EU boss to Kituyi: Take our deal or hit the road
Business Daily (Nairobi) | 9 November 2007
EU boss to Kituyi: Take our deal or hit the road
Written by Allan Odhiambo
November 9, 2007: The European Union reacted sharply to Trade minister Mukhisa Kituyi’s Tuesday revelation that Kenya will no longer pursue an interim trade pact with Europe but a comprehensive agreement ahead of the expiry of the one on December 31.
Mr Peter Mandelson, the EU trade commissioner read the riot act to Dr Kituyi, saying Kenya should be ready to trade with Europe under the General System of Preferences (GSP) should ongoing negotiations for a new economic partnership agreement fail to beat the December 31 deadline.
Mr Mandelson said the EU would not be seeking any further extension of the special World Trade Organisation (WTO) waiver that provides for preferential trade between it and developing nations under the African Caribbean Pacific (ACP) platform.
He said Kenya had the choice of signing an interim market access agreement that would guarantee it duty free and quota free access to Europe after January 1, 2008 or move to the GSP regime and deal with its potential effects on key export sectors such as horticulture.
“There is absolutely no question of arm twisting Kenya into signing an interim market access agreement as part of a future EPA. Let us be crystal clear, Kenya and its regional neighbours must decide whether or not they want such an agreement,” Mr Mandelson said.
Analysts said this latest warning by EU is likely to complicate the case for Kenya as it embarks on the final phase of negotiations for new trade deals by December 31.
The hard stance taken by both parties may see Kenya being forced to sign an Economic Partnership Agreement (EPA) with Europe under intense pressure in an attempt to beat the deadline or risk reverting to the less generous GSP.
Though the EU had opened the interim pact window to prevent trade disruption come January 2008 should the parties fail to sign a new EPA by year end, Dr Kituyi made a surprise about turn on Tuesday when he joined South Africa and 15 other nations under the banner of the Economic Community for West African States (ECOWAS) in opposing the strategy, saying it worked against regional integration in Africa.
The minister further accused the EU of trying to arm-twist Kenya into signing flawed deals in the guise of beating the December 31 deadline.
“We have covered so much ground in the talks and there is no reason not to extend the negotiations past the December 31 deadline and sign meaningful EPAs,” Dr Kituyi said.
In his reply to Dr Kituyi’s change of tack, Mr Mandelson denied that there was any arm twisting in the deal. “Dr Kituyi, his regional colleagues and ourselves must pin down an agreement that passes muster in the WTO with developing countries that will not enjoy the same trade privileges in the EU market.
This is the nub of the situation and time is of the essence,” Mr Mandelson said in a statement.
Through a trade agreement signed in Cotonou, in 2001, the ACPs and the EU agreed to negotiate a new trade regime to be concluded by December 31.
The non-reciprocal trading arrangement is based on the WTO waiver, which was granted at the fourth Ministerial Conference in Doha in November 2001.
The waiver was granted until the end of 2007, after which it was assumed that the arrangement will not be necessary. Those opposed to signing EPA within a rush period, including Dr Kituyi have however been fronting for an extension of this waiver.
Kenyan negotiators jetted out of the country yesterday for talks with the EU in Brussels with the question of interim trade arrangements omitted from the text for discussion. Indications were that the team will be fronting for a comprehensive trade deal by December 31.
“We are determined to engage them (EU) in negotiating a comprehensive EPA within the set deadline. The issue of interim deals does not arise because they are not compatible even with the existing laws,” Trade and Industry Permanent Secretary David Nalo told Business Daily as he left for Brussels.
Mr Nalo said Kenya had developed a proposal on market access and how to fast-track other key texts such as development financing. A notable point in the market access text is that Kenya is seeking to protect its markets for another 25 years.
“We are very clear on our side when pushing for full EPA deals because we have made very considerable progress in key areas such as development, market access and trade in services. So there shouldn’t be much of a problem,” the PS said.
Kenya’s energised push for EPA ahead of January 2008 is attributable to the fact that like other more developed ACP countries it doesn’t qualify for an alternative preferential trade regime known as “Everything But Arms” (EBA) that is open to least developed countries.
Civil society organisations have however argued that instead of going for a rush EPA that may affect the local economy, the Government should take up the more predictive GSP system that would have specific terms of reference.
“The civil society and other groups may make the noise but we believe in finding a lasting and favourable trade arrangement. We don’t want to be caught in the fight for exports when our markets are flooded with goods from EU,” Dr Kituyi said on Tuesday when he dismissed the calls for a GSP system.
Statistics showed that should Kenya’s trade regime with the EU revert to GSP some products that have been entering the European market at zero duty will attract duty of between 8.5 and 15.7 per cent- an issue that most producers have argued would jeopardise their chances of remaining competitive in their traditional main export markets in Europe.
