PUBLISHED ON September 24th, 2014

Trade talks must be concluded quickly

Trade negotiations are not an easy task given the high stakes involved in safeguarding the interests of parties involved.

Considering the long-term nature of most trade pacts, it is critical that parties involved in the process agree on the most favourable terms so as to avoid the pain of loss and mistrust.

For almost a decade Kenya and other East African Community countries have been buried in talks with the European Union for a new trade deal to replace the current one where developing countries are granted preferential market access for their goods.

Unfortunately, the deadline for the talks has lapsed before the EU and the EAC could conclude an Economic Partnership Agreement (EPA). This means that trade between the two blocs will from October 1 enter a higher tax bracket because a successful deal on EPA would have accorded them duty-free, quota-free access to European markets.

The gravity of this matter is reflected by the fact that Kenyan exporters now face taxes of about Sh100 million every week until such a time that the two blocs shall conclude and a sign a new trade deal.

This situation is rather unfortunate for Kenyan exporters who are already faced with rising cost of production. The new taxes are expected to make Kenyan goods even more expensive to EU citizens, hence impacting on sales volumes and in turn reducing foreign exchange inflows to the country.

While we appreciate the efforts by Kenya and other EAC countries in finding the most favourable deals with the EU, it is also important that we point out certain flaws that may have contributed to the present uncertainty that faces exporters eyeing the European market.

Although investors raised concern over the risk of missing the deadline of the EPA talks, there was general lethargy on the part of government. The talks were not treated with the urgency they deserved and exporters now have to face the consequences of inaction by the government.

We urge the government to move with speed and ensure that the talks on the EPAs are concluded fast and in the most sensible manner so that exporters are not punished for a long time.

Key sub-sectors such as horticulture that service the European markets are capital intensive and investors must not be punished through unnecessary delays in finalising the negotiations.

A nation that cannot protect the interest of investors only works against itself in an increasingly competitive global arena.

Source URL: Business Daily

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.