Kenya's flower farmers to access EU market duty-free from next month

Workers at Mugo Flowers Farm Ltd, Embu West sub-county pack the flowers ready for export to Europe. The move will see increased exports to the EU - creating more jobs. [PHOTOS:JOSEPH MUCHIRI]

NAIROBI: Flower farmers in Kenya could access the European market duty-free as early as next month. This is after the European Parliament and Council confirmed they do not object to the reinstatement of Kenya to the list of beneficiary countries in the so-called ‘EU Market Access Regulation’.

Kenya Flower Council, the industry lobby group, said with the approval, Kenya is now expected to be reinstated by end of the year to duty-free status for all flowers and floriculture products exported to the European Union. “This comes as a huge relief for Kenya’s floriculture sector and for all operators and businesses involved in the floriculture trade both in Kenya and in the EU particularly in view of the approaching peak sale season on Valentine’s Day,” Kenya Flower Council  Chief Executive Jane Ngige, said in a statement Thursday.

Ms Ngige said the process of reinstatement was accelerated through recognition by both the European Parliament and the Council of the importance of the approaching Valentine’s Day peak flower sale season on the EU market that is central to the financial sustainability of the flower industry in Kenya. As a result, the standard two-month review period was reduced to a month.

She said what now remains to be done is the formal publication in the EU Official Journal of the Commission’s Delegated Regulation that will effectively advise customs in the EU and operators that the duty-free status of Kenya flower and floriculture imports to the EU has been reinstated. “We expect this final formal step to be completed before December 31, 2014, meaning that Kenya can start the New Year with a renewed duty-free access to the EU market,” said Ngige.

OFFICIAL JOURNAL

Kenya Flower Council Chairman Richard Fox said, “As per our latest information, publication in the EU Official Journal legally enforcing duty-free status for all Kenya imports into the EU is likely to take place between December 24 and 31, 2014.”

Kenya failed to meet the October 1 deadline to sign the Economic Partnership Agreement (EPA), which saw Kenyan exports start to attract duty to access the EU market. The trade talks collapsed after the two regional blocs — East African Community and European Union failed to agree on three issues — export taxes, export subsidies and the Cotonou agreement.

The deal ought to have been concluded by July 1, 2014 ahead of the October 1 deadline to give EU three months to include Kenya on the list of beneficiaries of the market access regulation based on its economic categorisation globally.

However, on October 14, Kenya struck a deal with the EU that will see exporters continue enjoying duty-free access to the EU countries. Flower exports to the EU market now attract import duties between five per cent and 8.5 per cent under the EU GSP regime due to the delay in finalising an EPA between the EU and the East African Community (EAC) member States. “The additional cost associated with the duties has had to be absorbed by the floriculture sector in order to remain competitive in European markets and to safeguard jobs and the enormous capital investment in the industry,” Ngige said.

Kenya is the major provider of quality cut flowers to the EU market, with a total export value of Sh39.2 billion and a market share of about 40 per cent.

“All parties are aware that there remain some essential steps to be taken by both the EU and the EAC member States to sign and ratify the EPA within the next two years to ensure that Kenya can confidently plan its long term trading relationship with the EU and expand the investment in the Kenyan floriculture sector,” Ngige added.

MARKET ACCESS

According to the EU, exports of flowers are now attracting a duty of 8.5 per cent, tuna fish (20.5 per cent), other fish (15.7 per cent), fresh avocado (1.6 per cent), fresh pineapple (2.1 per cent), processed pineapple (22 per cent), processed vegetables (30 per cent) and roasted coffee beans 2.6 per cent.

Kenya has been negotiating the trade talks under the EAC regional bloc and it is the only country in the bloc that is ranked as a developing country, while Tanzania, Uganda, Rwanda and Burundi are least developing countries thus enabling them to enjoy duty free market access.

The EPAs negotiation has been on for more than 10 years and is designed to replace the Cotonou Agreement signed in 2000 after the expiry of the Lomé Convention of 1975.