The Kenyan floriculture and horticulture sector will face a huge blow if the Economic Partnership Agreement between the EU and the Eastern African Community is not signed and ratified by October 1st 2016. Speaking during the opening ceremony of this year’s IFTEX flower show in Nairobi, Kenya Flower Council Chairman Richard Fox urged the government to speed up the negotiations failure to which the sector stands to lose up to 3.8 Million Euros every month.
“It will not be the same as last time, the repercussions will be worse if the government does not finalize the negotiations in time,” the KFC Chairman reiterated.
Kenya will be subjected to export duty of between 8% - 12% if the EPA deal is not signed and finalized in time which will be a nightmare to players in the floriculture industry. Kenya is the only country in the East African Community trading block that is classified as a developing country. The others (Uganda, Tanzania, Rwanda and Burundi) are categorized as Least Developed Countries (LDCs) which puts them in a better trading position compared to Kenya.
The LDC countries are not required to sign the EPAs since their preferences will continue under the Everything But Arms (EBA) scheme. Under EBA, poor nations are granted duty free access to the EU for all products, except arms and ammunition and 41 tariff lines concerning rice and sugar, on which duty free quotas are established until full liberalization. The talks have been going on for more than a decade, and if they continue to drag on, the county’s flower industry could begin to suffer even more losses.
“Should Kenya miss out on signing the EPAs, trade between it and Europe would be reverted to the less generous market access terms under the General System of Preference (GSP),” says KFC CEO Jane Ngige.
Speaking during an event earlier in the year, the CEO noted that industry performance after a period of rapid growth between 2000 and 2010, when the flower exports rose from 40 to 120,000 tonnes, equivalent to an annualized growth of almost 12%, exports fell back to a growth of less than 2% in the following years.
In 2015, Kenya exported flowers worth $630 million as compared to $550 million in 2014 which is about 69 per cent of the total horticulture export earnings of over $910 million in the same year.
According to the agreement, the EAC has committed to liberalise the equivalent of 82.6% of imports from the EU by value. Under the EAC Customs Union, more than half of these imports are already imported duty free, not only from the EU but from the entire world. The remainder will be progressively liberalised within 15 years from the moment the EPA enters into force. 2.9% of it will be liberalised only within 25 years.
The texts agreed by the chief negotiators have been initialled and checked by EU and EAC lawyers. This "legal scrubbing" process was completed on 11 September 2015. The clean text has now been sent to translation in order to pave the way to the signature and ratification of the EPA by October 2016. The agreement will enter into force once ratification is completed.