The decision reached at a ministerial session that ended in Arusha last week also saw the five States take a common position ahead of Economic Partnership Agreements (EPAs) meeting with European ministers next month.
Kenya had previously taken a lone pro-EPAs stance as its four neighbours — which have other preferential trade windows as members of Least Developed Countries — pulled in opposite direction.
The search for a binding pact to safeguard the multibillion shilling trade with Europe has taken a new turn as East African ministers agreed on removing export taxes and agriculture from the long-drawn out talks.
The decision reached at a ministerial session that ended in Arusha last week also saw the five States take a common position ahead of Economic Partnership Agreements (EPAs) meeting with European ministers next month.
Kenya had previously taken a lone pro-EPAs stance as its four neighbours — which have other preferential trade windows as members of Least Developed Countries — pulled in opposite direction.
With the October 2014 deadline fast approaching, the EAC ministers resolved to delete the contentious sections of EPAs and refer them to Geneva to be handled at a multilateral level by the World Trade Organisation (WTO).
Sources privy to the negotiations said the plan to transfer agriculture and export taxes to WTO was initially floated by the African side when they met EU ministers in Belgium in May.
“The EAC has in principle agreed with the EU that issues of a multilateral nature should be handled at the multilateral level,” said an official.
Sharp disagreements on the clauses on agriculture and export taxes (charged on goods including leather exports) are some of the areas that have held back the search for a binding agreement to safeguard trade between the two blocs since 2007.
Under the agriculture clause, the EAC negotiators have opposed what it sees as trade-distorting domestic support and export subsidies that EU countries grant their farmers.
EAC States such as Kenya mainly export raw agricultural commodities, which their negotiators maintain cannot gain access to Europe due to the EU subsidies. EAC also fears that opening its market to the heavily subsidised EU commodities could hurt farming in the region.
On its part, the EU side has strongly objected to the tendency by African governments to levy export taxes on their natural resources and raw agricultural commodities.
Because it lacks capacity to extract and process its commodities, Africa mainly counts on the export taxes to boost its earnings from the natural resources (mainly extracted by western multinationals) and agricultural produce.
In Kenya, for instance, an agreement reached at a multilateral level would force the government to scrap the 40 per cent duty on raw leather export that has sustained the local tanning firms in the last six years.
“The ministers have the duty to critically analyse and strengthen the EAC positions under the EPAs negotiations to ensure that we have an agreement that best serves the interests of the region,” said Peter Kiguta, EAC director-general for customs and trade.
