BY PATRICIAH MUIGAI
Contrary to what appeared in the media concerning Economic Partnership Agreements (EPAs), Kenya stands to gain a lot from the negotiations.
For over 30 years, Kenya enjoyed free market access into the European Union countries for most of her exports. This was as a result of a non reciprocal preferential market access which the EU extended to the Africa Carribean Countries (ACP), countries under the Lome Conventions (1975-2000) and later under the Cotonou Agreement (2000-2007). Following the expiry of the Cotonou Agreement, a new trade regime in form of Economic Partnership Agreement was born. Therefore, EPAs are agreements that are designed to define a new trade regime between the ACP and European Union which choose to conclude the agreements with the EU.
The regime is reciprocal meaning Kenya opens her market to EC products as EC opens her market to Kenya’s products on an asymmetric basis (which means EC to open 100 percent of her market and Kenya less than 100 percent). Kenya had the option for going for this new trade regime or settling for the options available for the least-developed countries.
The main objectives of the EPAs are to ensure sustainable development of Kenya and other Africa Caribbean Countries (ACP), their smooth and gradual integration into the global economy and to eradicate poverty.
Areas that EPAs focuses on are market access, development, trade in services, agriculture, fisheries and trade related issues and intellectual property rights.
The negotiations have other 15 African countries, which include Burundi, Rwanda, Uganda, Comoros, DR Congo, Djibouti, Eritrea, Ethiopia, Madagascar, Malawi, Mauritius, Seychelles, Sudan, Zambia and Zimbabwe.
Negotiations in Kenya are led by the Ministry of Trade with other government ministries, public institutions, private sector and civil society groups that form the negotiating structure. Clusters that form the basis of negotiations include: market access and agriculture, fisheries, services, trade related issues and legal and institution issues.
Kenya derives several benefits from the EPAs with the main one being sustenance of Kenya’s exports Market in the EU and avoiding macroeconomic instability and disruption of the economic activities especially in the agricultural sector. With this, Kenya remains competitive with its horticultural and fisheries products.
Also, 1.5 million jobs already in the above related sectors are preserved and at the same time safeguarding of over $1 billion since these sectors generate income to the country. EPAs on the other hand ensure of domestic taxes.
Secondly, with the EPAs, trade is expanded into the EU market in support of vision 2030, hopefully increasing exports by 20 percent by 2030.
Thirdly, the agreement will allow export of trade services to the EC while at the same time defining a framework for trade in services.
In addition, the EU market access for products through negotiated non-tariff requirements will improve and market access measures enhanced. These include: sanitary and phytosanitary measures, simplified rules of origin for all products, safeguarding of benefits under commodity protocols – sugar , beef and veal and bananas, safeguarding against WTO driven preference erosion through targeted developmental measures and lastly safeguarding Kenya’s exports against unhealthy competition as a result of EU Common Agricultural Policy Reform Program.
The final rationale for EPA is to deepen regional integration since Kenya like all other EAC countries is bound to negotiate trade agreements as a bloc.
However, there are emerging fears and allegations that EPA is a violation of human rights and a move to decolonize Kenya due to the risks involved. Fortunately, risks posed by the same can be avoided for the EPA to deliver for the development of our economy.
Some of the highlighted risks include revenue loss which has a potential of converting into revenue gain as a result of new investments stimulated by the EPAs. Others include unemployment and deindustrialization.
The above mentioned risks are not lost on the negotiating partners and Kenya in particular is pursuing strategies to address them. One of the ways to counter the risks is by zero rating tariffs on intermediate goods which will increase competitiveness thus stimulating industrial and economic development, with a result of minimal loss in revenue.
Another move would be to exclude products from liberalization under EPAs in order to safeguard agricultural and industrial products. If the deal simplifies rules of origin, agricultural and industrial development will be supported with emphasis on value addition of agricultural products.
Negotiations should also focus on development of infrastructural and non- infrastructural constrains. Also, EAC’s and EU’s trade regulatory requirements should be made more predictable. Finally, marine and inland fisheries should be integrated in to the EPAs in order to unlock the potential behind these sectors.
(Patriciah Muigai is a Public Relations Officer at the Ministry of Trade)