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Monday, 05 August 2013

East Africa: EAC Fallout Over EU Deals

A row is brewing between Kenya's new government and her regional East African Community (EAC) counterparts over its readiness to sign the European Union's Economic Partnership Agreement (EPAs), the electronic version of AllAfrica informed on July 26.
While Kenya is under pressure to sign, thanks to lobby groups that argue that the government's delay was a threat to the country's fish and flower sectors, the other EAC member countries are under pressure not to endorse the deals thanks to lobby groups in their countries that say that the EPAs are a threat to their national economies. Civil society in neighboring countries is reported to have said that Kenya should rethink the EPA deal and its consequences on regional integration and regional trade.
However, Kenya is in a more sensitive situation, as it is not among the Least Developed Countries (LDC) like all the other four EAC members - Rwanda, Tanzania, Burundi and Uganda - which trade with the EU under Everything But Arms (EBA) arrangement under which all products except arms enjoy tariff free access to the EU market.
Without EPA, Kenya's exports may be subjected to punitive taxes under the third country or the Generalised System of Preferences (GSP). GSP is a trade arrangement through which the EU provides developing countries and territories with preferential access to the EU market in form of reduced tariffs for their goods when entering the EU market. Even with GSP, this represents an increase in tariffs for ACP countries, which hitherto have benefited from duty free access to the EU market.
Kenya is the biggest flower exporter to the EU. If Kenya does not sign the deal, its flowers will be subjected to an 8.5% duty, which will make the flowers less competitive. Without the EPA, buyers in the EU market may resort to cheaper flowers from other suppliers
However, voices say that Kenya should not succumb to pressure to sign the deal, as it could be making a mistake because – even in the case of a failure to sign the agreement with the EU - it can still get other alternatives within the region and Asia for its products.

At the moment, it appears Kenya's opposition Members of Parliament urging the Kenyatta government to re-consider the country's interests before signing the deal. The negotiations have now been put to a halt.

Source: All Africa