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Kenyan horticultural exports to EU might face taxation

Europe has issued a fresh warning of possible revenue losses for Kenya should the East African Community (EAC) fails to reach a trade deal soon.

“Kenya risks taxation on its exports to Europe by virtue of economic strength if the trade talks stall”, Mr Bernard Rey, head of the European Delegation told players in the horticulture sector. “EAC should realise the risks of the current situation of uncertainty. Burundi, Rwanda, Tanzania and Uganda, all are least-developed countries, will enjoy duty-free quota access to the EU markets even if the EPA (economic partnership agreement) is not signed,” Mr Rey
said. “But Kenya will risk seeing tariffs imposed on a good number of exports to Europe including horticulture products”.

The EU said it was concerned that negotiators from the East African team are yet to respond to its latest move to relax their position over the terms that need to be met for a new trade pact with East Africa to be concluded, frustrating the talks.

The region —under the EAC bloc— has been negotiating the contents of EPAs with European Commission since 2007 — the deadline that World Trade Organisation gave its members to scrap all the non-reciprocal preferential trade agreements such as the ones Europe used to extend to its former colonies.

For Kenyan exporters, this legal void has created a lot of uncertainty. They cannot tell for how long the European Commission will continue to extend the preferential trade relations. And even as those preferential terms last, exporters are well aware of the enormous risk they are exposing themselves to since there is no treaty to turn to in case of a dispute. “Growers are looking to the EU being an important destination for the Kenyan products to hasten the negotiations and provide assurance that whatever happens, Kenya, under special circumstances, will not be worse off,” said Kenya Flower Council in a statement.

Source: Business Daily