Kenya to open market for duty-free EU imports after trade deal takes effect
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Business Daily | 1 July 2024
Kenya to open market for duty-free EU imports after trade deal takes effect
By Constant Munda
Kenya and the European Union have enforced a trade deal after
a decade of negotiations, opening up the domestic market for
tax-free goods from the 27-country bloc after 25 years.
EU-Kenya Economic Partnership Agreement (EPA), which
preserves unrestricted access of Kenyan goods to the European
bloc except for arms, came into force on Monday, Kenya’s
Cabinet Secretary for Investment, Trade and Industry Rebecca
Miano announced.
“The EU-Kenya EPA is one of the most ambitious agreements
negotiated between the European Union and an African
country in terms of promoting economic sustainability. It can
serve as a template for other African countries, particularly
those in Eastern Africa to adapt,” Ms Miano said in a
statement
“The agreement includes trade, economic and development
cooperation and a chapter on trade and sustainable
development which covers provisions on labour issues, gender
equality, forestry and environment and the fight against climate
change.”
The pact, the first trade agreement between the EU bloc and a
developing country, ensures Kenya’s largely agricultural
produce such as vegetables, cut flowers, fruits, tea and coffee
continue to enter the bloc duty-and quota-free.
Nairobi, on the other hand, has committed to gradually lower
duty on imports from Europe within 25 years after which trade
will be liberalised.
This means no duty will apply for goods from Europe such as
machinery as well as mineral and chemical products, while
investments from the EU will also be incentivised.
The EPA deal, however, has a protectionist clause which bars
the EU from applying blanket subsidies to agricultural exports
to Kenya in the absence of a deepened policy dialogue with
Nairobi. This clause is aimed at safeguarding agriculture and
food security in Kenya against unfair competition from the EU.
Trade between the two parties favours the EU, which sold
goods worth Sh223.12 billion to Kenya, while importing
Sh150.08 billion.
The enforcement of the EU-Kenya EPA comes after approval
from the European Parliament on February 29, paving the way
for heads of State and government to complete the ratification
process.
Some 366 EU lawmakers voted in favour of the deal with
86 members rejecting it, while 56 members abstained.
Kenyan lawmakers also approved the document for it to
become enforceable.
The document is largely a modification of the text in the stalled
EU-East African Community pact, which was first agreed in
October 2014 subject to approval by respective parliaments.
The major change is the inclusion of clauses around climate
change.
The implementation of the EU-EAC treaty, which Kenya
endorsed in 2016, had stalled after the other EAC countries
rejected it.
Rwanda signed but did not ratify, while Tanzania and Uganda
refused to approve the pact for various economic and political
interests, including the fear of European goods flooding the
market.
Unlike Kenya, which is a lower middle-income country, the
other EAC countries are shielded from higher tariffs on exports
under the "everything but arms" trade arrangement for least-
developed countries.
This is provided for under the World Trade Organisation’s
(WTO’s) Special and Differential Treatment (S&D) because they
are the least-developed countries (LDCs).
The refusal to cooperate by EAC peers prompted Nairobi to
enter into a temporary special arrangement with the EU, which
has allowed Kenya’s exports to continue accessing the EU
markets duty- and quota-free.
The EAC Heads of State Summit in February 2021, however,
allowed partner members to sign bilateral trade deals on
condition that they leave room for other EAC countries to join
in future.
Kenya and the EU have utilised this window to re-engage on
the pact, leaving the door open for other EAC member States to
join when they choose to.
This culminated in the signing of the new document last
December subject to ratification by respective parliaments.
