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Economy

EAC pushes back free trade pact with Europe to Jan

A worker at Oserian farm. The EU accounts for 31 per cent of Kenya’s export market, especially for cut flowers, tea, fresh vegetables and coffee. The EPA deal is expected to ensure continued duty-free and quota-free access to the EU for all EAC exports. PHOTO | FILE 
A worker at Oserian farm. The EU accounts for 31 per cent of Kenya’s export market, especially for cut flowers, tea, fresh vegetables and coffee. The EPA deal is expected to ensure continued duty-free and quota-free access to the EU for all EAC exports. PHOTO | FILE   

The fate of Kenya’s Europe-bound exports rests with the European Union parliament after the East African presidents pushed back the date for reaching final decision on free trade pact to January.

President John Magufuli who chaired yesterday’s extraordinary heads of state summit said the bloc would continue to discuss the Economic Partnership Agreement (EPA) with the aim of concluding it at the start of next year.

“We have given ourselves three months to discuss further the signing of the EPA agreement and we will meet in January 2017 over this issue,” Mr Magufuli, who is also the East African Community chairman, said during the extraordinary summit in Dar es Salaam.

“We appeal to the EU not to punish Kenya by denying it access to the European market,” he said in a statement. Tanzania had earlier indicated it would not sign the EPA during yesterday’s summit.

The EU had given the region up to September 30 to sign and ratify EPA. Sources said it later asked EAC to show commitment by November 30 after Kenya’s Industrialisation secretary Adan Mohamed and his Rwandese counterpart Francis Kanimba asked EU parliament for more time few days ago “to prove region’s commitment.”

Start paying taxes

Kenya, the only state classified as developing country among the EAC’s six members, ships close to 32 per cent of its exports to Europe. Last year, it exported a total of 581 billion to different parts of the world.

If EU parliament interprets EAC summit’s statement as a show of commitment to sign EPA at a future date, the bloc may as well give delay imposing Sh10 billion-a-year tax on Kenya’s exports.

Otherwise, Kenyan exports could be asked to start paying taxes from as early as October 1, a development that will make its produce — mainly flowers and fish — uncompetitive in the EU market.

The rest of the members have alternative access to EU as they are all classified as least developed countries that would continue getting duty- and quota-free access under EU’s Everything But Arms initiative. The signing of the EPA, was scheduled to take place on July 18 before some partner states refused to sign.

Tanzania is holding back over what it says is a negative impact of European imports on emerging industries while Burundi declared that it would not sign the deal after the EU imposed economic sanctions following President Pierre Nkurunzinza’s decision to run for presidency for a third term.

Rwanda and Kenya have already signed the trade pact while Uganda was expected to sign during the summit.

Additional reporting by agencies.
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