Kenya-EU Economic Partnership Agreement: a closer look reveals limited progress
by Marc Maes | 11.11.11, Belgium
13 July 2023
In a recent announcement on June 19th, the European Commission (EC) celebrated the new Kenya Economic Partnership Agreement (EPA) as a major success. However, upon closer examination, it becomes evident that there is little new about this agreement, except for two key aspects: it has transitioned into a bilateral EPA and includes a "New Zealand" style chapter on Trade and Sustainable Development (TSD).
Despite the EC’s enthusiasm, the Kenya EPA remains primarily focused on shallow goods-only trade, falling far short of the EC’s initial aspirations after 25 years of protracted negotiations. Essentially, the EC’s celebration of the TSD chapter in the Kenya EPA conceals a significant setback.
The saga surrounding the Kenya EPA is far from over. The agreement includes rendezvous clauses that mandate Kenya to continue negotiations on various "new issues" such as investment, services, government procurement and intellectual property rights. It remains uncertain whether Kenya will be willing to accept these additional chapters. Kenya’s decision to turn its back on the East African Community (EAC), which includes Uganda, Rwanda, Burundi, and Tanzania, has weakened its position and made it more challenging for Kenya to resist the EC’s pressure for extensive follow-up negotiations. It remains to be seen if Kenya has already made promises to include these issues.
To fully understand the situation, let’s delve into the pre-history of EPAs and explore the issues of concern around them.
In the aftermath of decolonisation, several European Union (EU) countries maintained preferential trade relations with their former colonies in Africa, the Caribbean and the Pacific, known as the ACP countries. This arrangement allowed European investors who had remained in these countries - controlling mines and plantations — to continue supplying their homeland’s industries and markets. However, these trade preferences were deemed discriminatory and in violation of World Trade Organisation (WTO) regulations following complaints by Central American countries, particularly those involved in banana trade.
To address this issue, the EU pledged to replace its ACP trade preferences with WTO-compatible free trade arrangements. They secured a WTO "waiver" to maintain preferences until the end of 2007 while negotiating these arrangements. However, the proposed free trade agreements (FTAs) required ACP countries to open their markets to EU imports to ensure continued access to the EU market. This would not only introduce competition for vulnerable producers in the ACP countries but also result in significant revenue losses from abolished customs duties.
In 2002, the European Commission obtained a mandate from the EU Council to negotiate "WTO compatible trade agreements" with ACP countries, which they named Economic Partnership Agreements (EPAs). However, the mandate extended beyond what was necessary to maintain trade preferences for ACP exports. The EC included several "new issues" that it had been advocating in the WTO, such as trade facilitation, services, competition policy, investments, private sector development, intellectual property rights and government procurement.
Consequently, the EC’s approach encountered substantial resistance. By the 2007 deadline, only the Caribbean countries had accepted a complete EPA as proposed by the EU. In other regions, the EU pressured ACP countries to accept goods-only "interim EPAs" to preserve preferential market access while negotiations for comprehensive EPAs continued. Most ACP countries initially accepted these interim EPAs, but did not ratify them due to concerns about market openness and the rendezvous clause that obligated them to conclude comprehensive EPAs. As a result, negotiations dragged on despite the EC imposing numerous deadlines.
The pressure exerted by the EU had minimal impact on the least developed countries (LDCs) within the ACP group, as they continued to receive "duty-free and quota-free" market access under the EU’s Generalised System of Preferences (GSP), known as "Everything But Arms" (EBA). The proposal to extend this preferential treatment collectively to ACP regions, treating them as LDC regions, was rejected by the EU, as it would have hindered its ability to push for the inclusion of new issues.
Non-LDC ACP countries — such as Ghana, Ivory Coast, Cameroon, and Kenya — found themselves in a predicament. The regular GSP would not offer them the same level of market access to the EU as before, prompting them to gradually accept EPAs. However, this led to the fragmentation of regional economic integration areas like ECOWAS, CEMAC, and the EAC, as non-LDC countries with EPAs were required to open their markets to EU imports, which would then flow into the LDC countries.
Consequently, the EPA saga continued at a slow pace, resulting in some countries having comprehensive EPAs, others having goods-only interim EPAs, and many LDC countries without any EPA agreements.
Enters the ESA region… and a new CETA-style EPA mandate!
Now, let’s turn our attention to the Eastern and Southern African (ESA) region and the emergence of a new EPA mandate reminiscent of the Comprehensive Economic and Trade Agreement (CETA).
At the end of 2019, the EU claimed to have received a request from five ESA countries for comprehensive EPA negotiations. These countries include Mauritius and Seychelles, which are offshore fiscal paradises, along with landlocked Zimbabwe and two least-developed island countries, Comoros and Madagascar.
To accommodate this request, the EC swiftly crafted an even more ambitious EPA negotiating mandate, intending to transform EPAs into CETA-like agreements. The mandate was approved by the Council on December 19, 2019, but the EC withheld its publication for a considerable period. Nevertheless, details can be found in my article from February 5, 2020, on bilaterals.org.
Since then, the EC and the ESA-5 have engaged in 15 rounds of negotiations, the reports of which are available on the DG TRADE’s website. However, the ESA countries possess limited experience and capacity to navigate the EC’s proposed terms. The negotiation rounds mostly consist of the EC presenting and explaining its draft chapters. ESA negotiators have sought advice from their civil societies, yet even they are unfamiliar with the EU schemes, and EU CSOs appear preoccupied elsewhere.
The newest Kenya EPA
Returning to the newest Kenya EPA, hailed by the EC as "the most ambitious EU trade deal with a developing country when it comes to sustainability provisions such as climate and environmental protection and labour rights," it is not significantly different from the regional EPA signed and ratified by the EAC in 2016. However, as other EAC countries - including Tanzania, Uganda, Rwanda and Burundi - did not express a desire to follow Kenya’s example, the agreement remained in limbo until the EAC allowed Kenya to join the agreement on a bilateral basis in 2021. The EPA was subsequently renegotiated and reinitialed on June 19, 2023. Most of the text remains unchanged, apart from the TSD chapter, which closely mirrors the EU-New Zealand Free Trade Agreement and includes provisions for dispute settlement and enforcement.
In essence, it appears that the EC has utilised the New Zealand-style TSD chapter in the "new" Kenya EPA to divert attention from the years of EPA struggles, defeats and failures, presenting it as a triumphant accomplishment instead. While the EAC remains divided, the EC has assured Tanzania, Uganda, Rwanda, and Burundi that the door remains open for them to join the Kenya EPA.
- Read also: Regional NGOs warn Kenya on EU trade deal
The journey of EPAs continues to unfold, with each chapter revealing new complexities and challenges. As negotiations progress, it remains crucial to monitor the evolving dynamics and their implications for trade relations between the EU and its partner countries.