Kenya's exports to enjoy duty free status by early 2015

Kenyan exports to the European Union (EU) will enjoy duty free status from the end of January 2015, visiting EU Trade Commissioner Karel de Gucht said on Friday, 31 Oct 2014. The commissioner told a media briefing in Nairobi that Kenyan exports have been attracting duty as a result of failing to meet the Oct.1 deadline for signing the the Economic Partnership Agreement (EPA). "It will take at least two months from now for the EU Parliament to pass by a law that will allow duty free, quota free access for Kenyan goods," he said.

The East African Community (EAC) Member States and EU reached an agreement on the EPA and initialized the agreement in mid-October. The EU Commissioner said they can't organize refunds for the import taxes paid by Kenyan exporters because there is no provision for it. "However, it is possible for the EU to channel funds earmarked for overseas development for compensating exporters," he said.
He added that the EPA will provide guaranteed duty free and quota free access to the EU's single market of 500 million people.
According to the envoy, Kenya is no longer eligible for the EU's market access programs, as it is not classified as a Least Developed Country (LDC). He urged EAC states to ensure EU aid supports EAC's trade policies, infrastructure and export companies.

On Oct. 1, Kenyan exports to the EU started attracting Generalized System of Preference (GSP) tariffs while the other four EAC Partner states moved to the Everything But Arms (EBA) arrangement by virtue of them being Least Developed Countries (LDCs). Under the new GSP system, Kenyan flower exporters must attach a form, indicating the origin of the flowers to benefit from duties that go as high as 8.5 percent. Only carnations exported to the EU from Kenya do not attract duty under the GSP.
The change of regime to GSP meant this privilege of duty-free flower exports is a reserve for countries that have ratified EPAs concluded with the EU. Kenyan agricultural goods, including cut flowers, will in the meantime be subject to various EU GSP tariffs until the EPAs are fully implemented. These products include vegetables, beans, sweet corn and processed juice.

Ministry of Foreign Affairs and International Trade Cabinet Secretary Amina Mohamed said ratification of the EPA by both EU parliament and the five EAC partner states will occur by the end of August 2015. "It will offer Kenyan goods 30 years of duty free quota free access to the EU. EAC states will now be able to focus on improving their economic performance without worrying about the potential loss of duty free access," Mohamed said. She noted that the trade negotiations have been ongoing since 2003. "We have learnt a lot from the experience along the way," she said.  The CS said Kenya's exports to the EU are now facing greater scrutiny after EU border officials detected high levels of pesticide residues in exports. "This is affecting the competitiveness of Kenyan goods as ten percent of beans and peas consignments have to undergo physical inspection at the EU points of entry," she said.
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