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EPA talks with the EAC need ‘political solutions’

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Friday, 01 August 2014

EPA talks with the EAC need ‘political solutions’

The East African Community and the European Union have yet again failed to agree on the long awaited Economic Partnership Agreements, putting the principal market for Kenya fresh produce exports including cut flowers in jeopardy.

The collapse of the talks held in Kigali, could see the exports – currently accorded duty free access to the EU – being taxed at between eight and 12 per cent when the current interim arrangement lapses, making them uncompetitive in the face of intense competition from Tanzania, Ethiopia and Colombia.

The two trade blocs disagreed on provisions for agricultural subsidies that farmers in the EU benefit from, duties and taxes on EAC exports and non-trade issues such as good governance and transparency.

The two parties blamed each other for the deadlock, with some officials of the EU delegation accusing the EAC members of coming up with new demands in the negotiation meetings.

Negotiators from the two trade blocs had also failed to reach a deal on the EPA negotiations during the January talks in Belgium.

On taxes on exports, the EAC maintained that it should have the authority to determine when to impose the duties without seeking authorisation from the Economic Partnership Agreement Council as demanded by the EU.

The EAC members maintained that taxes on exports of raw materials were critical in developing the region’s agriculture-based industries and also maintaining currency stability especially when global commodity prices surge.

“Export taxes are used by countries when they want to stabilise their currencies, when faced with situations of food shortage so that you do not sell food simply because you are expecting higher prices abroad, leaving your home country without food,” said Dr Karanja Kibicho, Principal Secretary in Kenya’s Ministry of Foreign Affairs and international Trade, who was the head of the EAC negotiating team in Kigali.

The EU, however, insists that such taxes should be imposed with the authorisation of the Economic Partnership Agreement Council and that when duties are effected under special circumstances with regard to revenue, food security and environmental protection, EAC should only do so after notifying the EU.

Source: tralac.org