EPA Paper Final

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TradeMark East Africa TMEA East Africa Regional Aid for Trade Initiative Funded by DFID (UK) Briefing Note Framework Economic Partnership Agreeme nt (FEPA) and its implications for Kenya  January 2010 Draft Zero - (29 Jan) The following note is part of a series of short briefings produced by TradeMark East Africa, a multi lat eral progra mme of trade-relate d ass ist ance to the Eas t Af ric an Community supported in its initial phases by the UK Department For International Development (DFID). The intention of these briefings is to summarise, in a readable format, some of the main trade- relat ed issue s facin g Kenya’ s member ship in the East African Commu nity . These briefs will be used for traini n ur oses as well as refere nces uides for trade offi cials .

Transcript of EPA Paper Final

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TradeMark  East Africa TMEA

East Africa Regional Aid for Trade InitiativeFunded by DFID (UK)

Briefing Note

Framework Economic Partnership Agreement (FEPA) and its implicationsfor Kenya

 January 2010

Draft Zero - (29 Jan)

The following note is part of a series of short briefings produced by TradeMark East Africa,

a multilateral programme of trade-related assistance to the East African Community

supported in its initial phases by the UK Department For International Development (DFID).

The intention of these briefings is to summarise, in a readable format, some of the main

trade-related issues facing Kenya’s membership in the East African Community. These

briefs will be used for trainin ur oses as well as references uides for trade officials.

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List of Acronym

ACP African, Caribbean and PacificAAMS Associated African States and Madagascar

CET Common External Tariff  CEMAC

CU Customs UnionCOMESA Common Market for Eastern and Southern AfricaDFQF Duty Free Quota FreeEAC East African CommunityEBA Everything but Arms InitiativeECDPM European Centre Development Policy Management

ECOWAS

GATT General Agreement on Tariffs and Trade (GATT 1947).GSP Generalized System of Preferences

KRA Kenyan Revenue AuthorityMFN Most Favoured NationNMC Nation Monitoring CommitteeNTB Non Tariff BarriersNTM Non Tariff MeasureODI Overseas Development InstituteRoO Rules of OriginSADC Southern African Development CooperationS&D Special and differential treatmentSPS Special and differential treatment

 TBT Technical Barriers to TradeUNCTAD United Nation Conference on Trade and Development

VAT Value Added TaxWTO World Trade Organisation

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List of Acronym ....................................................................................................... 2

1. Introduction: EU/ACP Trade Relations - From Preference to Reciprocity .............4

2. The Origin and Objectives of EPAs ...................................................................... 6

2.1 Why the EPAs? ................................................................................................ 6

a. Supply side constraints which have limited the production expansion and

product and market diversification; ........................................................................ 6

b. Poor institutional capacity; .................................................................................. 6

c. Poor governance and .......................................................................................... 6

d. Unilateral character of the preferences, which contributed to highly protected

non-competitive economies. ................................................................................... 6

2.2 Why has the EAC members opted for the Framework Economic PartnershipAgreement (FEPA)? ............................................................................................... 8

2.3 The Key Objectives and Principles of the EPAs ............................................ 10

2.4 EPA Benchmark – Are these being met under the FEPA? .............................. 12

Overall the interim FEPA is a well-negotiated text and better designed than other

Interim or full EPA agreements. However, some areas will require negotiations that 

are more aggressive. In particular, with respect to the MNF clause, development

agenda and possible revisiting the coverage of 82% safeguard clauses, etc. The

WTO Transparency Decision (Paragraph 14 of the Transparency Decision)specifically provides for the possibility of renegotiating an already-notified

agreement and this has been done on several occasions (see the list of notified

changes). The only requirements are that the renegotiated agreement be re-

notified to the WTO, and that it remains WTO-legal. This leaves a great deal of 

scope for renegotiating aspects of the agreements, which are not required for

WTO-legality (for example, the MFN clause and the standstill clauses could be

removed without compromising WTO validity)...................................................... 14

3. Implication of the FEPA for Kenya ..................................................................... 14

3.1 State of play of the FEPA negotiations .......................................................... 143.2 FEPA Implication for Kenya .......................................................................... 15

3.3 Major areas of contention under the FEPA negotiations: .............................. 22

4. Conclusion ......................................................................................................... 24

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1. Introduction: EU/ACP Trade Relations - From Preference toReciprocity

 The ties between Europe and the African, Caribbean and Pacific (ACP) Countriescan be traced back to the colonial days. The European Union (EU) and ACPrelationship have been shaped by constantly evolving political and economicforces; from the colonial special association status (AAMS - Associated AfricanStates and Madagascar) to independent Associated States at the time of 

postcolonial independence, which culminated in 1957 with the YaoundéConvention. The Yaoundé Convention marked the start of a real partnershipbetween Europe and ACP countries. The EU-ACP relations have gone throughsuccessive Agreements - two Yaoundé Conventions; four Lomé Conventions (LoméI, II, III, IV, IV bis); to the current prevailing agreement which is the EU-ACPPartnership Agreement signed in Cotonou (i.e. the Cotonou Agreement), in June2000.

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Figure: Graphical overview of the EU-ACP trade relationships1 

 The overriding objective of each successive agreement has been the economic,political and social development of the ACP countries. However, the strategiesemployed to meet these objectives have evolved over time. Trade Cooperationbetween the EU and ACP has been one of the main strategies employed topromote economic growth and development. Trade Cooperation largely took theform of preferential tariffs, quotas and guaranteed prices under the CommodityProtocols of the Lomé Convention e.g. Sugar, Banana, Rum and Beef, granted bythe EU to the ACP countries.

 The Cotonou Agreement established the basis for a new trading regime between

the European Union and ACP countries, by providing reciprocal trade relations inconformity to the trade rules of the World Trade Organisation (WTO). After almostthree decades of non-reciprocal preferential access to the EU market, theEconomic Partnership Agreements (EPAs) have replaced the existing trade regimeby bringing forth reciprocal agreements, which are in conformity with the World

 Trade Organisation (WTO). Under the previous trade regime ACP exports enteredthe EU market at lower tariffs than that granted by the EU to other developing and

1The reform of the Sugar Trade Preferences toward Developing Countries in light of the Economic Partnership Agreements, The

Estey Centre Journal of International Law and Trade Policy, Author Elisabetta Gotor 

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least developed trading partners (e.g. China, India, Guatemala, etc), which was aviolation of the WTO most favored nation (MFN) clause. The ACP countries werealso not expected to open up their market to the EU in return for the preferentialmarket access granted to them (i.e. non-reciprocal agreement). However, giventhat the EPAs have been established as Free Trade Agreements (FTA) this hasrequired that the EPAs be designed as a reciprocal trade agreement, whereby the

ACP countries have to open up their market to the EU, by lowering tariffs on a setof negotiated products.

  This brief will focus on providing an overview of the EPAs, will review theimplications of the EAC – EU EPA on Kenya, and will provide a concise analysis of the current state of the EPA negotiations within the EAC configuration. This brief isintended for training and as a reference guide for trade officials.

2. The Origin and Objectives of EPAs

2.1 Why the EPAs?

 The origin of the EPAs as a concept finds its roots in the EC 1996 Green Paper onEU-ACP relations. The EPAs were included as an integral part of the Cotonouagreement under the Economic and Trade Cooperation section, article 34.4.

 Article 34.4 ‘ Economic and trade cooperation shall be implemented in fullconformity with the provisions of the WTO, including special and differential

treatment, taking account of the parties’ mutual interest and their respectivelevel of development’ 

 The main reasons, which are often advanced by the EC to explain and justify theending of the Lomé Convention’s trade preference system and the advent of theEPAs, are:

(i) The poor trade performance of ACP countries, which is often, attributedto the ‘poor economic incentive structure’ of the EU-ACP Trade preferencesystem; and

(ii) The WTO incompatibility of the Lomé trade provisions

For many years the trade relations between the EU and the ACP region haspresented both partners with challenges. The non-reciprocal preferential tradeagreement with the ACP states, which was originally designed as a way of boosting EU-ACP trade and of promoting growth in the region, did not deliver theexpected results. The main reasons attributed to the ACP countries’ failure todevelop as significant exporters to the EU are:

a. Supply side constraints which have limited the production expansion andproduct and market diversification;

b. Poor institutional capacity;c. Poor governance andd. Unilateral character of the preferences, which contributed to highly

protected non-competitive economies.

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External factors have also hindered ACP countries’ capacity to export to the EU. These have mainly been the distortive trade practices and regimes such as the ECCommon Agricultural Policy, or other forms of distortions such as Tariff Peaks and

 Tariff Escalations which have prevented ACP countries from accessing markets inthose sectors, where they enjoy comparative advantage, namely in agricultureand key commodities. For many years, these restrictive practices have lived in

tandem with the preferential trade regimes.

However, the major external driving force, which has brought about the end of thenon-reciprocal preferential trade regime, has been the growing number of tradedisputes initiated by non-ACP countries against the Lomé trade preferentialsystem. In particular, the commodity protocols e.g. Banana dispute coupled withthe fact that the Lomé preferential trade system went against the Article 1 of theGATT, i.e. MFN principle. Historically, the Yaoundé Convention and subsequentlyLomé Conventions’ trade preferences were based on provisions, which predatedthe creation of the General Agreement on Tariffs and Trade (GATT 1947).

GATT Article I, the MFN clause‘any advantage, favour, privilege or immunity granted by any contracting party to

any product originating in or destined for any other country shall be accordedimmediately and unconditionally to the like product originating in or destined for

the territories of all other contracting parties.’

Explanation of MFN

Non-discriminatory trade policy commitment offered by one country to another on

a reciprocal basis. Both countries apply that lowest import-duty and quota-

restrictions on imports from each other which they apply on the similar imports

from any other country. Under Article I of the General Agreement On Tariffs And

 Trade (GATT) and its successor World Trade Organization (WTO), all signatory

states must extend this treatment to one another. common markets, customs

unions, and free trade areas, however, are exempt from MFN provisions.

  These Lomé trade provisions included two specific trade instruments, whichviolated GATT Article I, MFN principle:

 Trade preference arrangements in the form of tariff rates that differed notonly from the MFN rates available to GATT contracting parties butsubsequently differed from the generalised system of preferences (GSP)

rates that were available to other non-ACP developing countries.  The four Commodity Protocols of the Lomé Convention covering beef and

veal, rum, banana and sugar, which provided ACP countries with quotas anddiscriminated against non-ACP developing countries.

Since the Lomé Trade preferences were instituted before the creation of GATT1947, these preferences benefited from what is know as the Lomé ‘GrandfatherClause’ which provided the preferential system with immunity from GATT’s rights

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and obligations. With the expiry of the Lomé IV bis in 2000, this meant that theLomé trade preferences would be open to trade disputes from WTO members. Thisprompted two major landmark changes in the EU preferential trade system, whichaimed to reverse the EU’s unilateral discrimination in favour of ACP countries andthus protect the EU and ACP countries from potential trade disputes within theWTO:

(i) Firstly in 2000, the EC proposed within the Cotonou agreement theintroduction of the Economic Partnership Agreements (EPAs), which wereto come into force in 2008 and

(ii) Secondly in 2001, the EC launched the ‘Everything but Arms Initiative’EBA which granted Least Developed Countries (LDCs) full duty-free andquota-free access to the EU market, excepted for arms and, for atransitional period (2006 and 2009), for banana, rice and sugar.

 Article 37 (Cotonou) provides that the "Economic Partnership Agreements shallbe negotiated during the preparatory period which shall end by 31 December

2007 at the latest".

However, given the fact that the EPAs were to be in place in 2008, a waiver wasobtained by the EU at the WTO, which allowed the EU to discriminate legallyagainst non-ACP countries during the transition period; until 31 December 2007.

2.2 Why has the EAC members opted for the Framework EconomicPartnership Agreement (FEPA)?

The East African Community

East Africa is a geographically and economically homogeneous region committedto regional integration. The Eastern African Community (EAC) consists of Burundi,Rwanda, Tanzania and Uganda (all of which are Least Developed Countries or

"LDCs") and Kenya (which is non-LDC). The EAC established a Customs Union in2005 (by 2010, a full-fledged union with zero internal tariffs is envisaged). The

EAC is fast tracking its economic integration process. It has signed the EACcommon market protocol, which comes into force in July 2010. In August 2008, the

heads of state decided to fast track the establishment of the monetary union to2012 as opposed to 2015. The integration agenda of the EAC is strongly political in

nature as its ultimate goal is to become a federation.

 The debate about the benefits of EPA v/s EBA has been active since the launch of 

the negotiations. The main arguments which are often brought forward in favourof the EPAs is that these are negotiated and contractually binding as compared tothe EBA initiative which is unilateral and can therefore be withdrawn at anymoment by the EC. Whilst the EPAs may not confer better market access in theform of tariff and quota exemptions, as compared to the EBA, they are supposedto confer better Rules of Origin, with cumulation with other developing countriesand other ACP grouping.

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 The reason, which has prompted the EAC members to jointly establish an interimEPA with the EU (i.e. the Framework Agreement for EPAs), is linked firstly to theneed to secure market access for Kenya. Secondly, to ensure that the EAC’sregional integration mandate is not derailed. A point in case where the EPAshave hindered regional integration is in Central and West Africa. Most countries inthe region have not initialled an EPA, whilst Cameroon, Côte d’Ivoire and Ghana

have done so. This has maximised the incompatibility between the countrieswhich have opted for alternatives trade regimes such as EBA (13/15 ECOWASmembers) and those of Cameroon, Côte d’Ivoire and Ghana. Only in the case of the EAC, have all members joined the EPA and accepted identical liberalisationschedules.2 The table below lays out the various EPA configurations:

 Table -1: Trade Regime after 01/01/08 by ACP Country3

Kenya is part of the EAC-EC-EPA configuration, which includes Burundi, Rwanda, Tanzania and Uganda. In order to fully understand the dynamics of the EAC-ECEPA negotiations it is critical to understand the diverging and converging interestof the EAC members. This configuration presents two major challenges; firstly,Kenya being a developing country, it is not entitled to the EBA as its other LDCmembers. With the expiration of Lomé waiver, Kenya’s exports would have fallen

2 Trade Negotiations Insights – Volume 7, Number 3/April 20083

EC Fact sheet on the interim Economic Partnership Agreements - An Overview of the Interim Agreements

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under the Generalized System of Preferences (GSP), with Tariff rates rangingbetween 2–24%. The conclusion of the FEPA was critical to safeguard againsttrade disruptions, which top trade officials for Kenya have projected could haveamounted to a total loss of $1bn in Kenya’s floriculture, horticulture and fishindustries.

 The second challenge is that the EAC is already a Customs Union with a CommonExternal Tariff (CET) and a Common Trade Regime and soon the entry into force of a Common Market, which will entail free movement of labour, goods, services,capital, and the right of establishment .

EAC Common Market

 The mandate for the Partner States to negotiate the EAC Common Market isderived from Article 5(2) of the Treaty and more specifically from; Article 76(1)

which states that “There shall be established a Common Market among thePartner States. Within the Common Market, and subject to the Protocol provided for in paragraph 4 of this Article, there shall be free movement of labour, goods,services, capital, and the right of establishment”; and, Article 76 (4) of the Treaty which states that “For purposes of this Article, the Partner States shall conclude a

Protocol on a Common Market.”

 This meant that even if the EAC LDC members had opted out of an EPA, the factthat Kenya would most likely have signed an individual agreement with the EU,this would have automatically committed its neighbors. Being in a CU would implythat whatever tariffs Kenya would grant to the EU would have to be applied by its

CU members if it were to respect the CET rule. Not doing so would lead to tradedeflection whereby it would be difficult to control the movement of good in aregion, which is poised to become a common market. More importantly failing toagree on a common tariff regime vis-a vis the EU would have greatly compromisedthe broader EAC regional integration agenda. These conflicting forces are at theroot of the FEPA.

2.3 The Key Objectives and Principles of the EPAs

 The Cotonou Agreement defines EPAs as the main instrument of economic andtrade co-operation, closely linked to the political and development finance aspectsof the agreement. EPAs are supposed to be asymmetrical trade agreements

covering not only trade in goods and services but also ‘behind the border’ issues,such as competition, government procurement, intellectual property and tradefacilitation. EPAs, according to the Commission, are supposed to help to improveACP countries’ trade and business environment, promote growth and increasetheir ‘overall competitiveness’, which will in turn, aid their integration into theglobal economy (EC, 2000: Art. 35-37). The most important element of an EPA isthe establishment of a Free Trade Agreement (FTA), which will progressivelyabolish all trade restrictions between both parties substantially. Article XXIV of 

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GATT sets out the guidelines for an FTA; i.e. liberalizing substantially all tradewithin a reasonable period.

EPA Key Clauses Article 36 (Cotonou) - whereby the ACP and EC agreed to remove

"progressively barriers to trade between them and enhancing cooperation in allareas relevant to trade" in line with article 24 of the GATT.

 Article 24 (GATT) - requires "the liberalisation of "substantially all the trade" (ongoods) between the countries involved and "in a reasonable length of time".

Most importantly according to the Cotonou Agreement, the key guiding principlesof the EPAs is to strengthen regional integration within the ACP group. RegionalEPAs were designed with a view to contribute in fostering the integration of theACP in the world economy, stimulate investment and contribute in locking in thenecessary trade reforms. The following principles provide the framework withinwhich the EPAs are to be concluded. These principles are enshrined in thenegotiation mandate and have been drawn from the provisions of the CotonouAgreement:

EPAs as instruments for development –  The EPAs must contribute tofoster the smooth and gradual integration of the ACP states into the worldeconomy, with due regard to their political choices and developmentpriorities, thereby promoting their sustainable development andcontributing to poverty eradication in the ACP countries.

Principle of Asymmetry -  The EPAs must ensure that the principle of asymmetry and sequencing is built-in into the agreements, and that dueaccount is taken of the specific economic, social, environmental and

structural constraints of the ACP countries and regions concerned.

Regional integration -   The EPAs are expected to support regionalintegration initiatives and contribute to reinforcing regional integration, inparticular by contributing to the regional harmonization of rules existingwithin the ACP and not undermine regional processes. In this regard, thecountries are expected to ensure that the process of regional integration, aslaid out by the African Union and outlined in the Lagos Plan of Action andother ACP regional blocs, is strengthened.

Preservation of the ‘acquis’ –  The EPAs are expected to build on theLomé ‘acquis’ with a view to improving on the current level of preferential

market access into the EC, with particular regard to the special anddifferential treatment of Least Developed Countries (LDCs) and reservationof the benefits under the Everything-But-Arms initiative, as well as thelandlocked and island states.

WTO compatibility - The EPA negotiations are expected to be compatiblewith WTO rules while providing the necessary flexibility and safeguardsnecessary to meet the developmental objectives of ACP countries,including, in particular, special and differential treatment.

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Special and differential treatment - The EPAs are expected to takeaccount of the differential needs and levels of development in the ACPcountries. Therefore, special and differential treatment is to be provided toall ACP member states.

 

2.4 EPA Benchmark – Are these being met under the FEPA?

Since its launch in Brussels on 27 September 2002, the EPA negotiations havebeen fraught with divergence between the EU and various ACP groups as towhether the EPAs meet the above principles. The above key principles provide thekey benchmark , which trade negotiators should use when crafting theirrespective agreements. The table below provides a brief analysis of how the FEPAmeasures up to these key principles:

 Table 2 - Divergences/Convergence against key EPA principles

EPA Bench Mark Divergences/Convergence of EPA Benchmarks under the FEPA

The EPAs asinstruments fordevelopment

Differing interpretations of the development component:

 The EAC members have currently (Dec 2009) made a proposal to entrench thedevelopment text and matrix in the FEPA making it legally binding. The EACmembers have argued for the need to tie import liberalisation commitments todevelopment aid, The EAC position is that guaranteed access to long-termfunds is crucial to overcoming supply-side constraints and diversifying theproduction base. FEPA text (as well as those of CEMAC and Côte d’Ivoire) alsoexplicitly foresees continued negotiation on Development cooperation.However, the European Commission insists that EPA negotiations and talks ondevelopment finance are two separate issues and that resources required fordevelopment will be provided under the 10th EDF Regional IndicativeProgramme, Aid for Trade and the EU budget. Currently, this is one of the mainareas of divergence with the EU.

Principle of  Asymmetry

FEPA provides greater asymmetry and flexibility than other groupings

In the framework of the EPA negotiations, the EC’s position has been that thetransition period for liberalising trade should not exceed 15 years and thatsubstantially all trade should equal at least 90 percent of the total value of trade. However, in the case of the FEPA, the EAC members have been able tosecure the longest transition period of all EPA grouping i.e. 20+ years. To takebut one example, the Côte d’Ivoire will have to remove tariffs completely on60% of its imports from the EU two years before Kenya starts reducing itstariffs as part of the FEPA.

However, with respect to the degree of liberalisation under the FEPA, the EACmembers have agreed to liberalise 82.6% of its imports from the EU by value(65% by 2010, 80% by 2023 and the remainder by 2033). Considering that 4 of the 5 members are LDC, this coverage is high.  An analysis of some 40 free-trade agreements notified to the World Trade Organization, including interimEPAs4 shows that not all FTAs liberalize 90 percent of their value of trade, or

4Free-trade agreements: the other side of liberalization - What is developing countries’ room to manoeuvre? Damien Lagandré,

Jean-Pierre Rolland and Arlène Alpha – Trade Negotiations Insights - Issue 10 | Volume 8 | December 14 2009 January 2010

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tariff lines. In 30 per cent of the cases examined, less than 90 percent of tradeis liberalized, and in 13 percent, it is less than 80 percent, with an asymmetrybetween developing and developed countries. The India-Singapore tradeagreement is an example. India liberalized only 23.6 percent of tariff lines,representing 75 percent of its trade, allowing the country to shield a significantnumber of sectors it considers a priority. This precedence could be evoked for

continued discussions with the EU for a lower coverage.RegionalIntegration

FEPA reinforces EAC regional integration mandate – but dangers of displacingintra-regional trade affect Kenya the most 

A common perception, expressed by many countries in the independentreviews of the EPA negotiations foreseen by Article 37.4 of the CotonouAgreement, is that there is little coherence between the EPA agenda and theregional integration processes in Africa. One particular concern has been thatcountries in the same economic region might liberalise different baskets of products and so create new barriers to intra-regional trade. A number of EPAagreements, in particular the ESA and Central African agreements havedisplayed such characteristics. The EAC is the only case where all membershave jointly negotiated an EPA and committed to identical liberalisation

schedules.

However, the EPAs do present potential welfare losses, through the possibledisplacement of domestic production by cheap imports from the EU. This islikely to affect those members, which have the most important industrial base,and in this case, it will mostly likely displace Kenyan exports given that Kenyahas one of the largest intra regional trade volumes in the EAC.

Preservation of the ‘acquis’

FEPA erodes the Lomé ‘acqui’

 The negotiations are expected to build on the Lomé ‘acquis’ with a view toimprove the current level of preferential market access into the EC, withparticular regard to the special and differential treatment of Least DevelopedCountries (LDCs) and preservation of the benefits under the Everything-But-

Arms Initiative. The FEPA EC market access offer consists of: (i) 100% duty freeand quota free access to imports from the EAC Partner States except for riceand sugar; (ii) Duty on rice until Jan 2010 and (iii) Duty on sugar until Oct2009. This offer by the EU is consistent with the Lomé trade preferences.However, the market liberalisation, which the EAC members have beenrequired to make in favour of the EU (as per article XXIV of GATT), hasdismantled the non reciprocal provisions of the Lomé trade preferences.

WTOcompatibility

FEPA displays the key WTO compatible requirements. 

For an agreement to be WTO compatible, the minimum requirement is that itcovers free trade in goods (Article XXIV GATT. It does not require the inclusionof liberalisation ‘multiplier’ clauses, such as MFN or standstill clauses. It alsodoes not require progression to full EPAs or the inclusion of other trade related

issues, such as services or investment. The FEPA, which has been initialled andnotified to the WTO Secretariat, is WTO compatible. Under the FEPA the EC iscurrently requesting a number of concessions, which go beyond the WTOrequirements, namely the inclusion of (i) Standstill Clause (Article 13 ), (ii) MFNClause (Article 16). It is also worthy to note that the WTO TransparencyDecision specifically provides for the possibility of renegotiating an already-notified agreement.

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Special anddifferentialtreatment

FEPA stifling S&D treatment

A degree of asymmetry has been provided in the EPA, which affords the EACmembers with preferential treatment. However the inclusion of the MFN clausein the FEPA places heavy restrictions on the development of South-Southcooperation and would turn the purpose of the enabling clause in the WTO

agreement on its head.

Overall the interim FEPA is a well-negotiated text and better designedthan other Interim or full EPA agreements. However, some areas willrequire negotiations that are more aggressive. In particular, with respectto the MNF clause, development agenda and possible revisiting thecoverage of 82% safeguard clauses, etc. The WTO Transparency Decision(Paragraph 14 of the Transparency Decision) specifically providesfor the possibility of renegotiating an already-notifiedagreement and this has been done on several occasions (see the list of notified changes)5. The only requirements are that therenegotiated agreement be re-notified to the WTO, and that it

remains WTO-legal. This leaves a great deal of scope forrenegotiating aspects of the agreements, which are not requiredfor WTO-legality (for example, the MFN clause and the standstillclauses could be removed without compromising WTO validity).

3. Implication of the FEPA for Kenya

3.1 State of play of the FEPA negotiations

On 27 November 2007, the East African Community (Burundi, Kenya, Rwanda, Tanzania, and Uganda) agreed a region-to-region interim EPA with the EU. TheFEPA mainly covers trade in goods and fisheries and is a stepping-stone towards afull EPA. A commitment was taken by both parties to continue negotiations onservices, investment, agriculture, rules of origin, Special and differential

treatment), Technical Barriers to Trade (TBT), customs and trade facilitation andother trade-related rules in order to conclude a full EPA. The main features of theFEPA are:

(iii) Duty free quota free access into the EU for all imports from EAC, withtransition periods for rice and sugar;

(iv) Asymmetric and gradual opening of the EAC to EU goods, taking fullaccount of the differences in levels of development between them and the EU;

5 The legal status of the initialled EPAs, Dr Lorand Bartels - Trade Negotiations Insights – Volume 7, Number 3/April 2008

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(v) Trade defense provisions with safeguards allowing each party toreintroduce duties if imports of the other party disturb or threaten to disturbtheir economy; and

(vi) Rules of Origin (subject to review in the full EPA negotiations)

In the case of the FEPA, all imports from the EAC countries have entered the EU

duty and quota free since the 1st of January 2008 (subject to transition periodsuntil 2010 for rice and 2015 for sugar) which are conditions similar to the EBA. Inreturn, over the next 25 years, the EAC will liberalise 82.6% of its imports from theEU by value (65% by 2010, 80% by 2023, and the remainder by 2033. The FEPAhas since been applied provisionally from 1 January 2008 and was expected to bereplaced by a full and comprehensive EPA by the end of July 2009. However, bymid January 2010, the negotiations were still not concluded and a number of clauses are still under negotiations.

3.2 FEPA Implication for Kenya

A number of studies have looked into the effects of the EPA on Kenya and havedetermined that the EPA confers both pros and cons to its contracting parties. Inthis section, we will review briefly the implications of the FEPA for Kenya.

Trade Creation - Increase in Exports and Export Diversification:

 Trade liberalisation, even if limited to tariff reductions, increases the return toexports relative to import-competing products so exports should increase6.However, some of the reasons why exports may not increase following tradeliberalisation are due to constraints on production and poor export supplyresponse. Kenya will need to address some of its more ‘stubborn’ supply sideconstraints, namely those in areas of trade facilitation, high transport cost, poorinfrastructure, and inefficient institutions if it is to fully benefit from liberalisation.

 This is the key reason why the current negotiations between the EAC and the EUon development cooperation and finance are of such relevance. However, thescale of funding required to improve EAC members’ productive capacity andcompetitiveness goes beyond grants and aid.

 The FEPA offers Kenya potential improvements in market access, at least to theextent that Rules of Origin (RoO) requirements will be relaxed compared toexisting regimes and scope for cumulation may be deepened. This may catalyzeKenya’s efforts to venture into ‘new exports’ and diversify away from itstraditional exports. The negotiations on the RoO are thus a critical element of theEAC EPA.

Increase in cheaper imports from the EU - Consumption andCompetitiveness gains

An analysis of Kenya’s imports indicates that 34% of consumer goods imports aresourced from the EU, 17% of motor vehicles, 58% of machinery and equipment

6Missed Opportunities: The WTO Trade Policy Review for the East African Community Oliver Morrissey and Chris

 Jones, CREDIT and School of Economics, University of Nottingham, The World Economy (2008)

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and 22% of imported intermediate inputs7. Thus, elimination of the tariff will implyprice reduction for Kenyan consumers of imported goods and capital andintermediate goods sourced from the EU. This will also have a positive impact onthe competitiveness of Kenya manufacturing sector. The EU is the largest singlesource of Kenya’s imports of intermediate inputs, machinery and capitalequipment. It is therefore expected that liberalization through EPA will increase

the competitiveness of Kenyan industries through cheaper intermediate inputsand capital equipment.

Revenue Effect: Tariff Revenue Losses

 The European Union is the number two destination market for Kenyan exports,after the COMESA. In 2008, the share of Kenya’s total exports to the EU was31.4% of its overall trade (Annex 1 – Kenya trade profile). As explained in section2.2 the FEPA has allowed Kenya to maintain is post Lomé market accesspreferences to the EU and has prevented the imposition of higher tariffs underGSP and the likely collapse of Kenya’s horticulture sector, which generates closeto 1 billion US in revenue. The FEPA effectively grants Kenyan exports’ market

access to the EU on an equal basis as any LDC, with the advantage of being alegally binding agreement8. In return, Kenya together with its EAC partners iscommitted, as mentioned previously, to liberalise 82.5% of current trade over aperiod of 25 years. Worth noting is the fact 65.4% of this trade is already enteringKenya and its EAC partners at zero duty, since the EAC Common External Tariff isalready set at 0% for raw materials and capital goods (as of January 2010 underthe CU protocol). Thus, effective liberalisation is as follows:

 Table 4 - Summary of EAC Liberalisation

 Tarif f 

lines

Imports from the EU Time line

Value in US Share1st Tranche: Raw materialand capital goods – CET0% duty

1950

1,615,331,216

65.4 2010 (EAC Customs UnionEffect)

2nd Tranche: Intermediategoods – CET 10% duty

1129

361,011,102

15.2% phased down over a period of 15years where in the first sevenyears the Customs duties shallremain at the current rate in theEAC CET and thereafterreduction shall commence

7 Prospects for Kenyan Economy in the Economic Partnership Agreement with the European Union (EU) - Wed, May 10, 2006 By David S.O. Nalo

(CBS), Permanent Secretary, Ministry of Trade and Industry 8 Source - http://www.delken.ec.europa.eu/en/information.asp?MenuID=2&SubMenuID=10

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progressively at 10% per yearfrom 2015 up to 2023 when therates will reach zero

3rd Tranche - finishedproducts at 25% tariffs

960 64,864,376 2% phased down over a period of 25years commencing with the firstreduction in 2020 up to 2033.

Exclusion (sensitive list) 1390 428,818,834 17.4

Source:http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/B6CB574AC6DA08AAC125760400322BDE/$FILE/pmr17-def.pdf 

Up to 17.4% of current EU import trade to Kenya (1390 tariff lines) is excludedfrom any liberalisation and hence these sensitive sectors will remain shelteredfrom EU competition. Among the products on the sensitive list are: meat, fish,dairy, vegetables, fruits, cereals, coffee, tea, juices, jams, canned fruit &vegetables, ham, cheese, wines & spirits, chemicals, plastics, car parts, wood,textiles & clothing, footwear.9 Although the first ‘liberalisation’ tranche, coveringtwo-thirds of imports, must be completed by 2010, this is in effect a result of the

EAC members’ commitments under its Customs Union Protocol. Thus, the firsttranche of tariff liberalisation under the FEPA should be seen as a ‘customs unioneffect’ rather than an ‘EPA effect’. Kenya will not be required to start removingany positive tariffs until 2015. Hypothetical revenue loss for Kenya has beencalculated to be around 49 million USD (3.78 billion KES) for all items beingliberalized, with the majority of the losses being associated with the 2nd trancheliberalization, which will not be fully felt until 2023, giving countries a relativelylong time to adjust.

 Table 5 – Hypothetical Revenue Loss for EAC region10

 The policy implication for Kenya and its EAC partners it that alternative revenuesources will need to be put in place and more efficient revenue collection will beneeded to mitigate import duty losses. In 2006/2007, the Kenyan Revenue

Authority (KRA) collected 27.5 billion KES11 in import duties. The hypothetical

9 The full list is available for consultation under the following link: http://www.trade.go.ke/index.php?option=com_content&task=view&id=87&Itemid=121 .10

The Interim Economic Partnership Agreements between the EU and African States Contents, challenges andprospects Edited by Sanoussi Bilal and Christopher Stevens Policy Management Report 17 - European CentreDevelopment Policy Management (ECDPM) and Overseas Development Institute (ODI) -http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/B6CB574AC6DA08AAC125760400322BDE/$FILE/pmr17-def.pdf 11 IMF Country Report No. 10/26 - January 2010 http://www.imf.org/external/pubs/ft/scr/2010/cr1026.pdf 

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revenue loss (total import duties) for Kenya amounts roughly to 13.5% (using the2006/7 figures). However, the recent IMF country report forecasts that by 2013/14,Kenya’s Import duty collection will amount to 82 billion KES, which is close to afour fold increase in import duty collection in comparison to the 2006/7 figures.

 This is due to an increase in trade as well as improved duty collection by therevenue authority. Given the long transition period for liberalisation and projected

increase in import duty collection, the impact of EPA on import duties losses forKenya, seems to be manageable in the medium to long term. However, this willrequire continued improvements in KRA revenue collection improvements andsustained reform of tax revenue polices.

Possible effect of Trade Diversion

Under the FEPA, the EU exports to Kenya (which will benefit from lower tariff) hasthe potential of displacing imports from the rest of the world i.e. trade diversion (apotential welfare loss). The FEPA may result in displacing more competitiveimports from UAE, India, China or South Africa, thus undermining south-southtrade.

 The main imports from the EU based on 2008 data are machinery and transportequipment, chemicals (Manufactured goods) and agricultural products.

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Source: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113407.pdf 

When compared with the imports coming from the top 4 import destinations, UAE,India, China and South Africa, we find that the imports which could be displaced,though trade diversion is mainly manufactured goods. However, this is not likelyto happen before 2020, when tariffs on finished. products under the FEPA arescheduled to be phased down. The table below lays out the potential imports fromthe 4 key import destinations which are most likely to be displaced by EU imports

(see Annex 3 – Kenya's imports from China and India:

Potential Products likely to bedisplaced

China:  Telecommunications equipment,

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Motor vehicles for the transportof goods and special purpose motor

India Medicaments (includingveterinary medicaments0

Motor vehicles for the transportof goods and special purpose motor

Food-processing machines(excluding domestic) and parts there

Equipment for distributingelectricity, n.e.s.

UAE household and office electronic

appliances, automobile spare parts motor vehicles.

South Africa  Telecommunications equipment, Motor vehicles for the transport

of goods and special purpose motor Prepared foods

 The extent of possible trade diversion is likely to be mitigated if Kenya negotiatesbilateral trade and investment agreements with its main trading partners, whichconfers same or superior market access.

Displacement of Regional Trade

Another source of potential losses  will be through displacement of importcompeting goods in the local and regional markets by EU imports12.

12Prospects for Kenyan Economy in the Economic Partnership Agreement with the European Union (EU) - Wed,

May 10, 2006 By David S.O. Nalo (CBS), Permanent Secretary, Ministry of Trade and Industry 

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 Table 6 – EAC imports and exports by country (2008)

U n i te d A ra

E m ira te s 4 3 .6E U 3 1 .4K e n y a 3 1 .9S w i tz e r la n d 2 1E U 2 6 .

S w i tz e r la n d 1 5 .3U g a n d a 1 0 .8E U 2 3 .4E U 2 0S u d a n 1 4 .

E U 1 1 .7T a n z a n ia 7 . 5C o n g o D R C 1 2 . 7S o u th A f r ic a 9 .5K e n y a 9 .5

K e n y a 5 .3U S A 5 . 7H o n g K o n g 6 .5C h in a 7 .3S w i tz e r la n d 9

C o n g o D R C 4 . 2E g y p t 3 . 9S w a z ila n d 5 . 1K e n y a 5 . 8R w a n d a 7 .

E U 4 0 .5E U 2 7 .7E U 2 2 .9E U 1 8E U 1 9 .

U g a n d a 9 .6

U n i te d A ra

E m ira te s 1 3 .1K e n y a 1 6

U n i te d A r a

E m ira te s 1 3

U n i te d A ra

E m ir a te s 1 1 .

K e n y a 8 . 8I n d ia 1 0 . 3U g a n d a 1 4 . 5S o u t h A f ric a 1 0 K e n y a 1 1 .

C h in a 7 .3C h in a 7 . 3U n ite d A raE m ira te s 8 .4In d ia 8 .7In d ia 1 0 .

In d ia 5 S o u th A f r ic a 5 . 3C h in a 8 .4C h in a 7 C h in a 8 .

S o u r c e : C o m p i le d b y th e a u t h o r h t t p :/ /s t a t .w t o . o r g / C o u n t r yP r o f i le / W S D B C o u n t r yP F V i e w . a s p x ? L a n g u a g e = E & C o u n t ry = B I , K E

U g a n d a

U g a n d a

T o p 5 E x p o

M a r k e t (2 0 0

T o p 5 Im p o

M a r k e t (2 0 0

R w a n d a

R w a n d a

T a n z a n i a

T a n z a n i a

B u r u n d i %

B u r u n d i %

K e n y a

K e n y a

From the table below we can discern that Kenya is one of the Top 5 importdestination for three of the five EAC partners. In 2008, Kenya accounted for 8.8%of Burundi’s imports; 16% of Rwanda’s imports; and 11.3% of Uganda’s imports.Uganda and Tanzania are the second and third most important export destinationfor Kenya making up close to 18% of Kenya’s exports. Kenya is also an importantexport destination for many of its EAC partners (Burundi 5.5%, Rwanda 31.9%,

 Tanzania 5.8% and Uganda 9.5%). We can therefore conclude from the tableabove that intra-EAC trade plays a significant role in Kenya’s trade basket i. It issafe to assume that the intensity of intra-EAC and Kenya’s trade to the region islargely underestimated given that significant trade occurs informally acrossborders. Given the importance of intra-regional in Kenya, increased competitionfrom EU imports, is likely to result in welfare loss associated with the loss of regional market share.

However, the impact will depend on (i) whether intra regional trade is significantfor Kenya; (ii) Kenya’s intra-regional trade pattern; and (iii) which products arebeing liberalised and over what period. To study the impact of the FEPA on intra-regional trade a detail analysis of intra-regional trade patterns in Kenya is

required. This is, however, outside the scope of this brief. In general Kenyasupplies light manufacturing, processed food and agricultural products (fruits andvegetables)13. The EAC exclusion list (Annex 2 – EAC Exclusion List) indicates thatmost of Kenya’s key export products, in which it has marked competitivity, will besheltered from tariff liberalisation. Given the fact that liberalisation is expected totake place over a long period of time (23 years) and the protection afforded by the

13 Fresh Produce Exporters Association of Kenya (FPEAK) roughly estimates that domestic and regional trade infruits and vegetables generates close to 1 billion USD, most of which is being traded informally at the borders.

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exclusion list, the risk of EU exports displacing Kenya regional exports are likely tobe mitigated.

Effects of FEPA on Agriculture

Under the FEPA, all agricultural products and agro-products are on the EAC’s

exclusion list. Kenya and its EAC partners, since January 2008, enjoy duty andquota market access to the EU, with the exclusion rice and sugar, which aresubject to transition periods. The challenge in the agricultural sector lies beyondthe EPAs and are linked primarily to the EU subsidy on agricultural products. TheEC, through the WTO process has undertaken to eliminate subsidies by 2013 andhas offered to fast track the reduction for products of export interest to EAC regionwithin the framework of EPA. Kenya’s major exports of horticultural products,coffee and tea will remain the same or increase, especially if the EU withdrawssubsidies extended to its farmers. To benefit from FEPA DFQF provisions Kenyamust build its capacity in adding value to the commodities that are currentlyexported in bulk. 14

3.3 Major areas of contention under the FEPA negotiations:

  The EAC-EPA negotiations were supposed to be concluded by July 31, 2009.However, the deadline was missed due to lack of consensus the following clauses.In this section, we will flag out what are the main areas of contention between theEU and EAC in the context of the FEPA.

FEPA WTO compatibility – The EC claims that since the FEPA has notbeen signed by the member states and has only been initialed and thatareas of the FEPA are being put back on the negotiation table, this wouldconstitute a breach of the WTO compatibility rule. Legal experts15 haveconfirmed that the FEPA is perfectly valid and WTO compatible. The reasonsare as follows:

a.  The WTO Transparency Decision imposes a procedural requirementto notify the World Trade Organisation of any agreement under whichpreferences are granted -before the agreement enters into force. ACPcountries are not obliged under treaty law or WTO law to sign anyinterim or full EPA that they have initialled. An initialled text issufficient for WTO notification purposes.

b.   The WTO Transparency Decision specifically provides for thepossibility of renegotiating an already-notified agreement. This hasbeen done on five occasions to date. The only requirements are thatthe renegotiated agreement be re-notified to the WTO and that itremains WTO-legal. This leaves a great deal of scope forrenegotiating aspects of the agreements, which are not required for

14 Prospects for Kenyan Economy in the Economic Partnership Agreement with the European Union (EU) - Wed,May 10, 2006 By David S.O. Nalo (CBS), Permanent Secretary, Ministry of Trade and Industry 15

The legal status of the initialled EPAs, Dr Lorand Bartels - Trade Negotiations Insights – Volume 7, Number

3/April 2008

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WTO-legality (for example, the MFN clause and the standstill clausescould be removed without compromising WTO validity).

Export Taxes (Article 15) – The EU wants to exclude all export taxes,whilst EAC members want to retain the ability to impose export taxes as anindustrial policy tool for strengthening the regions industrial base and value

addition capacity. However article 15.2 makes provision for EAC Party toimpose duty or tax in connection with the exportation of goods, with theauthorization of the EPA Council, under the following circumstances: (a) tofoster the development of domestic industry; or (b) to maintain currencyvalue stability, when the increase in the world price of an export commoditycreates the risk of a currency value surge. The EAC party is not agreeing todiffer to the EPA council for the imposition of such taxes.

MFN Clause (Article 16) – EAC member states are not in favor of including MFN as this could limit their room for negotiations with otherpartners in the future. Effectively, including the MFN clause in the EPAagreement would mean that the EU would be provided with a guarantee

that it will receive all trade advantages, such as lower tariffs or easieraccess for its services suppliers, which the EAC partner may grant to anythird country in the future. The contention is that this goes against theenabling clause16. Including the MFN clause in the EPA agreement would inspirit contradict the enabling clause and means that if the EAC partnerswere to sign an FTA with Brazil, India or such groups of developing countriesas the ASEAN and MERCOSURE, any preferences granted which werebeyond that granted to the EU would also need to be extended to the EU.

A second issue with the MFN clause is to do with the definition of ‘majortrading partner17’. Article 16.6 defines major trading economy as anydeveloped country, or any country accounting for a share of worldmerchandise exports above 1 percent in the year before the entry into forceof the free trade agreement or any group of countries acting individually,collectively or through a free trade agreement accounting collectively for ashare of world merchandise exports above 1,5 percent in the year beforethe entry into force of the free trade agreement. The EAC members areproposing to raise the threshold from 1% to 6%.

Multilateral Safeguards (Article 20.4) – EAC members want tofollow the WTO procedures of notification whilst the EC is requesting priorconsultation with the ‘EPA council’ before the application of Safeguards.

Chapter IV Economic and Development Cooperation - the EC isnot willing to provide any additional funding besides funds allocated underthe 10th EDF Regional Indicative Programme, Aid for Trade and the EU

16 Paragraph 2(c) of the enabling clause provides for developing countries to negotiate free trade agreements(FTAs) among themselves in order to promote south-south trade. When read together with provisions of the WTOAgreement, it is clear that the enabling clause is intended to operate as a positive exemption from the MFNrequirement in GATT Article 1, for the benefit of developing countries.17 The MFN clause 16 states that ‘EAC Party shall accord to the EC Party any more favourable treatmentapplicable as a result of EAC Party becoming party to a free trade agreement with any major trading economyafter the signature of this Agreement

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budget. The commitments made under the EDF and EU Budget isindistinguishable from the commitments made by the EC under the AfTagenda.

4. Conclusion

In principle, EPAs offer potential benefits to the EAC countries beyond what wasavailable under Lomé conventions, although these are quite limited. As LeastDeveloped Countries, Burundi, Rwanda, Tanzania and Uganda are entitled tolargely free access to the EU without offering any reciprocity; only Kenya stands togain a preference as the EPA would be tariff-free and the alternative is lesspreferential access. However, all five should benefit from less restrictive Rules of Origin requirements. An underlying premise is that the EAC, as with any regionalintegration among groups of ACP countries as a precursor to EPAs, should derivebenefit from enhanced regional integration. The intra-regional trade benefits maybe limited under the FEPA, however there are potential benefits from regionaleconomic cooperation. For example, coordinated and streamlined customs andport clearance procedures could reduce trade costs and facilitate trade, enhancingthe business environment to both attract investment and promote exports.18 

 These will be further strengthened through the upcoming EAC Common Marketand ongoing Custom Union implementations.

A study undertaken by ODI and ECDPM concludes that the agreements/andinterim agreements that have been concluded tend to vary widely in terms of provisions included and that countries tend to have a ‘deal’ that reflects theirnegotiating skills rather than their level of development. Countries able tonegotiate hard with knowledge of their interests have obtained better deals thanthose lacking these characteristics19. The FEPA presents the EAC members, with a

number of advantages, such as the long transition period, back loading of its tariff phase-down and an exclusion list, which covers Kenya’s key products areas. TheFEPA and final EAC EU EPAs agreement will be as good as it negotiators. It isimperative that the last leg of negotiations be carried out strategically and thatsufficient flexibility be afforded to the EAC members to come back to the drawingboard. In any case, the WTO Transparency Decision specifically provides for thepossibility of renegotiating an already-notified agreement.

18 Missed Opportunities: The WTO Trade Policy Review for the East African Community Oliver Morrissey and Chris Jones, CREDIT and School of Economics, University of Nottingham, The World Economy (200819  The Interim Economic Partnership Agreements between the EU and African States Contents, challenges andprospects Edited by Sanoussi Bilal and Christopher Stevens Policy Management Report 17 - European CentreDevelopment Policy Management (ECDPM) and Overseas Development Institute (ODI) -http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/B6CB574AC6DA08AAC125760400322BDE/$FILE/pmr17-def.pdf 

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Annex 1 - Kenya Trade Profile 2008

MERCHANDISE

Breakdown in eco

Agricultural produFuels and mining

Manufactures

Share in world tot

By main commodi

MerchandiseexpMerchandiseimp

Source: World Trade Organisation statistic -http://stat.wto.org/CountryProfiles/KE_E.xls

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Annexe 2 - EAC Exclusion List

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i A 2005 study by Kirkpatrick and Watanabe demonstrates that ‘exports of Kenya to

regional partners account for 14.2 percent of total exports during the 1970-97 period,

whereas for the same period the figure is 3.1 per cent for Tanzania and 2.4 percent for

Uganda. In addition, the overall, intra-EAC trade has averaged 9.5 percent over the

period 1970-97’ - Kirkpatrick, C. and M. Watanabe (2205), Regional Trade in Sub-Saharan

Africa: An Analysis of East African Trade Cooperation, 1970-2001’ The Manchester School

Volume 73, Issue 2 , Pages141 - 164

Annex 3 – Kenya Imports from China – India

Kenya import from China 2007: SITC SHORT VALUE IN KSHS

764Telecommunications equipment, n.e.s., and parts, n.e.s., and accessories of apparatus falling within division

762,584,618,826.00782Motor vehicles for the transport of goods and special purpose motor 1,496,934,322.00778Electrical machinery and

apparatus, n.e.s. 1,455,708,053.00652Cotton fabrics, woven (not including narrow or special fabrics ) 1,442,060,866.00653Fabrics, woven,

of man-made textile materials (not including narrow or special fabrics)1,341,009,969.00891Arms and ammunition1,312,785,212.00783Road

motor vehicles, n.e.s.1,296,889,117.00752optical readers, machines for transcribing data onto data media in coded form and machines for

processing such data, n.e1,218,116,339.00625Rubber tyres, interchangeable tyre treads, tyre flaps and inner tubes, for wheels of all

kinds1,206,137,097.00655Knitted or crocheted fabrics (including tubular knit fabrics, n.e.s., pile fabrics and open-work fabrics),

n.e.s.1,062,997,405.00Kenya import from India 2007: SITC SHORT VALUE IN KSHS

334Petroleum oils and oils obtained from bituminous minerals (other than

crude); preparations, n.e.s. containing by weight 70% or more of

petroleum oils or of oils obtained from bituminous m

18,591,775,886.00542Medicaments (including veterinary medicaments)4,380,891,621.00673Flat-rolled products, of iron or non-alloy steel,

not clad , planted or coated

2,685,634,016.00771Electric power machinery (other than rotating electric plant of heading

716), and parts thereof , n.e.s.

2,357,855,754.00727Food-processing machines (excluding domestic) and parts there

1,319,706,599.00651Textile yarn

1,172,821,067.00778Electrical machinery and apparatus, n.e.s.

944,310,011.00782Motor vehicles for the transport of goods and special purpose motor

866,264,821.00773Equipment for distributing electricity, n.e.s.

841,514,626.00728Other machinery and equipment specialized for particular industries, and

parts thereof, n.e.s.

815,668,007.00