Europe piles pressure on EAC over trade pact
Business Daily Africa, Nairobi
Europe piles pressure on EAC over trade pact
21 March 2012
A bid by European parliament to impose a deadline for reaching a binding trade pact with East Africa is driving a wedge between the Government and exporters who feel the matter is not being addressed urgently enough.
Kenyan government officials have asked for more time to persuade reluctant neighbours that the Economic Partnership Agreements (EPAs) are well intentioned leading to anxiety among exporters that the ensuing uncertainty is putting investments worth billions of shillings at stake.
“While all groups are in favour of EPAs, those in official circles feel they require more time while businesses told us prevailing uncertainty over access to EU market in future is not good for them,” Prof Vital Moreira, the chairman of the European Union Parliament’s International Trade Committee (INTA) said in Nairobi on Wednesday.
The nine-member team is on a mission to monitor progress on EPAs negotiations, identify EAC’s concerns, evaluate the chances of success and expected impact.
On Wednesday, it held close-door discussions with business lobby groups, civil society organisations and ministry officials in charge of both foreign affairs and trade.
They also held discussions with the Parliamentary Committee on Finance, Planning and Trade chaired by Nambale MP Chris Okemo.
He said the discussions would make EU negotiators more serious in addressing the remaining issues, just weeks after the European Commission drafted a Trade Policy Bill which seeks to tie the deadline for concluding EPAs to December next year.
The proposal which is before EU parliament will make it mandatory for the 27 EU countries to levy import taxes of between eight and 18 per cent on goods from any country that will not have signed EPAs by January 2014.
Under the duty-free conditions, Kenya has significantly raised its export of goods to Sh109 billion in 2010.
Horticulture accounts for the single largest portion of this export value with Sh91 billion last year, 80 per cent of it to the EU.
To local exporters, this taxation will introduce another layer to spiralling cost of getting goods to the lucrative EU market.
“We already face lower margins because of continued rise in fuel prices and volatility of shilling that have raised freight and input costs.” Peter Mwangi, the General Manager of Magana Flowers Kenya Ltd said on the sidelines of a three-day International Flower Trade Expo (IFTEX) that opened in Nairobi on Wednesday.
Apart from the import taxes, exporters face additional levies for using means that pollute environment to get their goods to Europe.
“We are aware of these discussions in Europe to introduce additional levies including carbon prints and we must work together to address issues raised because additional cost will kill this industry,” Agriculture minister Sally Kosgei said as she opened IFTEX on Wednesday.
