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Thursday, 04 March 2010

Kenya may break ranks with EAC on trade deal with EU

Kenya is considering breaking ranks with its East Africa partners and sign a framework on new economic trade pacts with Europe, citing its disadvantaged position should it fail to do so. “We have been patient for long and the time may have come to put down our feet and sign the framework. Other regional countries have a fall back position in terms of the Everything But Arms (EBA) should things go wrong,” a senior official at Trade ministry in Nairobi told Business Daily. Under the EBA arrangement, Europe offers countries under the UN roll of least developed countries (LDCs) free access of all their products to its market except arms and ammunition. Under the European Union (EU) regulations when a country is excluded by the UN LDCs, it is automatically stripped of the preferential terms but accorded a three year transitional period to adjust to the expected knock effects. Coincidentally, all East African Community (EAC) member states with the exception of Kenya fall in the LDCs cluster—-explaining Kenya’s growing agitation in the wake of a fresh onslaught from Brussels over long-drawn out negotiations. Statistics showed that failure to sign a framework agreement as demanded by the EU would translate to an estimated Sh100 million loss in revenue for Kenya in that trade terms with the Europe would revert to the lesser attractive market access terms available under the General System of Preference (GSP). Some of the key products Kenya has been exporting to the EU at zero duty would henceforth attract duty of between 8.5 and 15.7 per cent.

Source: Bilaterals

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