East Africa: UK-Kenya Trade Pact Awaits Approval From EAC Council of Ministers

Flower traders (file photo).

East African Council of Ministers will, this week, hold their last meeting of the year with Kenya hoping to get approval to separately sign a trade agreement with the United Kingdom ahead of the December 31 deadline.

The EastAfrican has learnt that the virtual meeting of the EAC Sectoral Council of the Ministers of Trade, Industry, Finance and Investment (SCTIFI) will also discuss other regional matters such as EAC policies on trade, non-tariff barriers, Customs, budgets, standards and quality, industrialisation and the tripartite agenda.

Kenya is pegging its hopes on Article 37 of the EAC Customs Union Protocol, which allows partner states to separately conclude or amend trade agreements with foreign countries provided the terms do not conflict with the provisions of the Protocol.

Under the Customs Union Protocol, the first pillar of regional integration, EAC countries are required to negotiate matters related to trade with third parties as a bloc. However, a member may separately negotiate bilateral trade agreements, subject to notifying other members.

Earlier this month, Kenya and the British government reached a critical agreement on a new trade deal that grants Kenyan products duty-free quota-free access to the UK market after December 31.

The deal, which includes clauses from the old Economic Partnership Agreements (EPAs) under the European Union, is expected to be formalised through signing of the agreed texts by the two countries.

The EastAfrican has learnt that the British government is adamant with its timeframe, but it is willing to apply the Principle of Variable Geometry under the EPAs to allow EAC member states that are ready to sign the agreement while others join later.

"With respect to other East African states, the UK is willing to proceed with those that are ready and allow others to join at a later date as per the current EPAs text," said Kevit Desai, Kenya's Principal Secretary in the State Department of EAC Affairs.

Kenya is racing against time to, individually, negotiate and sign a new trade agreement with the UK to avoid paying duty on its products destined to the British market starting January, 1 2021.

The UK formally exited the European Union on January 31 with an 11-month transition period to re-negotiate new trade agreements with its trading partners outside the 27-member bloc.

All existing trade agreements with the UK under the EU terms, which are not rolled over, will expire on December 31.

EA member countries, which run a common Customs Union, are required to negotiate and sign this agreement as a bloc. However, Uganda, Rwanda, Tanzania and Burundi appear not to be keen on the deal thereby calling for the extension of timelines for the negotiations by one year, citing country specific issues including election cycles.

But, with or without a new trade agreement these four countries, which are classified as less developed countries, have a window to continue enjoying duty-free quota-free access to the UK market beyond the December 31 deadline under the Everything But Arms initiative introduced in 2001 under the EU's Generalised Scheme of Preferences.

Kenya, on the other hand, is classified as a lower middle-income country.

The Kenya-UK agreement is expected to provide continuity for businesses, investors and supply chains besides setting foundations for further economic development.

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