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Kenya says EAC-EU trade talks could be concluded by May

16 April 2014, 10:32

Nairobi - The ongoing trade talks between the East African Community (EAC) and the European Union could be concluded by the end of May, a government official said on Tuesday.

Foreign Affairs Principal Secretary Karanja Kibicho told journalists in Nairobi that the number of contentious issues in the Economic Partnership Agreement (EPA) has been reduced to three.

"The EAC is therefore optimistic that a deal will be reached by the end of next month," Kibicho said during a workshop on trade in the Great Lakes region.

The one day event brought over 100 participants to strategize on ways of enhancing Kenya's exports in the Great Lakes region. The EU parliament has set a deadline of October for the agreement to be concluded.

He said that EAC's position is that the EU should eliminate export subsidizes on its agricultural products. "If these products are allowed duty free access to our markets, they could negatively impact our farmers," Karanja said.

"However if the EU continues to support its agricultural sector through subsidizes, the EAC should be allowed to impose import duties on these goods," Kibicho said. The other contentious issue is the EAC's use of taxes to discourage export of raw materials.

"This is a deliberate effort to encourage value addition of our commodities before they are exported," he said. The government official said that one of the reasons that the region has a high unemployment rate is due to its low manufacturing base.

The summit comes at a time when EU-EAC negotiations on a full Economic Partnerships Agreement (EPA) have made considerable progress and are on the verge of conclusion.

The EAC region has a tangible opportunity to seize the advantages offered by the EPA and to maintain Duty Free Quota Free access for all Kenyan exports to the 500 million consumer EU market.

The East African nation stands to benefit from foreign exchange earnings, employment opportunities and penetration to the European Union market with EPAs.

The country has enjoyed preferential access to the EU market for the last 38 years through four successive Lome Conventions signed between 1975-2000.

The intention is to reciprocate the trading terms that the African Caribbean and Pacific (ACP) countries have been enjoying since 1959.

The EU and EAC are also yet to agree on the inclusion of non trade issues on the trade negotiations. "The EAC's position is that the EPA's should only concentrate on trade issues," he said.

The EU is proposing to include agreements on human rights and corruption and other issues on the trade pact. "We feel that these issues are already being dealt with other channels and international conventions," he said.

Ministry of Foreign Director of the Office of the Great Lakes Region Ken Vitisia said that European market used to absorb over 50 percent of all Kenyan exports over two decades ago.

"However, the volume of trade now accounts for less than 20 percent due to the emergence of other trading partners in Africa as well as China and India," he said.

Kenya Association of Manufacturers Head of Policy Phyllis Wakiaga said that Kenya's trade with Africa will continue to expand due to the region's rapid population growth.

"The continent has numerous natural resources and various social and economic needs that are yet to be exploited," Wakiaga said.

"Our economies are gradually becoming integrated and interdependent and this is clearly manifested through the expanding trading relationships," she said.

She added that Africa should utilize its numerous rivers and lakes to accelerate intra-regional trade.

"Water transport is a cheaper method of transporting bully goods especially to the landlocked countries," he said.

Kenya Private Sector Alliance Chairman Vimal Shah said that one of the challenges of trading in Africa is the presence of tariff and non tariff barriers.

Shah noted Kenya is one of the biggest investors in the other EAC countries. He added that Kenya's relatively developed economy places it in a disadvantaged position compared to its neighbors which are classified as least developed countries.

"Our neighbors have access to developed markets due to their underdeveloped status," he said.

The East African nation's position as the regional gateway is expected to improve with the launch of an on-line cargo clearance system in May.

The long-awaited single electronic window, which is to be officially rolled out on May 2 by President Uhuru Kenyatta, is expected to facilitate international and domestic trade at the port of Mombasa, and has been touted as the solution to the persistent delays at the port.

It is expected to reduce the time it takes to process goods through customs at the port by half - from seven days to three days.

Kenya National Chamber of Commerce and Industry Chairman Kittony Kiprono said that most of African countries are frontier markets.

"They offer good trade opportunities due to their low industrial base and so demand for consumer goods is increasing," he said. The chairman said that Kenya has a competitive advantage in the agriculture, manufacturing and the services sectors.

Ministry of Foreign Affairs Director of Economic and International Nelson Ndirangu said that Kenya has a positive trade balance with Africa and deficit with the rest of the world. "We therefore want to concentrate in growing African markets," he said.

 - Xinhua

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