Concerned about a recent agreement Kenya and the European Union (EU) agreed into, the East African Business Council (EABC) is uneasy.
Kenya will get duty-free and quota-free access for all of its exports to the 27-member EU bloc by adopting the Economic Partnership Agreement (EPA). However, the East African country would also be forced to gradually reduce import taxes on products from Europe.
EABC, meanwhile, worries that Kenya's decision to liberalize tariffs with the EU might make it more difficult to tax products brought into the area. Adrian Njau, a trade and policy expert with the group located in Arusha, made a suggestion about how the arrangement would skew the tariff structure for imported commodities.
Even though Kenya went ahead and signed the agreement on the variable geometry principle, the decision could have been better for the area. "We would like to see all the East African Community (EAC) sign and implement the agreement as a bloc", he said during a Webinar.
Mr. Njau stated that doing so would avoid distortion of the EAC Common External Tariff (CET) when Kenya begins tariff liberalization with the EU under the EPA accord.
He went on to say that the EAC member nations should make deals with third parties together in order to "improve mutual trust." They would retain the Customs Union "and common policy in the field of external trade" by negotiating and signing such agreements together.
Nairobi claimed that its unilateral decision to engage in a bilateral agreement was prompted by a bye from a recent EAC Heads of State Summit.
The February 27th, 2021 summit mandated that partner states that desire to sign and implement the EPA use the variable geometry approach. Previously, for the EPA with the EU to enter into force, all EAC member states had to sign and ratify it.
After years of discussions, the EAC and the EU struck an agreement in 2014, which was subject to ratification by all nations.
It was later halted because other EAC member nations refused to support it, despite the fact that Kenya, the only middle-income country at the time, signed and approved it. While Tanzania and Uganda rejected the deal for various reasons, Rwanda signed but did not ratify the EPA.
Kenya stated during the signing of the accord on June 26th that it would not mislead its fellow member states in the bloc this time. The region's largest economy was only using a window provided by the Heads of State that permitted partner governments to negotiate with the EU bilaterally.
The EABC-organized Webinar on Thursday provided a venue to unveil the EABC Policy Advocacy Agenda 2023/24.
The adoption of the EAC-CET 2022 Version is one of the key areas of attention for Agenda 2023/24. The approval of a 4-band EAC tariff structure was one of the results of the organization's campaign, according to John Bosco Kalisa, executive director of EABC, who spoke at the Webinar.
The other is the EAC member nations' approval of the African Continental Free Trade Area (AfCFTA). He claims that the seven agreed-upon service sectors in the bloc will have at least 78 subsectors liberalized by each member state.