9 June 2014

Kenya Enlists Germany in Trade Pact Push

The Kenya government has sought the help of influential German investors in a bid to hasten the conclusion of the Economic Partnership Agreement talks between the EAC and EU.

Germany is Europe's largest economy. The gruelling talks between the 28-member EU and the five-country East African Community have reached an agreement on most hitherto contentious issues except three.

Unresolved issues touch on export taxes, domestic support and export subsidies, and another on the Cotonou Agreement - a 2000 partnership between the EU and 79 developing countries from Africa, Carribean and the Pacific on countering proliferation of weapons of mass destruction, human rights, corruption and good governance.

Technical negotiators from the two blocs on March 24 failed to strike a deal on the three issues and referred them to respective councils of ministers.

The EU parliament has set a deadline of October 2014 for the EPA to have been signed.

"Negotiations on the EU-EAC EPAs have been going on well .... We only have three issues remaining," Cabinet Secretary for Foreign Affairs and International Trade Amina Mohamed told a visiting delegation of German investors last Wednesday.

"We want to plead with you to help us address these issues expeditiously in a way that encompasses the interests of the region."

The two blocs have reached a deadlock on EU's agricultural export subsidies to its producers which the EAC wants eliminated.

If not removed, the EAC is seeking to maintain duty on EU agricultural imports to cushion uncompetitive domestic agricultural sectors which have barely moved into value addition.

The EU, on the other hand, is unhappy with the EAC's stance to continue taxing export of agricultural raw materials.

Foreign affairs PS Karanja Kibicho said last April that taxes on export of raw materials was a deliberate strategy to encourage the sector to add value to its produce before shipping them abroad.

The two blocs are currently trading under a World Trade Organisation-endorsed interim EPA pact struck in 2007, which primarily focused on goods and fisheries.

It provided for further negotiations on a full pact that includes agriculture, rules of origin, sanitary and phyto-sanitary standards, technical barriers to trade, and customs and trade facilitation. It also postponed the discussion on other trade-related rules and trade in services until a later stage.

Major exports to EU include cut flowers, fruits, coffee, tea, fish, beans which earn Kenya close to Sh150 billion in foreign exchange cumulatively.

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