Members of the European Parliament are rooting for the extension of the October deadline to sign the comprehensive Economic Partnership Agreement (EPA) between East African Community (EAC) and the EU.
The MPs said the extension would help salvage the deal expected to offer Kenya relief from heavy taxes for exports to the EU after Tanzania and Burundi threw a spanner in the works.
Tanzania has refused to sign the agreement while Burundi is on the verge of being sanctioned by the EU following political instability in the country.
Bernd Lange, the chairman of a joint EU delegation of Trade and Development Committee attending the 14th United Nations Conference on Trade and Development (UNCTAD) in Nairobi, said Kenya would be the biggest casualty should the standoff persist.
“Our first proposal is to have the October 1st deadline extended to allow for more time and see whether Tanzania will agree to sign or if Burundi will improve her democratic situation and evade sanction from the European Union. If none of these happen then I expect that Kenya will apply for the GSP [Generalised System of Preferences] Plus and when it is received then we can begin the market access regulations and save Kenya,” Mr Lange said.
The GSP Plus status will allow Kenya to continue exporting at the current preference terms even if the two countries don’t sign up.
But the situation now leaves Kenya with a huge headache of dealing with the political problems of one neighbour as well as convincing another one that is reluctant to sign up.
Kenya is the only country among the East African partners who does not enjoy the Least Developed Country (LDC) status hence has to depend on the agreement or risk preferential treatment in the lucrative EU market.
European parliamentary member Marie Arena said the countries needed to agree, having structured the deal not to leave any of them out.
“The question now is not even the details of the agreement but the timeliness and the countries really need to do that this August because as EU parliament, we have no control on sanctions to Burundi or convincing Tanzania to sign the agreement. Kenya and other members can do that better so that we have a smooth signing sail in this agreement,” Ms Arena said.
Under the trade deal, the EU would be granted unlimited market access to Kenya for the next two and half decades. The East African nation will also enjoy the exemption from the 8 -12 per cent taxes while selling goods to the EU market.
Should the deal flop, these taxes will hurt Kenyan exports by making them uncompetitive.
A failure will also hurt one of Kenya’s engines of economic growth, agriculture. Close to 90 per cent of the country’s exports to the EU are agricultural, agro-processed and manufactured products.
The scenario might also spell doom to more than 600,000 workers, mainly on the flower farms, and fresh foods producers.
This is not the first time Tanzania has been a hurdle in the signing of the EPA. In 2014, Kenya suffered a setback after Tanzania refused to sign the pact that East African delegates negotiated in Brussels.
Tanzania says it is resisting the pact due to strict EU market access conditions. The Southern African Development Community signed a similar pact with a clause providing that the signing can be done even if one member opts out.