and development analyst at South Centre.

For instance, EU agricultural products are heavily subsidized by their government making them much cheaper. The EPAs will also prohibit countries to impose new or increase export taxes, thus discouraging Africa's industrial sectors while growing EU industries as they will have a constant supply of cheap raw materials. The World Bank has in the past discouraged EAC from entering the pact with EU.

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