President Ruto bypasses EAC barrier to EU trade deal

Trade Cabinet Secretary Moses Kuria and European Commission Executive Vice-President Valdis Dombrovskis (seated) sign the deal to implement EPA on June 19, 2023 at a ceremony witnessed by President William Ruto and his deputy Rigathi Gachagua. PHOTO | DENNIS ONSONGO | NMG

Kenya has signed one of the most ambitious trade deals between the European Union and any African country, unlocking immediate duty-free quota-free access for all her exports to the 27-member bloc while gradually lowering import duty for goods from Europe.

Nairobi and the European Commission on Monday agreed to implement the Economic Partnership Agreement (EPA) between the EU and the East African Community reached in October 2014 subject to approval by respective parliaments.

The implementation of the treaty, which Kenya signed and ratified in 2016, had stalled after the other EAC countries declined to endorse it.

Rwanda signed but did not ratify the EPA, while Tanzania and Uganda refused to approve the treaty for various economic and political interests, including the fear of European goods flooding the market.

Nairobi was forced to enter into a temporary special arrangement with the EU to allow duty-and quota-free entry of Kenyan goods ahead of the January 2017 deadline set by the EU.

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The other EAC countries were shielded from higher tariffs on exports under the “everything but arms” trade arrangement, regardless of the EPA, which is provided for under World Trade Organisation’s (WTO’s) special and differential treatment (S&D) because they are least-developed countries (LDCs).

Kenya and the EU have, however, used the window opened by the EAC Heads of State Summit in February 2021 to sign the deal bilaterally and leave room for other EAC countries to join in future.

This is unlike the past when all EAC member states were required to sign and ratify the EPA with the EU for it to come into force.

“We want rapid and judicious conclusion [to the EPA deal] because we believe multilateralism is the way to go. There was no dispute, no variance by either Kenya or European Union,” Trade Cabinet Secretary Moses Kuria said, pledging to mobilise lawmakers to approve the deal.

“Protectionism has got no place in modern-day economy.”

The EAC-EU EPA, which the two parties have agreed to implement bilaterally, requires Nairobi to gradually open up to imports from Europe with a deadline of 25 years.

The deal, however, has a clause that bars the EU from applying subsidies to agricultural exports in the absence of deepened policy dialogue to safeguard agriculture and food security in the EAC region.

“We are looking at it in two ways. That we will enhance our exports because we now have an assured predictable market, but also we are negotiating because Kenya is now working on our manufacturing capacity,” President William Ruto, who witnessed the signing at State House, said. “Most of the products we export today, including tea and coffee, we now have to take them through the process of value addition, processing and manufacturing so that we can export finished products, we can derive more value and we can put more money in our farmers’ pockets.”

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Trade between Kenya and the EU bloc was yet to return to pre-Covid levels by the end of 2022.

Kenya exported goods worth Sh133.18 billion to the EU countries last year, while buying merchandise valued at Sh202.22 billion, according to the Kenya National Bureau of Statistics.

The EU remains Kenya’s largest destination for cut flowers and other horticultural produce, accounting for about 70 percent share.

“This Agreement considers our different stages of development. Kenya’s exports to the EU will be tariff-free from day one, while tariffs on EU exports will be liberalised over time and not on all products,” European Commission executive vice-president and EU commissioner for Trade, Valdis Dombrovskis, said in a statement.

“This agreement reflects our shared ambition to underpin our economic relations with strong protection of the environment and climate, labour rights and gender equality. We will work together with Kenya to meet global sustainability challenges and offer our support in this regard.”

The EU becomes the second party that Kenya has reached a deal to bilaterally enforce the EAC-EU pact after inking a similar arrangement with the UK in December in December 2020 before the latter left the EU bloc.

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