Fate of EAC trade deal with Europe in ministers’ hands

What you need to know:

EAC and EU have so far failed to agree on five key issues for the partnership.

Negotiations for a new trade deal between Europe and East Africa have now been referred the Council of Ministers from the two blocs for direction after technical teams yet again failed to agree on five sticky issues.

The Council of Ministers — the top decision making organ of the European Union (EU) and the East African Community (EAC) — is now expected to give a final word on the long-delayed signing of a preferential economic partnership between the blocs when it meets next month.

Nairobi last week hosted technical teams from the EAC and EU for crunch talks during which the two blocs struck a deal on the Rules of Origin (ROO), the Most Favoured Nation (MFN) and policies on support for their respective domestic agricultural sectors.

The parties, however, remained deadlocked on five issues including export taxes, domestic support and export subsidies, tackling the proliferation of weapons of mass destruction, human rights and corruption as well as good governance.

“The next EAC-EU ministerial meeting to guide on the way forward on the outstanding issues is expected to be held by mid May 2014 within the EAC,” the secretariat said in update.

The deadlock is a major setback for the EU that had anticipated that the talks would end in time to allow the signing of a final deal on a new Economic Partnership Agreement (EPA) with East Africa when it hosts African heads of State for a summit in Brussels from April 2-3.

READ: Europe keen to end stalemate with EAC in trade deal talks

Kenya and other EAC members are currently trading with the EU under an interim preferential deal signed in 2007 following the expiry of a similar programme by the World Trade Organisation (WTO) in 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 the EPA, Kenya and neighbouring nations will be required to cut duty on several products imported from Europe while a wide range of their export products would attract duty in the EU market.

Previously tax-exempt products will 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.