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EU: EU reaches trade deal with East African community

21 October 2014   (0 Comments)
Posted by: Author: Ulrika Lomas
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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, and Uganda."

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 Free EU market access was withdrawn for Kenyan exports at the start of this month, after negotiators failed to reach a deal on the EPA by an October 1 deadline.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 scheme."

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.

EU Trade 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.



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