Kenya in a tight spot over EPA

February 15, 2012
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NAIROBI, Kenya, Feb 15- Kenya’s plans to conclude a comprehensive Economic Partnership Agreement (EPA) with the European Union continue to hang in the balance thus jeopardising the access of the country’s produce such as tea, coffee and horticulture into the (European) market in the near future.

Kenya seems to be running out of ideal options that would ensure that it continues to secure the lucrative EU market while staying true to the spirit of the East African Community (EAC)

This dilemma that the country is in was alluded to by former Tanzanian President Benjamin Mkapa who pointed out that the option of Kenya going it alone and signing an EPA to protect its agriculture and horticulture sectors would in turn ‘destroy the EAC Customs Union’.

“The Least Developed Countries (LDCs) would not be able to open up their markets to Kenya if they do not want EU goods to flood their internal markets,” said Mkapa, who’s also the Chairman of South Centre an independent policy think tank.

Although the government has continued to maintain that the ongoing negotiations are between the EU and the EAC, Kenya has a pact that was signed with the European body in January 2008 after the expiry of an interim framework entered into by the two blocs in November 2007.

But while giving a keynote address on the ‘Role of Multilateral and Bilateral Trade Agreements in Fostering Trade and Development in Africa’ in Arusha, Tanzania, Mkapa suggested that going this route would have negative repercussions on the country’s economy.

Similarly, the former president acknowledged that if the entire EAC bloc signed an EPA with Europe, the move would have huge implications on the member states’ ability to industrialise.

This he argued was because these countries would have to cut their tariffs to zero and this would affect at least 80 percent of their trade with the EU.

“Given that the EU remains a major food exporter and still subsidises its agricultural sector to the tune of 60 billion euros a year, this could shrink the size of the local markets that small farmers in the region sell on,” cautioned the chair.

Analysing the third available option of having the EAC region decline to sign an agreement, Mkapa contended that this would have also affect Kenya’s (horticultural and agricultural) industries.

Admitting that this puts Kenya in a tight corner, the former president proposed ‘robust’ debate’ and ‘implementable’ recommendations in the ongoing EPA negotiations to ensure that the need to preserve Kenya’s market in EU, the need for the EAC to industrialise and the need to adhere to the principles of common market are protected.

But given the challenges that the EAC and EU deal presents, Mkapa suggested that the region needs to consider several factors such as the impact of trade pacts on industrialisation, food security, employment and domestic production when negotiating any (trade) agreement.

The EPA trade discussions have dragged on for many years as none of the parties is ready to compromise by give up some of the demands they hold dear. It is however not clear how long the status quo and thus the safeguarding of Kenya’s industries against higher tariffs and the opening up of its markets to competition can continue.

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