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Kenyan exports could attract additional UK tariffs over deal

BUSINESS
By Frankline Sunday | February 27th 2021

A worker from Naivasha-based Maridadi flower farm works on roses for exports. [Antony Gitonga, Standard]

Kenyan exports to the United Kingdom could be subject to additional tariffs by the end of this year if the Economic Partnership Agreement (EPA) signed between the two countries is not ratified.

This comes even as Parliament and the Ministry of Trade point fingers at each other over the delay in implementing the Sh200 billion bilateral deal with less than a month left to the deadline.

On Thursday, National Assembly Speaker Justin Muturi stopped debate on the report by the Committee on Trade, Industry and Cooperatives that was recommending the ratification of the EPA, stating that the report lacked crucial documentation.

“We should not be in a hurry to ratify this document until the Clerk of the National Assembly confirms that the document tabled before the House is complete, as well as the one uploaded on the website for public participation,” he said. “It is only fair that what is going to be discussed and debated by Members of Parliament should be in the public domain. Article 10 and 118 require that there is public participation and if during that participation the annexures were not there, it means this report itself is incomplete.”

However, Trade Cabinet Secretary Betty Maina yesterday said the treaty had been subjected to public participation and met the legal thresholds.

Due process

“The Kenya-UK Economic Partnership Agreement currently awaiting ratification by Parliament underwent rigorous public engagement and an all-inclusive process with adherence to due process,” she said at a public forum on the trade deal.

According to a policy advisory published by UK’s department for international trade in December last year, delayed ratification of the deal could increase the cost of trade between the two countries.

“The EPA not being applied would result in our businesses losing access to preferences negotiated in the EPA,” the report said.

“This would include the imposition of many tariffs on our imports from Kenya, and loss of access to preferential tariffs rates which Kenya is due to implement for our exporters in the future.”

“For 2021, the annual increase in duties on our imports from Kenya if the EPA is not brought into effect is estimated to be around £10.5 million (Sh1.6 billion),” explained the report.

“This estimate assumes that the current patterns of trade remain unchanged in future and that tariffs on these imports would otherwise revert to our ‘General Framework’ GSP rates on certain eligible goods.”

Negotiations between Kenya and the UK kicked off on August 25 last year, concluded on November 3 and deal signed on December 8.

To avoid any trade disruptions, the two parties signed a three-month transition mechanism in the form of a memorandum of understanding with effect from January 1, 2021, according to the report by the House committee.

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