Africa: East Africa agrees draft EU trade pact to avoid tax charges
If the Economic Partnership Agreement is ratified by the EU, exporters from Kenya, Tanzania, Uganda, Rwanda and Burundi will maintain duty-free access to Europe, the ministry said yesterday on its Twitter account, citing a signing ceremony that took place in the northern Tanzanian town of Arusha.
The accord follows more than a decade of negotiations, with export taxes and non-compliance provisions some of the main sticking points in the final stages of talks, EU Commissioner for Trade Karel De Gucht said last year. The EAC common market signed an interim EPA in 2007 that gave the five African nations duty- and quota-free access to the EU in exchange for lifting restrictions on EU goods over 25 years.
The EAC exported 2.2 billion Euro ($2.8 billion) of goods to the EU last year, and imported 3.5 billion Euro, representing about 0.2 percent of all EU trade, according to the European Commission Directorate-General for Trade.
In Kenya, East Africa’s largest economy, the failure for an EPA to be enacted before the Oct. 1 deadline would result in the EU imposing taxes on the nation’s agricultural shipments, excluding coffee beans, tea and carnations, the EU said today in a statement in the Nairobi-based Daily Nation newspaper.
Roses, Vegetables
The country would be subjected to tariffs under the Generalised System of Preferences, which are lower than normal EU charges. Under the GSP regime, taxes on Kenyan imports to the EU will include as much as 8.5 percent on fresh roses and cut flowers, 30.1 percent on processed vegetables, 6.4 percent on tobacco and 2.6 percent on roasted coffee, the EU said.
“If Kenya loses the EU market, that might negatively affect its foreign-exchange reserves,” Eric Musau, a financial analyst at Standard Investment Bank Ltd., said today by phone from the capital, Nairobi. The nation’s reserves have risen to a record $7.4 billion, the central bank said last week.
Europe buys about 40 percent of Kenya’s fresh produce exports, according to the country’s Foreign Ministry.
The other four EAC members are considered least-developed nations and can send goods under the Everything But Arms regime, while Kenya is a developing nation, the EU said.
“Negotiations for an EPA between the EU and the EAC are ongoing and are close to conclusion,” the EU said today.
The EAC has a combined gross domestic product of $100 billion and the region is home to 141 million people.
The Africa trade bloc has requested a meeting with the EU from Sept. 24-26 to discuss their “common position,” according to an e-mailed statement from the European Centre for Development Policy Management, an independent research group.
Source: bloomeberg.com