EAC-EU Deal Could Be Sealed By October

The delayed trade partnership between the East African Community and the European Union could be signed by October, after negotiators meeting in Nairobi reached consensus on three key outstanding issues.

Workers harvests roses at a flower farm in Kenya. Flowers are among the country’s key exports to Europe. Photo/FILE

Workers harvests roses at a flower farm in Kenya. Flowers are among the country’s key exports to Europe. Photo/FILE

During their March 24 meeting, negotiators are said to have struck a deal on clauses on the Rules of Origin, Most Favoured Nations (MFN) status and policies for their respective domestic agricultural sectors that have been holding back the signing of an Economic Partnership Agreement (EPA) between the two trading blocs.

This leaves three outstanding clauses to be discussed and concluded by the EAC-EU ministers in their next meeting scheduled for mid-May.

The three are: Export Taxes; Domestic Support and Export Subsidies; and relations with the Cotonou Agreement dealing with countering the proliferation of weapons of mass destruction, human rights and corruption as well as good governance.

The negotiators referred the clauses to the ministers for a final decision.

“This is an indication that we are moving in the right direction and we hope that the ministers will come to an agreement on the clauses,” said Richard Sindiga, the Kenyan EAC director of economic affairs. “The agreement may not be signed as early as expected, but it will be signed before the October deadline.”

Jane Ngige, the chief executive officer of the Kenya Flower Council said: “The fact that the negotiators have been able to finalise on the other outstanding issues, has us convinced that the negotiations will end and the agreement be signed within the set period.”

Stephen Mbithi, CEO of the Fresh Produce Exporters Association (FPEAK), said if the ministers fail to agree in their next meeting, it will delay the process.

“If we do not have an agreed text early on which parliament can begin debating, it will be difficult to meet the September 30 deadline,” said Mr Mbithi.

According to Marie Umulisa, the regional trade advisor at the EAC, during the EAC-EU ministerial meeting held on January 30 in Brussels, both parties reached an agreement on the outstanding issues in the Institutional Arrangements and Dispute Settlement provisions.

“The ministers, however, did not reach an agreement on Export Taxes; Most Favoured Nation (MFN) Treatment; and the Non-Execution Clause,” said Ms Umulisa.
The ministers then referred the outstanding issues under Rules of Origin and the Agriculture chapter to the technical and senior officials.

The EAC member states had insisted that clauses addressing domestic support measures and export subsidies be included in the final text as the EU’s policy would have a negative effect on trade and agricultural production.

The EU, however, said that these matters should be addressed by the World Trade Organisation. According to a joint report, the EAC partners said that the EU proposal did not address EAC interests in ensuring that the EU reduces its trade distorting domestic support and eliminates export subsidies.

The EAC experts maintained the community’s position on handling domestic support, export subsidies and export taxes as a package, that should be dealt with at the multilateral level. Consequently, the EU withdrew its proposal.

The other agreed on clause, Transparency in Domestic Support and Review of Tariff Lines Liberalisation, will ensure that the EAC reserves its right to review its liberalisation schedule after a five-year period, and exclude the tariff lines that enjoy trade distortion support.

Under the Rules of Origin, the EPA experts considered the EU proposed package deal. The parties agreed on the institutional agreements, dispute settlements and final provisions and market access under the Rules of Origin.

“In this case products are considered as originating in an EAC partner states if they are produced there, incorporate materials originating in the European Union, materials originating in another African, Caribbean and Pacific (ACP) state that do not attract MFN tariff in the EU or materials originating from a country with which either party has a free trade agreement, which are entitled to duty free quota free treatment upon importation into the EU,” says the report.

The EU, however, insists on measures disciplining the use of export taxes in the EPA. The EU demands that 82 per cent or more of trade in the EPA agreement be liberalised.

“The export tax is a way of ensuring that the EU insulates itself against emerging economies like India and China,” said Mr Sindiga.

– The EastAfrican