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Kenya hopes to sign EPA by July 2014

Kenya has made significant strides on negotiations of the EAC-EU Economic Partnership Agreement (EPA) and hopes to sign the deal by July 2014, says Mrs. Jane Ngige Kenya Flower Council (KFC) Chief Executive.

Ngige says that the outstanding issues towards signing the agreement are not major and are on their way to being resolved. She says that the signing of the agreement will be particularly essential for Kenya which is the only country in the EAC trading block classified as a developing country. The rest are categorized as Least Developed Countries (LDCs) which puts them in a better trading position compared to Kenya. Other EAC countries are Uganda, Tanzania, Rwanda and Burundi.

LDCs do not have to sign the EPAs since their preferences will continue under the Everything But Arms (EBA) scheme. Under EBA, poor nations are granted duty free access to the EU for all products, except arms and ammunition and 41 tariff lines concerning rice and sugar, on which duty free quotas are established until full liberalization.

But as a developing country, Mrs. Ngige says, failure to sign the pact will put Kenya in an awkward position as she (Kenya) needs to continue accessing the European market.

“In this we are in an awkward position because we are not referred as an LDC country but as a developing country,” she points out.

Should Kenya miss out on signing the EPAs, trade between it and Europe would be reverted to the less generous market access terms under the General System of Preference (GSP).

Such as an arrangement would see some of the products Kenya has been exporting at zero duty attracting duties ranging between 8.5 per cent and 15.7 per cent making the products less competitive.

“If we don’t sign EPA in time we will be in big trouble because fewer people will buy our produce,” Ngige adds.

The EU continues to be EAC’s largest trading Partner accounting for 19.9 percent in 2009 compared with 18.4 percent recorded in 2008. EAC’s main exports to EU are agricultural (coffee, tea, spices, plants & flowers, fish & fish products, & horticultural products accounted for 72 percent of EAC total exports to EU in 2008). EAC’s main imports from EU include machinery both mechanical and electrical, pharmaceuticals and vehicles.

The EAC Partner States have negotiated for policy flexibility for revision of the tariff lines liberalized under the EPA. Further, the EAC and the EU have agreed to review the Agreement after every 5 years.

The EPA contains provisions on trade defence instruments that would give EAC the opportunity to impose measures in cases where EU imports were to increase in such quantities that they would threaten domestic producers and industry.

These include, bilateral and multilateral safeguards including pre-emptive safeguards – where in exceptional circumstances require immediate action, i.e. for food security; Infant industry protection measures. EAC can impose non-tariff measures or re-introduce Most Favored Nation (MFN) tariff for up to a period of 10 years with the possibility of a 5 year extension; and antidumping and countervailing measures.

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