The East African Community is close to concluding the long-awaited Economic Partnership Agreements (EPAs) with the European Union. During a visit to Kenya last week, EU Trade Commissioner Karel De Gucht said both regions have settled on most issues paving way to the signing of a comprehensive EPA after years of intense negotiations for a World Trade Organization (WTO) compatible trading regime.
The development is good news to the flower industry that just a fortnight earlier had expressed concerns over the delayed agreements with the Kenya Flower Council (KFC) CEO Jane Ngige saying that the sector would be most affected if the region failed to conclude the talks. “The EU has given us a deadline of October 1, 2014 to have an EPA in place, failure to which our flowers will be slapped with an import duty of between 8 and 12 per cent dealing a devastating blow to an industry that has thrived on duty-free access to our biggest market”, she said.
Mrs Ngige added that the development is a positive move coming at a time when the flower industry is concentrating on sustainability and market access after growing rapidly over the past two decades. Production has flattened and earnings slowed, a feature that is expected to define the behavior of the sector in the global scene going forward.
“The flower sector seems to have flattened at 120,000 tons over the past four years, and our greatest focus now is sustainability”, she said adding that with the EPA close to being signed, investors can concentrate on issues of sustainability/competitiveness to craft ‘brand Kenya flower’, that will be marketed as having been sustainably grown for sustainability.
To achieve this, the KFC has kicked off the National Compliance Mechanism, a Dutch government funded programme that will bring under one roof all flower exporters to subscribe to the KS 1758, and industry-wide code of practice whose implementation will enforce standards throughout value chain.
Reports indicate that by end of this week, a technical meeting in Arusha involving the EAC partner states technocrats will finalize the document which will be presented to respective countries both in the EU and the EAC parliaments for ratification, paving the way for putting the document into law after which it will be taken to the Heads of State for signing for consenting by the deadline of October 1, 2014.
The EU has submitted that failure to have an EPA by that date will see the EAC revert to the less favorable Generalized System of Preferences (GSP), under which the EU is allowed by the World Trade Organization to charge duties for goods entering its territory.
According to Mrs Ngige, the anxiety over the EPAs is one of the reasons the sector has slowed down. “No investor is willing to put money into an export oriented business whose future is not guaranteed due to lack of a trade pact”, she told reporters in Nairobi. Currently, Kenya exports to the EU, the country’s second largest export market after the EAC. The bloc though is the largest global flower destination, sources 40 per cent of cut flower from Kenya.
Kenya is the only nation in the EAC region that is not a Least Developed Country while partner states qualify to continue exporting duty-free to the EU under the Everything But Arms initiative (EBAs). Those in the know say EBAs are not a negotiated platform and is given at the discretion of the stronger partner and can be withdrawn without notice leaving the receiving party at the mercy of the benefactor.
The EU Trade Commissioner noted that interim EPA that has guided trade between EAC and EU market since 2007 is not compatible with global trading requirements therefore; the two blocs must finalize a comprehensive EPA by 2014.
Earlier on, as part of an integral partner of exporters from Kenya, KFC participated in a meeting the Principle Secretary Ministry of Foreign Affairs Eng. Kibicho Karanja on 11th July, primarily to discuss progress the EU/EAC Economic Partnership Agreement, ahead of this week’s negotiations on the same in Arusha. The PS, as a result of a motion tabled in Parliament urging Government not to sign the EPAs, was concerned about the alleged “ skewed trade in favour of the EU Countries “ and that small scale growers would be adversely affected negatively.
The PS was adequately appraised by the technical team from Ministry of EAC Commerce and Tourism on the outstanding EPA issues which include: Rules of Origin; MFN clause, Agriculture, domestic support and export subsidies and Institutional and dispute settlement. He appointed a Committee to provide him with a report on the impact of different scenarios from the outcome of the EPA Negotiations, not just in Kenya but also on the other partner states by the end of July. KFC volunteered to be part of the Committee.