Kenya moves to secure duty-free trade deal with EU after stalled EPAs talks
Friday May 13 2022
Kenya has put in place temporary measures for its exports to the European Union after the implementation of a duty free-quota free trade agreement with other EAC member states stalled.
Classified as a lower middle income economy by the World Bank, Kenya aims to protect its trade interests with the EU after Tanzania, Uganda and Burundi declined to sign the Economic Partnership Agreement (EPA) citing various economic and political interests.
The agreement, whose negotiations were concluded on October 16, 2014, provides for duty free-quota free access for Kenyan and EAC products to the EU market.
To secure its market position, Kenya has signed a replica of the EPAs with the UK and early this year signed an interim EPA with the EU.
“We have the highest decision making organ called the Summit. For the past five years, the Summit has given guidance on the application of the principle of Variable Geometry, which allows trading partners to make certain progress as long as there is concurrence that the others can catch up later,” Johnson Weru, Kenya’s Principal Secretary in the ministry of Trade and Industry, told The EastAfrican last week.
Although Kenya has signed and ratified the agreement, the pact requires all countries to sign and ratify it as a bloc for it to take effect.
Uganda, Rwanda, Burundi and Tanzania, which are considered Least Developed Countries, enjoy a preferential trade arrangement with the EU under the Everything but Arms arrangement.
“Kenya does not have that provision so we have to protect our trade interests because these are our major trading partners,” said Mr Weru.
“A decision of the EU parliament allows Kenya to access the EU market until the other countries decide to sign. We have been doing that since December 2016,” he added.
Access to markets
Kenya benefits from the EC Market Access Regulation, which allows developing countries that are still negotiating EPAs to access the EU market until the agreement is signed.
With all EAC member states aspiring to attain middle income status by the year 2040, trade agreements under a reciprocal arrangement is inevitable.
Uganda has formulated Vision 2040, Tanzania and Burundi have Vision 2025, and Rwanda had Vision 2020 to move into the middle income category.
On February 28, 2021, the EAC Heads of State Summit concluded that while not all EAC members are ready to sign and ratify the EPA, those members who wish to implement it could engage with the EU.
Following Kenyan President Uhuru Kenyatta’s visit in June to Brussels, both countries agreed to work towards bilaterally implementing the EPA. Subsequently, a joint task force was established to discuss the modalities of the implementation.
In February, Kenya’s Cabinet Secretary for Foreign Affairs Raychelle Omamo and European Commission’s executive vice president Valdis Dombrovskis signed an interim EPA to guide trade relations and ensure sustainable development.
The agreement paved the way for further negotiations on establishing a lasting trade and investment relationship, consistent with the United Nation’s 2030 agenda for sustainable development.
The EPA is also open to other member states and provides for less restricted trade relations between the countries and EU member states, and trade-related co-operation, aimed at boosting sustainable growth and job creation.
In December 2020, Kenya and the UK signed an EPA to ensure uninterrupted flow of goods between the two countries when Britain exited the European Union trading arrangements on December 31, 2020.
The deal meant that all companies operating in Kenya could continue to benefit from duty-free access to the UK market.
The trade agreement between Kenya and the UK is a translation of the terms previously agreed between the EU and the EAC, and includes clauses to allow other member states to join in the future.
The UK market accounts for 43 percent of total exports of vegetables from Kenya, as well as at least nine percent of cut flowers. Top imports to the UK from Kenya in 2020 were tea, coffee, spices, vegetables and cut flowers.
Under the EPAs, the EAC has committed to liberalise an equivalent of 82.6 percent of imports from the EU by value, and 17.4 per cent will be progressively liberalised within 15 years from the date the EPA enters into force.
The agreement sets up an EPA Council to address implementation issues.
It will be reviewed every five years taking into account the experience acquired in its implementation.