Kenya-EU trade pact takes effect, ushers in new order
The economic partnership between Kenya and the European Union (EU) has entered into force unlocking new economic opportunities for Kenyans.
Concluded in June 2023 and signed by both parties on December 18, 2023, the Economic Partnership Agreement (EPA) between the two is intended to open duty-free and quota-free access for all Kenya’s exports in EU markets.
The move will create more opportunities for Kenyan businesses and exporters including high value manufactured products as it will also fully open the EU market for Kenyan products and incentivise EU investment in Kenya due to increased legal certainty and stability.
The $18 trillion (Sh23.26 trillion) EU market will also boost bilateral trade in goods, increase investment flows, strengthen the ties between reliable partners and facilitate mutually advantageous economic relations in a sustainable manner including stimulating job creation and economic growth.
Economic sustainability
Cabinet Secretary for the Ministry of Investments, Trade and Industry Rebecca Miano, said the partnership is one of the most ambitious deal negotiated between the European Union and an African country in terms of promoting economic sustainability. “This will serve as a template for other African countries, particularly those in Eastern Africa to adapt,” she said Miano, adding that the EU is a top export destination for Kenya and second largest trading partner.
The agreement includes trade, economic and development co-operation 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. Total trade between the EU and Kenya reached over €3.5 billion (Sh486.16) in 2023, an increase of 16 per cent compared to 2018.
The agreement aims at implementing the provisions of the EU-East African Community (EAC) EPA and it remains open to other EAC Member States.
The EPA and its ambitious commitments represent a crucial deliverable of Kenya’s 2016 Trade Policy, its Integrated National Export Development and Promotion Strategy and the value-chains approach under the Bottom-up Economic Transformation Agenda.
“It will help integrate Kenyan value chains with global ones and enhance Kenya’s economic development objectives,” stated Miano. As in other EPAs, the EU-Kenya deal involves an asymmetrical removal of tariffs. In practical terms, the EU fully liberalises access to its market upon application of the EPA and all goods from Kenya (except arms) can enter its market without tariffs or quotas.
Under the arrangement, Kenya will open up its market gradually to imports from the EU, benefiting from transition periods. It will exclude sensitive products from liberalisation.
Kenya may also benefit from other provisions that consider its development needs such as special safeguards for agriculture, measures on food security and infant industry protection.
Binding provisions
The deal has a comprehensive chapter on trade and sustainable development (TSD) reflecting a high level of ambition. It incorporates most of the outcome of the EU’s TSD review. The agreement includes strong and binding provisions on labour standards, climate change and biodiversity, and gender equality.
It further prevents both parties from lowering labour and environmental standards to attract trade or investment.
