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EU pact to open floodgate of imports

The Nation (Nairobi)

January 19, 2007

EU Pact to Open Floodgate of Imports

By John Mbaria

Thousands of farmers, jua kali artisans and hundreds of thousands of workers and their families will end up in deeper poverty if the Government signs an agreement that will allow farm and industrial products from Europe into the local market.

Lobbyists opposed to the Economic Partnership Agreement (EPA) say the Government is hell-bent on signing the controversial pact with the 26-member European Union.

Basing their concern on a statement faxed to newsrooms last week by the Trade and Industry ministry, which expressed the Government’s fears of the country losing the lucrative EU market, the lobbyists believe it is only a matter of time before the Government signs the agreement. "Unless there is an Economic Partnership Agreement with the EU by the end of 2007, there will be an immediate loss of market opportunities in the EU," read the statement in part.

This was prior to the recently concluded meeting of African Trade ministers in Addis Ababa, Ethiopia, where they made a declaration that asked the EU to "show flexibility and to positively and adequately respond to Key concerns of Africa".

The ministers also asked the EU to provide additional resources to develop infrastructure and Africa’s capacity to enhance production and to compete effectively in the market.

The proposed scheme is meant to create a free trade area in which the EU and Africa Caribbean and Pacific (ACP) countries, will be required to gradually eliminate tariffs and quotas on goods and services.

It is expected to come into effect from January 2008.

Kenya is one of the countries in the ACP, which are being called upon to reciprocate once the EU opens up its market for free entry of goods and services from the group.

In support of the upcoming arrangement, the EU says EPA will promote trade and investment, remove barriers to trade in services, improve ACP countries’ access to its market and support different regional integration schemes within the ACP countries.

That the government is now warming up to signing the EPA is considered an unprecedented move because it goes against its earlier hardline anti-EPA stance.

That position was evidenced by a passionate anti-EPA appeal made by Trade and Industry Minister, Dr Mukhisa Kituyi, during a meeting in Britain in June 2005.

Addressing parliamentarians, ambassadors and journalists, Dr Kituyi then said: "Lowering tariff on goods from your neighbour is like inoculation, but if you open up to the EU, that’s full dose of the virus."

He had further asked the EU to do away with EPAs saying; "to make poverty history, we will also have to make EPAs history."

Dr Kituyi then, seemed to have been particularly angered that liberalisation of African economies had led to what he called a "lost generation" of the 1990s, which was denied education.

Thrown out rhetoric

But now, the Government seems to have done away with this rhetoric.

Instead, it is arguing that not having a new trade agreement in place towards the end of the year, would mean the crippling of huge foreign exchange earners such as the horticultural industry - particularly cut flowers, pineapple juice and French beans exports.

The Government sees the threat as very real because competitor countries such as Morocco, Ethiopia, Tanzania, Uganda and Zambia are likely to pick up the spoils "as they are guaranteed duty free market access" to the EU under the Everything-but-arms agreement.

Should this happen, says the Government, more than one million jobs will be lost and so too will investments worth more than Sh50 billion.

EU is a significant trading partner to Kenya and contributes 26 per cent of its exports and 35 per cent of its imports.

The trickiest part in the whole affair though, hinges on the fact that it is not so obvious how the country might end up losing.

This is partly because of the subtle manner in which the EU is enticing Kenya and other ACP countries to sign the EPAs. "Behind the herd of acronyms, obscure economic jargons and polite euphemism lies a pernicious programme that threatens to subjugate economies of ACP countries to the needs of European capital," says a report published in Africa News, a weekly online newsletter.

Dangling carrot

For one, the EU is said to be dangling a "carrot" in the form of assistance through the multi-billion dollar European Development Fund.

Meant to provide development aid for ACP countries, the fund was created in 1957 following the Treaty of Rome, through which European countries sought to offer technical and financial assistance to their colonies.

"The EU is now pledging to help us overcome constraints that hinder expansion in production."

Seemingly, the Government has swallowed the bait.

It says the arrangement, in which the EU also pledges assistance, will help it develop sectors such as marine fisheries "under the EPA framework". The Government sees other goodies such as rural development cooperation, a deeper link with regional markets and a 100 per cent duty free and quota free EU market access.

Headed dragon

However, anti-EPA lobbyists are seeing in the scheme a subtle but nonetheless hydra-headed dragon that might end up gobbling Kenya’s (and other ACP countries’) chances of ever emerging from poverty and dependency.