Kenya Seeks to Cement UK Market After Trade Deal

Flower traders (file photo).
8 December 2020

Kenyan officials say the new trade agreement with the United Kingdom will protect an invaluable market for local producers, creating continuity after Brexit.

On Tuesday, Kenya formally inked the deal with the UK, ending an era of doing business with Britain through the protocols of the European Union, from which London will officially exit at the end of December.

Trade Cabinet Secretary Betty Maina and UK's International Trade Minister Ranil Jayawardena signed the agreement with a lengthy title: The Economic Partnership Agreement between Kenya, a Member of the East African Community, of the one part and the United Kingdom of Great Britain and Northern Ireland, of the other part.

The ceremony in London brought to an end four months of negotiations and language revision of the text of what could determine a trade protocol between Kenya and the UK, as well as the UK and the entire East African Community, should other member states enter it, for the next two and a half decades.

And while it retains most of the privileges Kenya enjoyed during trade with UK under the European Union, officials said the new arrangement provides for new opportunities, including tying London to a special commitment of supporting Kenya's nascent industries with technical knowhow as well as infrastructure support to open up trading channels in the region.

"This is about securing and protecting Kenya's annual £2 billion ecosystem of trade with the UK on which hundreds of thousands of jobs and millions of livelihoods depend," Manoah Esipisu, Kenya's High Commissioner to the UK," said in a statement.

"Delivery if this was our primary objective for the year and we are thrilled to be over the finishing line," he said after the signing ceremony in London on Tuesday.

Comprehensive package

While Kenyan produce like coffee, tea, cut flowers, fresh vegetables and herbs will enter the UK as before, duty-free and quota free; the agreement ties Kenya to supporting regional integration, with respect to the EAC Customs Union as well as encouraging member states of the EAC to continually work towards making the bloc a common and free market.

The UK, on its part, committed to enhance its development cooperation, to support the EAC countries to realise their development goals, a dispatch from the Trade Ministry indicated.

This includes investing in key sectors of Kenya's economy "to support the government's priority Big Four agenda and Kenya's Vision 2030 development programmes," the dispatch added, referring to Kenya's programmes meant to enhance manufacturing, agriculture, housing and healthcare.

Mooted two years ago, the programmes have faced financial constraints with most of them all but stalled for now.

But trade officials in Nairobi argued the new agreement will also address key concerns such as resolving trading barriers for trade in the EAC, constraints to foreign direct investment, intellectual property, e-commerce and government procurement.

As it is, the UK could accept certain products produced in Kenya, even though their raw materials may be sourced from outside of Kenya from other developing countries, have common standardisation codes as well as liberalise trade, while protecting certain sectors on the side of Kenya from possible undue competition for at least 25 years.

"We have agreed on a comprehensive package of benefits that will ensure a secure, long term and predictable market access for exports originating from the EAC free trade area," Ms Maina said in a statement Tuesday.

"This agreement is expected to drive growth and expand exports of priority sectors and value chains identified in the national export and development strategy, including in agricultural, manufacturing, fisheries, and livestock sectors."

Job security

Her UK counterpart claimed the deal will safeguard jobs that had been on the line if there were no deal by end of December.

"From florists to cafes, this deal supports livelihoods in both our countries and provides the platform for us to forge deeper ties in the years ahead," the UK Minister said.

Kenya had to go bilateral, for an agreement that could still benefit other EAC states, because it was the most endangered.

Ranked as a Lower Middle Income country, Kenya's produce faced taxation as other EAC member states of Tanzania, Uganda, Burundi, Rwanda and South Sudan are still considered Low Income Countries.

Tanzania joined Kenya in the rank this year but this will only be formal after three years. Still, the UK demanded guarantees for a common access to the EAC.

Tanzania and Uganda wanted negotiations to begin in 2021. South Sudan and Burundi didn't show up. In fact, it is Kenya which exports the most to the UK, earning an average of Sh40 billion a year since 2015.

Nairobi's headaches

Throughout negotiations however, the meetings were only labelled 'consultative' at the EAC level as absenteeism killed quorum.

Faced with a deadline and a reluctant EAC, Kenya pushed for geometric asymmetry which allows members of a bloc to enter a trade deal with an outside entity gradually with willing partners going first.

"Kenya adopted this (bilateral) approach because of the Brexit transition period's fast-approaching deadline and the need to secure duty-free and quota-free market access to the UK," CS Maina explained last week ahead of the signing ceremony.

"The experience of the EAC-EPA amplifies this position; it has not entered into force due to reluctance by the other EAC Partner States to sign and ratify," she explained.

She was referring to the common economic partnership agreement negotiated under the European Union, which failed to take off after Tanzania especially recoiled on a clause about opening up its market for EU imports in exchange for duty-free exports into EU.

Kenya's challenges are now to ensure Parliament ratifies the agreement before Christmas and promoting the new deal among trade stakeholders.

The biggest headache for Nairobi is whether the EAC will buy into the deal or let it pass like the unimplemented EU EPAs.

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