Kenyan exports to start enjoying duty-free access to EU next year

Nairobi; Kenya: Kenyan exporters will start enjoying duty-free access to the European market next year. A European Union (EU) diplomat said on Friday that after a two-day consultative meeting in Nairobi with Kenya Government officials, it was agreed that Kenya will be included on the list of beneficiaries of market access regulation in February next year.

Speaking in Nairobi on Friday, out-going European Union Trade Commissioner Karel De Gucht said the Economic Partnership Agreement (EPA) will relieve Kenya from paying higher customs duties in February and give the country an ‘advance’ on the access it will get once the agreement is ratified.

“The ending of temporary access under our Market Access Regulation on October 1, 2014 meant that Kenyan exporters had to pay higher custom duties. This deal allows us to solve that problem. The EU will give Kenya what we might call an advance on the access it will get once the agreement is ratified,” said the commissioner.

He called on other East African partners to take up the opportunity to work with Brussels to prioritise aid that will support their trade policies, trade infrastructure and export companies.

Foreign Affairs Cabinet Secretary Amina Mohamed welcomed the gesture, saying it guarantees huge benefits to the local economy.

However, the EU turned down Kenya’s request to compensate exporters for the tax to the tune of about Sh2 billion they will have paid to the EU market up to end of January 2015.
Early last month, Ms Mohamed had promised that the government will lobby for compensation of the exporters by the EU.

Sign the deal

But, Gucht said the EU legislation does not provide such provisions. This leaves local traders at a great loss.

Kenya failed to meet the October 1 deadline to sign the EPAs, which saw Kenyan exports start attracting duty to access the EU market. However, on October 14, Kenya struck a deal with the EU that will see Kenyan exporters continue enjoying duty free access to the EU countries.

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 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.

After the signing of the trade deal, Kenya initiated negotiations to plead with the EU to reduce the period that the country has to wait before it is included on the list of beneficiaries.

“Kenya will enjoy 30 years of duty and quota-free access to the world’s largest European Union market once the Economic Partnership Agreement is ratified,” said Ms Mohamed.

She added: “Any delay by any country to sign and ratify the agreement will affect everybody and therefore our partners should sign the deal as quick as possible.”

The EPAs deal signed in Brussels mid last month must still be ratified by the parliaments of the five EAC member States — Kenya, Tanzania, Uganda, Rwanda and Burundi — and by the European Parliament. Kenyan products that have been enjoying duty-free export to the European Union before October 1, 2014, will continue to attract between four and 30 per cent in taxes, a fact that could see the cost of doing business in the country rise significantly. According to the Kenya Flower Council, its members lose about Sh640 million per month.

Reciprocal agreements

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, which granted non-reciprocal trade preferences to African, Caribbean and Pacific Group of States (ACP).

Gucht explained that the new trade agreement provide for reciprocal trade agreements, meaning that not only the EU provides duty-free access to its markets for ACP exports, but ACP countries also provide duty-free access to their own markets for EU exports.