Exporters welcome EPAs deal but EU rules out refund

flowers processing for export

Nairobi; Kenya: Even after securing export deal with the European Union, Kenyan exporters could miss out on compensation. Although the Government says it is negotiating a reimbursement package with EU officials, the latter has ruled out this possibility.

Any hopes that exporters had of a refund for between Sh2.6 billion and Sh4 billion in taxes that will be paid in the meantime were yesterday dashed as it emerged that the EU would not commit to making the refunds.

“The conversation that we were getting from the EU was that we missed the deadline and because of this any prospects of a refund are next to impossible,” said Mr Lodewijk Breit, ambassador to the EU delegation to Kenya.

However, Foreign Affairs and International Trade Principal Secretary Karanja Kibicho said at a press conference yesterday: “We are losing Sh670 million each month and we are looking at ways to cushion exporters from these costs and one of the ways we were looking at is having discussions with the EU on the possibility of refunds of this monies.”

The ministry says it was negotiating with the EU on refunding taxes that Kenyan exporters are now eligible to pay in the 4-6 months before the new deal is in place.

 MASSIVE TAXES

But despite this uncertainty, local flower farmers have welcomed the new Economic Partnership Agreements (EPAs) deal signed by the Government and European Union, which absolved Kenyan exporters from paying massive taxes that would have crippled the sector.

The deal, which is expected to take effect early next year, came after earlier negotiations failed to meet a September 30, deadline, which means the countries’ horticulture exports have been subject to EU customs duty since October 1.

Kenya Flower Council (KFC) Chief Executive Officer Jane Ngige said the deal had come as a relief for the flower industry and other exporters to the EU.

“The successful completion of the East African Community and European Union Economic Partnership Agreement (EAC-EU EPA) negotiations has saved the flower industry from a crippling crisis,” she explained in a statement issued following the signing of the deal.

“Having resolved the contentious issues on export taxes, subsidies and good governance, Kenya will now benefit from duty-free, quota free status access for all its exports to the EU market. This process is expected to take two to six Months.”

The Economic Partnership Agreements, signed in Brussels on Tuesday, must still be ratified by the parliaments in the five EAC member states -- Kenya, Tanzania, Uganda, Rwanda and Burundi - and by the European Parliament.

The Government has stated that it will be pushing for the ratification and final signing in three months to avoid any more losses and job cuts in the horticultural sector.