August Issue 4 2012

Floriculture stakeholders workshop

A workshop for the flower industry stakeholders organized by Onkunya and Associates (EA) Ltd and Professor Kamau Ngamau & Team in collaboration with the Kenya Flower Council was held on Thursday, 23rd August 2012, at the Serena Hotel, Nairobi.

Onkunya and Associates (EA) Ltd and Professor Kamau Ngamau & Team were recently commissioned by the Kenya Flower Council (KFC) to carry out an evaluation of the KFC’s capacity to lead the “Kenya Flower Industry ‐ Capacity Building For Sustained Market Access: A National Mechanism For Industry‐Wide Compliance” Project.

The project, funded by the Dutch Government is aimed at supporting the Kenya flower industry in assuring sustained access to international markets, by developing and implementing a National system for industry-wide compliance with the existing regulatory framework for sustainable production.

The consultants presented their findings to the participants followed by a discussion on the national mechanism.

Despite a myriad of both public and private tools governing regulation of the cut flower industry in the realm of labour standards, protection and stewardship of natural resources, it is clear from consistent reports and concerns raised from various stakeholders, that more work on the robustness of implementation was to be done.

EPA Watch-Rules Of Origin

Recent Developments

The stakeholder’s consultative forums continued in Nairobi this week with the fisheries stakeholders meeting to discuss the fisheries aspects under the rules of origin and also develop a position aligned to the country’s development plan for the fisheries industry. The ongoing stakeholder’s meetings are aimed at developing a country position in preparation for an EAC meeting, whose objective will be to forge a common EAC position before the senior officials meeting in mid-October 2012.

The meeting came up with a position on the scope of definition of wholly obtained fish in the context of the EU/EAC EPA.

Background

In our EPA watch today, we bring you brief general background on the Rules of Origin.

The corner stone of the EPA Rule of Origin (RoO) is the principle of asymmetry that reflects the differential level of development between the EAC and the EU. The negotiations on RoO are guided by the following objectives

i  Improving and increasing the market access for EAC exports into the EU market;
ii.  Promoting the establishment and growth of the industrial and agricultural base of EAC Partner States;
iii. Facilitating the diversification of the EAC export base;
iv. Deepening EAC regional integration through cumulation across EAC as well with COMESA and SADC countries;
v. Widen EAC Partner States base for sourcing raw material for production of goods targeting the EU market by allowing for extended cumulation that covers all ACP countries, countries that the EU has concluded an FTA with and cumulation with goods that enter the EU market at an MFN duty rate of 0%; and
vi. Achievement of the overall Cotonou Partnership Agreement objectives: poverty eradication, equitable growth, sustainable development, strengthening of private sector, integration into global economy, increasing productivity and competitiveness of ACP products.

The EAC-EU EPA RoO are contained in Protocol No. 1 with all its annexes, which include Annex II that spells out specific rules to apply for products manufactured using non-originating raw material.

Current negotiations on the RoO are focused on rules applicable to EAC exports to the EU.  The EAC negotiating positions on the RoO are being derived from Industry consultations at the Partner States level, EAC Protocol on RoO and GSP Rules.
The EAC Partner States and the EU have agreed to undertake further work on Protocol No 1 and the Annexes.

TRAC introductory stakeholder workshop

The Trademark East Africa Challenge Fund (TRAC) a project funded by Trademark East Africa (TMEA) was formally introduced to stakeholders who are also the potential beneficiaries on 24th August 2012 at the Laico Regency Hotel, Nairobi. Kenya Flower Council attended the launch.

TRAC invests in innovative projects that can boost regional trade in the East Africa Community and the regions trade with the rest of the world.

According to the TRAC Fund Manager Isaac Njoroge the deadline to submit proposal for the 1st round is 24th September 2012. They can fund projects of above USD 50,000 to a maximum of USD 350,000. In attendance was the TRAC Project Manager Howard Millar who gave a highlight of how TRAC works.

The projects are expected to be complete for their investment in 3 windows of funding:

Window 1: Business innovation that will increase trade

Innovative projects, proposed by private firms that have the potential to boost cross-border and international trade will be eligible for funding. Innovative projects that benefit large numbers of men and women and promote climate resilience and environmental sustainability will be given preference.

Window 2: catalyzing innovation in services that enable cross-border trade

This will support service businesses that have developed innovative projects to reduce cost of trade in East Africa. The main types of guarantees are likely to be providers of logistics, transport, financial, ICT and professional cross-border services.

Window 3: innovative ways of gathering evidence and mobilizing public opinion.

TRAC will incentivize strong coalitions to be built between the Private sector  (PSOs) and civil service organizations (CSOs) across the  EAC that can gather evidence of the way barriers to trade harm the public interest and mobilize public support for reforms that will lead to greater trade and regional integration, particularly those able to use new social media.

Russia now a WTO Member

On 23 July, Russia officially notified the WTO that it had completed the formal ratification of its accession package to the WTO.  As a result, fully-fledged membership of Russia took effect on 22 August 2012. Russia became the 156th member country of the WTO.  This happened after 18 years of negotiations and formal accession of Russia to the WTO approval on 16 December 2011.

In terms of market access, reduced tariff duties will apply for import of floriculture products of Chapter 6 into the Russian market as from 2013, 2015 or 2017 depending on the sub-sections. These new tariff duties will be applied according to the MFN (Most-Favored Nation) rule, i.e. to any third country exporting floricultural products to Russia.

The average tariff ceiling for imports of agricultural products into the Russian market will be 10.8%, lower than the former average level of 13.2%.

The following new tariff duties apply for import of floriculture products of Chapter 6 into the Russian market:

–          Overall, tariff duties for all goods from Chapter 6 will be lowered to 5% ad valorem (vs. the current level of 15%) with entry into force in 2013, 2015 or 2017 depending on the subsections.

–          For heading 0603 (cut flowers) :

  • 5% ad valorem duty but not less than 0.3€ per Kg – To be applied from 2013
  • except for heading 0603 90 000 (7,5% but not less than 0,45 € per kg) – to be applied from 2015

–          For heading 0602 ( live plants) :

  • 5% ad valorem duty – To be applied from 2015
  • Except for headings 0602 30 000 (rhododendrons and azaleas) and 0602 40 (roses) : 5% ad valorem duty – to be applied from 2017

The anticipated benefits of Russia’s accession to the WTO are not limited to lower duties for the market access of goods. It is also important to note that Russia has committed to fully apply all WTO provisions, including international standards and WTO rules in a number of areas such as customs procedures, intellectual property, and technical regulations in compliance with the WTO TBT Agreement. This is expected to greatly improve the overall business and investment climate with Russia’s trading partners.

Most significantly as far as agricultural products are concerned, Russia will also be bound by all SPS (sanitary and Phytosanitary) measures in accordance with the provisions of the WTO SPS Agreement and of international conventions such as the IPPC (International Plant Protection Convention). This means for example that suspension, cancellation or refusal of an import permit will have to be fully justified, based on scientific facts and an adequate risk-assessment in line with the WTO SPS Agreement and cannot be applied arbitrarily or unjustifiably discriminate between origin countries.

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