Horticulture sector braces for EU decision on delayed EPA deal

Flower Farm

Local exporters of produce to Europe are bracing themselves for higher taxes on their goods after the East African Community (EAC) decided to delay the signing of a trade deal with the European Union (EU).

EAC heads of state meeting in Tanzania on Thursday decided to go back to the negotiating table with a decision on whether to sign the Economic Partnership Agreement (EPA) to be made in January.

With Kenya the only member state classified as a developing country under EU rules, it is subject to higher tariffs and taxes on its goods heading to Europe.

The Fresh Produce Exporters Association of Kenya Chief Executive Officer Margret Muchui said with the higher taxes, many players in the sector would be forced to seek alternative markets or risk going out of business.

“Some of the exporters are not big enough to absorb that (taxes) and definitely that is going to have a ripple effect in the sector,” Mrs Muchui said.

With the October 1 deadline looming, Kenya could be subjected to Sh10 billion a year tax on exports to Europe.

The sale of fruits, vegetables, flowers and nuts is a leading source of foreign exchange for Kenya, with Europe offering a lucrative market for horticulture.

Tanzania president and Chair of the EAC heads of state summit John Magufuli however called on the EU not to penalize Kenya even as the EAC member states engaged in further negotiations.

“We appeal to the EU not to punish Kenya by denying it access to the European market,” President Magufuli said during the summit on Thursday.

Mrs Muchui expressed optimism that the Kenyan government would seek an exemption from the taxation rules.

“We have the arms of the government working day and night and us as industry we are confident,” she said.

The EAC secretariat is expected to file a formal request to the EU seeking to waive the taxation for Kenya. The matter will be presented to the EU parliament which could read the move as a sign of commitment to implement the EPA deal.

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Story By Patrick Igunza
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