EU deal no threat to EAC says Kenya

February 11, 2010
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, NAIROBI, Kenya, Feb 11 – The Ministry of Trade has moved to allay fears that Kenya may break ranks with the East African Community because of the Economic Partnership Agreements (EPA) trade deal with Europe.

Below is a full statement from the ministry;

According to Cotonou Agreement, EPA are to be concluded between the European Community (EC) and the African Caribbean and Pacific (ACP) countries that consider themselves in a position to do so, at a level they consider appropriate. This principle secures sovereignty of ACP countries in regard to determination of whether to conclude an EPA with the EC or not.

In October 2007, the EAC Partner States in a bid to preserve their Customs Union, agreed to form EAC EPA configuration to enable them to negotiate with EU as a bloc. The EAC as a Customs Union therefore initialled the Framework Agreement for establishing an Economic

Partnership Agreement (FEPA) with the European Communities (EC) on 27th November 2007 in Kampala, Uganda.

Why Kenya initialled FEPA?
For Kenya, the primary aim of initialling the framework agreement was to secure export market access in the EU after 31st December 2007, when the ACP/EU preferential trade arrangement was set to expire.

The Ministry is fully aware of the significance of the EU market as the second most important destination for Kenyan exports after the Common Market for Eastern and Southern Africa (COMESA), having accounted for 26.4% of exports in 2008, and being Kenya\’s leading market for horticultural products.  This trade has contributed immensely to the economic development of the country which has translated into creation of over 1.5 million jobs and over KShs.70 billion worth of investments in the horticulture and fisheries sectors. 

In signing the FEPA, EAC offered to liberalize 82.6% of her trade with the EU, 65.4% of which is already zero rated under the EAC Customs Union leaving a mere 17.2% of total trade for effective liberalisation to be done on a phase down basis within a period of  25 years. 17.4% of the Products are classified as sensitive to protect agriculture and infant industry.

Why Kenya will not break ranks with EAC on EPA trade deal.

The EPA negotiations are not between the European Community (EC) and Kenya. The negotiations are between the EC and the EAC as two regional blocs. Kenya, therefore like other EAC countries is bound by the EAC Customs Union Protocol to negotiate all trade deals under the EAC. This is primarily because EAC is a Customs Territory, and therefore, for trade agreements to be legally binding, they must be concluded under the EAC framework. It is important to let the public know that Kenya is bound by the Protocol and will not break ranks with EAC Partner States on EPA or any other trade negotiation. It is also important to note that other EAC Partner States which are all Least Developed Countries (LDCs) have never considered the everything but Arms (EBA) initiative as an option to EPA.    

When will Kenya sign FEPA?

Kenya, as in deed all other EAC Partner States, is committed to the signing of FEPA, immediately  outstanding issues of concern raised by both the EAC and the EC are addressed. The outstanding issues are economic development, export taxes, and Most Favoured Nation Treatment (MFN) clauses. Economic development   issues are pertinent in addressing supply side constraints, while export taxes and Most Favoured Nation Treatment (MFN) clauses limit policy space.  Negotiations on these outstanding issues are ongoing both at the regional level and between the EAC and the EC with a view to signing the FEPA as soon as these issues are agreed between the two parties. Kenya, with other EAC Partner States are negotiating to get the best deal, well aware of the urgency to append the signatures.

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