Ms Betty Maina: The signing by Kenya means there will be no disruption of market access come next week. PHOTO | FILE
Kenya is continuing its lone battle to have East African Community member states conclude the long-negotiated Economic Partnership Agreements (EPAs) with Europe.
Matters came to a head last month when Tanzania refused to sign the deal just a few weeks to the deadline, forcing the EU to extend the deadline.
Principal Secretary for East African Community Betty Maina spoke with the Business Daily on the sticky points of the agreement and how Kenya is navigating the rough terrain.
The Foreign Affairs ministry on Thursday deposited the ratified Economic Partnership Agreement with the EU, and it was interesting this coincided with the EU ambassador to Kenya Stafano Dejak’s statement that they may have to engage Kenya directly if the rest of the region does not sign.
I saw the comment, he even sent me the brief, but I’m not sure what he means by a direct relationship because whatever relationship you may have must negotiated. So I’m also quite curious about that.
We still do not have a clear picture of the implications of Kenya going it alone with the EPAs. Does it mean that regardless of what the bloc decides we will still get the preferential status by next year?
I think the clarity to make is that the signing and ratification by Kenya means there will be no disruption of market access come next week. So, Kenya will continue to have duty-free market access without any deadline.
This, however, is just access under the Market Access Regulations (MAR); the bigger question is how we can unlock the other deals under EPAs that were negotiated, including the fact that EU access to our market is phased out over 25 years besides a seven-year grace period before duty-free goods come in.
There is also a whole section on fisheries and capacity to trade and there is a development matrix that offers additional money for development, flexible rules of origin which are the terms of trade.
Our interest should be unlocking all the promises.
You recently had a summit in Arusha where the EPAs was part of the agenda. Was the government able to negotiate the possibility of going it alone if the rest of the region does not step up?
We negotiated the EPAs as a joint team representing the five member states.
We hope that there will be a review within the three months provided. We would then be asking the presidents to free us and request implementation of the agreement for those who have signed and ratified.
The decision to negotiate and conclude together was an EAC decision in 2002 and which was echoed in 2007, it was not imposed on us.
How are EAC negotiations structured, do they allow for a majority vote or must it be a consensus and if it is just consensus, don’t you think it is time the arrangement is looked into to safeguard against such stalemates as we have with EPAs?
I think this experience will offer lessons, and indicates we should have inbuilt mechanisms for flexibility because circumstances change.
In future, we must give ourselves some breathing room so no one is held hostage. No one member State should suffer because of the sovereign decision of another state.
Has Rwanda indicated when it will ratify the treaty or are they slowing down?
There was no immediate pressure on Rwanda’s ratification, they will follow their process.
Rwanda is very serious about this because nobody wants to negotiate forever. For us, it was intended to show good faith because we were the ones who would have been thrown under the bus if we did nothing.
Tanzania has been the strongest opponent of EPAs, do you think their concerns are valid?
Tanzania only feels they have market access, their goods can go to Europe so why should they sign?
Kenya’s position is different, making it more critical that we complete the process.
None of us has a problem with the agreement. Actually even Tanzania does not, at the technical level, because we negotiated it together.
They signed when the legal scrubbing was concluded in September last year and were present in all the sectoral discussions and signed off.
The concerns Tanzania is raising have been raised for the last five years by NGOs particularly and President Benjamin Mkapa’s article and we responded. Those issues have been addressed in the final agreement.
What were the issues that stood out and have they been resolved?
Yes, the issues on infant industries, imposition of export taxes and the protection of industries from EU imports etc. Under the framework, 65 per cent of those goods on the tariff offer were already at zero on the tariff book and we import them from everywhere, not specific to EU.
The next bunch of goods is at 10 per cent and will move down to zero in the seven-year grace period.
The two per cent which will be new are mostly capital goods we require to industrialise. And we have committed to assessing the emergence of any local industries in this area so that we may revise the rules accordingly.
On agricultural goods, the part that we are good at, about 17 per cent of the market is never open so the claim that we would be competing with EU dairy is not true and President Yoweri Museveni spent so much time trying to persuade President John Magufuli that his fears were not valid, he personally read the agreement.
How have these issues been dealt with in the final text?
One of the issues was, at what stages can we impose export taxes in order to use our raw materials, especially if they are of interest to Europe? What is the policy space to industrialise really?
If you got a lot of raw hides and you want to start a leather industry you would want to impose an export duty to discourage the exportation of raw hides and because these are materials that are of interest to Europe they had initially wanted to have a say on whether we could impose the export taxes.
Eventually, we agreed on how to approach it because I think the bigger question is that East Africans did not want to let Europeans determine their fate.
So we agreed on the language that you can do whatever you want so long as you notify the other party and then review this after 40 or 48 months.
Why the review?
If you impose taxes on raw hides and you do not start your leather industry, you are blocking somebody who has a leather industry in Italy from accessing raw materials and you are not using it yourself. You are disrupting trade for no particular reason.
Any other sticky issues?
The other thing that had become sticky was how to link provisions of Cotonou agreement on political issues, governance, human rights and media freedom, how to link that up with EPA.
The Europeans had wanted express provisions in the EPA that pretty much said they could disrupt trade if they find that there are some violations.
We decided not have that in the agreement but to make a reference that the provision is in the Cotonou agreement and can be invoked in the context of Article 98 of the Cotonou agreement.
The third sticky point was how to deal with goods that enjoy agricultural subsidies in Europe and eventually the agreement was to assure that EPA states that no good that has enjoyed agricultural subsidies will be exported to EAC.
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