EAC must remain together with Kenya on EPA

Though a few issues remain to be ironed out between them, member states of the East African Community (EAC) have stood by Kenya, despite failure to conclude a new trade pact with the European Union under the Economic Partnership Agreement (EPA). The irony is that despite efforts in joint negotiations, the other EAC member states – categorised as Least Developed Countries – don’t have to sign the EPA to gain duty free and quota free entry into the EU market for their exports. This means that only Kenya, categorised as a developing country, will bear the brunt of the collapse of EPA talks. The country’s exporters now stand to lose millions of dollars annually on tariffs for its products to EU with thousands of jobs at stake. This is a given, unless the EPA is signed. EPAs are trade agreements meant to accord African, Caribbean and Pacific (ACP) countries’ preferential access to EU markets. EAC is the only trading bloc in Africa that is yet to sign an EPA agreement with the EU, of which deadline for the negotiations came and passed end last month bringing into play tariffs on its products beginning October 1. For now, all that can be hoped for is negotiations to resume and an agreement reached between the EU and EAC as soon as possible to shorten the length of time Kenya will have to endure the economic pain. So, what are the issues? As of last month, this was the official ‘state of play’ between the EU and EAC. The main outstanding issues included negotiations on agriculture, rules of origin, technical barriers to trade, customs and trade facilitation, and sanitary and phyto-sanitary standards. phyto-sanitary standards relate measures for the control of plant diseases, especially in agricultural crops. These issues, including economic and development cooperation, have been completed. In principle, duty and quota free access into the EU for all imports from EAC has been agreed upon. Others include gradual opening of the EAC to EU goods, trade defence provisions with safeguards allowing each party to reintroduce duties if imports of the other party “disturb or threaten to disturb” their economy, and dispute avoidance and settlement provisions. The agreement contains an extensive fisheries chapter, mainly aiming to reinforce cooperation on the sustainable use of resources. What remains as a point of contention is the chapter on agriculture. The EAC decided to exclude the agricultural products from liberalisation, including wines and spirits, chemicals, plastics and, among others, articles of base metal and vehicles. Kenya has been pushing its EAC partners to include a provision for special export taxes to protect certain sectors that it considers sensitive to discourage sale of raw materials to Europe. An official in the robust Kenyan manufacturing sector was quoted in the media explaining that the main concerns to signing EPAs was that they would hurt domestic industrialisation and turn the region into a dumping ground for cheap goods. But in the globalised world we are living in, the reality is that the region cannot avoid the lure of the lucrative European markets. The other reality is that Kenya cannot go it alone, thus the regional approach to the negotiations for an agreeable EPA. EAC should remain in it together. With its strong industrial and manufacturing base and a resurgent economy, weakened Kenya trade output means the entire region will feel the effect. But ultimately, it is all about numbers. According to the official ‘state of play’ document, the EAC committed to liberalise 82.6 per cent of imports from the EU by value. Under the EAC Customs Union, more than half of these imports from across the entire world are currently duty free. The remainder will be progressively liberalised within 15 years after the entry into force. 2.6 per cent of it will be liberalised by the 25th year. Thus, the EPA represents an effective liberalisation effort which is merely a portion of 82.6 per cent on imports only from Europe over 25 years. The point is that EAC are in it for the long haul, though Kenya may have to endure the pain in the meantime. The writer is a commentator on local and regional issues Twitter: @gituram

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EAC must remain together with Kenya on EPA