EU: EU reaches trade deal with East African community
21 October 2014
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas (Tax-News.com)
The European Union
has said the conclusion of a new trade deal with the East African Community
(EAC) means that EAC countries no longer have to worry that their improving
economic status will lead to the loss of full duty-free and quota-free access
to the European market.
According to the
EU, the finalized Economic Partnership Agreement (EPA) will "provide legal
certainty for businesses and open a long-term perspective for free and
unlimited access to the EU market for products from Burundi, Kenya, Rwanda, Tanzania,
An interim EPA was
signed in 2007. Imports from EAC countries have entered the EU duty- and
quota-free since January 1, 2008.
All EAC members,
with the exception of Kenya are classed as least developed countries (LDCs) by
the United Nations. Free EU market access was withdrawn for Kenyan exports at
the start of this month, after negotiators failed to reach a deal on the EPA by
an October 1 deadline.
The EU has now
confirmed that, under the new EPA, all EAC members – least developed or more
advanced – will benefit from the same "predictable and uniform trade
Betty Maina, CEO of
the Kenya Association of Manufacturers, said that, "because of the delay
in concluding the EPA, Kenyan firms will unfortunately have to pay taxes for still
another three to six months before the full legal processes for reinstatement
into the duty free schedule can be concluded." However, she added that
"consultations are underway between [the] Government and private sector on
how to cushion Kenya exporters to the EU against the effects of the [EU's]
Generalised Scheme of Preferences tariff system."
To comply with
World Trade Organization rules, the EPA includes a commitment that EAC
countries should increase EU duty-free access to 80 percent of their imports
over the next 15 years. If EAC countries negotiate broader agreements with the
EU's main competitors, the EU would be able to claim the same tariff relief.
The EU also said
that the two blocs had reached a balanced agreement on export taxes and had concluded
an agreement that includes provisions covering the free movement of goods,
cooperation on customs and taxation, and trade defense instruments.
Commissioner Karel De Gucht said: "The EAC region stands out for its
dynamism and ambition to develop as an integrated region. The comprehensive
partnership agreement we have just reached is the best way in which we can
support [the] EAC's aspirations. We have concluded two other
development-oriented partnerships with African regions this year. It's a source
of my personal satisfaction also to see East Africa benefiting from the
opportunities that Europe wants to offer. I hope that these EPAs will be signed
and implemented soon."
In 2013, total
trade between the EU and the EAC reached EUR5.8bn (USD7.4bn). EU imports from
the EAC are worth EUR2.2bn and mostly comprise coffee, cut flowers, tea,
tobacco, fish, and vegetables. The EU mainly exports machinery, equipment,
vehicles, and pharmaceutical products to the EAC, worth EUR3.5bn.
This article first appeared on tax-news.com.