NAIROBI, Kenya, Oct 4 – It is now emerging that the European Union (EU) may be to blame for the failed Economic Partnership Agreements (EPAs) negotiations with the East African Community (EAC).
A leaked report seen by Capital FM News indicates that the EU has refused to hold a meeting or propose a date or way forward on the matter.
According to the documents EAC Council of Ministers met on September 20 to deliberate on the outstanding issues and mandated the EAC Secretariat to write to the EU requesting for a meeting between September 23 and 26 in Nairobi.
Although EAC Secretariat did as requested, the EU responded saying ‘they do not see the need’ for a meeting.
The documents say that the EU has remained silent despite several calls from Kenya’s Ministry of Foreign Affairs and international Trade, to organise for a meeting.
EPAs negotiations have agreed on all issues except three: Export Taxes, Export Subsidies and Relationship between Cotonou Agreement and EPAs.
“EAC wants to use export taxes as an instrument of development primarily to add value to its raw materials such as tea, coffee, fresh fruits and vegetables,” the document states.
EU on the other hand wants continuation of supply of raw material to their industries and therefore rejects export tax.
EU also insists any introduction of export taxes must be approved by EPA Council and reviewed within 48 months with a view to terminating it.
On export subsidies EAC wants an enlarged band of export subsidies while the EU insists in cannot go beyond export refund. Yet in 2005 in WTO, EU committed to phase out all forms of export subsidies by 2013.
EU has also refused to accept proposal by EAC that the relationship with the Cotonou as currently obtains should only exist until the expiry of ACP-EU partnership agreement in 2020.
On Friday the EU said that it was committed to concluding the EPAs with the EAC in bid to cushion Kenyan Exporters from Taxes.
EU Trade and Communication Counselor Christophe Ve Vroey said that the negotiations were at 99 percent stage of conclusion with only a few areas left for conclusion.
Vroey said that they have received a new proposal from the East African Community but it was insufficient for reaching an agreement.
From October 1 Kenyan exports to the EU started incurring taxes of about Sh100 million every week.
The Kenya Association of Manufactures says goods to Europe will now be subject to custom duties of approximately Sh7.64 billion annually in taxes.
95 percent of Kenya’s horticultural exports go the EU; other exports include processed vegetables and fruits, peas, beans coffee and Tobacco among others.
In 2013 twenty one percent of the total exports went to the EU worth Sh110 billion. The EU mainly exports machinery, chemicals and vehicles to the EAC.
Source: Business & Tech
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