EU plans fresh trade talks with Kenya month-end

A new round of talks is planned for the end of this month in the latest attempt to end a stalemate that has delayed the signing of a key trade pact that would ensure Kenya’s exports continue enjoying preferential access to the European market.

The European Union trade and communication counsellor Christophe De Vroey said he was optimistic that the bloc and the East Africa Community member states would strike an Economic Partnership Agreement (EPA) before the October 1 deadline.

“The next senior official round of talks will be held in EAC region by the end of February or early March,” said Mr De Vroey during a media breakfast meeting Monday in Nairobi.

The lapse of the existing interim preferential trade deals without another arrangement would mean imposition of import duties on Kenya’s fresh produce entering the European Union.

The previously tax exempt products would attract duty ranging from 8.5 per cent to 14.5 per cent, making them less competitive and significantly cutting the returns to growers.

Kenya exports cut flowers, fruits, fish, beans, coffee and tea to the EU which accounted for about a quarter (Sh110 billion) of Kenya exports.

The interim preferential trade arrangement between EU and Kenya, Uganda, Tanzania, Rwanda and Burundi was signed in 2007 after the expiry of a similar programme by the World Trade Organisation (WTO) the same year.

Under the non-reciprocal trading arrangement deal by WTO, exports from all countries in the continent used to enjoy a duty waiver in foreign markets.

With EPA, Kenya and neighbouring nations would be required to cut duty on several products imported from Europe.

In the deal, tariffs of 17 per cent of products considered sensitive – largely agricultural commodities – from EU would continue attracting import duties while the tariff barrier would gradually be removed from the others.

READ: Delays in EU trade agreements hurt flower production

Kenya largely imports machinery, chemicals, manufactured products and food from Europe.

At this time, sensitive goods which can be produced locally attract higher import duties when shipped into the EAC market to shield local firms from competition.
Under the EAC Common External Tariff (CET) structure, sugar attracts duty of 100 per cent, while maize and wheat attract charges of 50 per cent and 35 per cent respectively.

Finished imported machinery attract 25 per cent duty while charges for completely knocked down spare parts stand at10 per cent.

Another round of talks held last month in Brussels, Belgium yielded little with the clause of Most Favoured Trading Nation (MFN) a thorny issue.

Under the MFN, the European bloc demands that the preferential treatment that would be extended to select products from other developed and emerging economies should match that from European market.

Export duty

“All we are asking is a level playfield. EU would be doing itself disservice if levies charged on its exports to East African nations are higher compared to those imposed on products from its competitors such as China,” observed Mr Vroey. He said that the export duty should be harmonised across markets.

A lack of commitment by several EAC nations has delayed the signing of the pact with the EU branding Tanzania and Burundi “non-commital.”

Unlike Kenya, which is a developing nation, the other EAC members will continue to enjoy duty-free access to the EU market under the Everything-But-Arms arrangement accorded the the least developed nations status.

Tricky position

“Kenya is in a tricky position, and that is why it has to marshall her neighbours into grabbing this window of opportunity,” said Mr Vroey.

According to EPA terms, the EU can only strike trade deal with a bloc comprising several nations, meaning a single country cannot go it all alone.

The EU last month entered a pact with the Economic Community of West African States and Eastern and Southern Africa – Madagascar, Mauritius, Seychelles and Zimbabwe last year.