Do not sign an EPA in light of the Global Financial Crises

All this comes at a time when the highly liberalized developed countries which are facing a financial meltdown, are introducing protectionist measures such as ‘Stimulus Packages’ to bail out their banks and industries.

Civil society organizations working on economic justice issues have continuously elucidated the concerns we have with the EPAs, not just the content but also the manner in which these negotiations are taking place. We would like to take this opportunity to reiterate our concerns with the Interim EPA: ‐

‐ GOVERNMENT REVENUE LOSS

Impact assessments that have been carried out by the Kenya Institute of Public Policy Research and Analysis (KIPPRA) show that the government will lose revenues due to tariff elimination and from regional trade. Other analyses that have been carried out by European Centre for Policy Development and Management (ECPDM) state that loss of revenue will be severe; this will greatly affect provision of social services such as education and health care.

‐ LOSS OF JOBS

65 per cent of Kenyan industries are faced with unfair competition from EU industries. These vulnerable industries include food processing, textiles, paper and printing. Analyses done by KIPPRA indicate that the EU will become the main supplier of food and beverages accounted for 67 per cent of all food and beverages imported into the country. This will lead to loss of jobs of over 100,000. As the global recession kicks in, Kenya has begun to experience massive job losses in the horticultural, banking and other sectors. ‐ ARTICLE 13 – STANDSTILL CLAUSE

This clause freezes tariffs on ALL TRADE between the parties whether or not these products are subject to liberalization. As a result, even if a product is on the ‘exclusion list’, the tariff on this product cannot be raised after the entry into force of the agreement. For example, imported milk and milk products attract a tariff of 60 per cent however with the entry into force of the agreement; Kenya will be unable to increase this tariff to protect any vulnerable sector.

‐ REMOVAL OF EXPORT DUTIES

Export duties have been used to raise revenues for some developing countries across the world accounting for more that 20 per cent of government revenue in countries like Burundi. In Kenya, export duties have been used to encourage value addition for example, in the leather sector.

‐ ARTICLE 18 ‐ EU MEMBER STATES’ EXPORT SUBSIDIES NOT ELIMINATED

The Interim agreement allows the EU to continue issuing their producers export subsidies. It is important to note that the dairy sector in the EU received 16 billion euros; this translates to USD 2 per cow per day! Over 56% of Kenyans survive on less than USD 1 per day

‐ ARTICLE 16 – MOST FAVOURED NATION (MFN)

The EPAs threaten South–South integration. Europe insists on a ‘most favoured nation’ (MFN) clause in EPAs, requiring the EAC countries to extend to Europe the benefits of any deal that they might strike in future with other large countries or regions such as India, China, or Brazil. Ensuring permanent, privileged access to EAC markets might be good for Europe, but it is not necessarily in the interests of EAC countries. Just at the point when historical dependence on Europe is waning, this provision limits the leverage of EAC countries to negotiate favourable deals with the very countries where their exports are growing most rapidly. Brazil, supported by China and India, has raised concerns about this provision at the WTO.

We strongly urge the Minster, Hon. Kimunya to halt the signing the agreement in light of the concerns that we have raised.

We also urge the Minister to reconsider negotiating the EPAs and look into possible alternatives such as the Enhanced Generalised System of Preferences (GSP plus) which also assures us of preferential access into the EU market.