Kenya close to signing trade pacts with the EU

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September 10, 2013. Kenya is closer to signing economic partnership agreements that will enable more products from Europe to enter the local market on equal terms.

It will also ensure continued lower tariffs for Kenyan exports effectively meeting the European Union imposed deadline of October 2014.

Most of the issues, according to the government, have been agreed on and what remains is the final text that will spell out compromises that have been reached.

“As of today, there is commitment on both sides and only 3 per cent of the issues are remaining (not agreed on). The next ministerial meeting will be held either this month or in October and these are among the issues to be handled,” said Mr Joseah Rotich, a technical expert in the Ministry of East Africa, Commerce and Tourism in charge of EPA’s docket.

Among the vexing issues that are yet to be settled are existing trade pacts between South Africa and the European Union that stand in the way of smooth trading between the various partners.

Trade between Kenya and South Africa has, on the other hand, been growing exponentially mainly in raw materials which form a component of finished local industrial goods. Kenya is also fearful that EU could slap taxes on goods exported there especially those partly manufactured with raw materials from South Africa, hence affecting trade with the bloc.

There have been concerns that the country might not meet the deadline which could compromise trade with the EU, with local products attracting higher tariffs.
“The EU deadline can affect us but it’s not putting pressure on us as to forget the interests of Kenya and the region,” said Mr Rotich.

He said according to the trade agreement between EU and South Africa, some of the items are classified as ‘sensitive’ and not allowed to EU without duties while on the other hand, South Africa has trade ties with Kenya that allow these goods here.

This has made EU wary that South Africa could use Kenya as transit for goods to that market hence violating their trade agreement. The concern is that industries using raw materials from South Africa could face problems selling their products to the EU with possible disruption of trade if the matter is not solved.

According to 2012 Economic Survey, Kenya’s imports from South Africa rose to Sh71 billion in 2011 from Sh35.4 billion in 2007. The value of exports increased slightly to Sh2.8 billion from Sh2.3 billion in the same period with the two countries tightening their bilateral trade ties.

Experts have called for the signing of the economic partnership agreement between Kenya and EU to be in sync with the East African regional integration to avert disrupting business in the bloc. They have expressed concerns that if Kenya, which is particularly under pressure to sign EPAs goes it alone, it could upset the regional common market protocol and customs union.

Kenya is in a different trade band from its counterparts in the trade bloc as it is considered a developing country while others are ranked in the least developed countries category.

The country’s current trade with EU is carried out under the Generalised System of Preferences agreements that restrict some items while the other countries operate under the Everything -But -Arms tier that enables them to export all that meets EU market standards.

Ms Aileen Kwa of South Centre, an inter-governmental policy think-tank warned earlier this year that if Kenya signs EPAs on its own, it would have great implications on regional trade.

The view was supported by Prof Yash Tandou, a special advisor to the EAC on trade agreements who said EPAs should be sequenced on regional integration to avoid disrupting business.

By Mwaniki Wahome for Daily Nation