Kenya: The EU-Kenya Economic Partnership Agreement

On 1 July 2024, the EU-Kenya Economic Partnership Agreement (EPA) entered into force culminating negotiations towards an EU-Kenya Strategic Partnership.

EU engaged in negotiations towards an EPA with EAC member states in 2014 and agreed on a draft EU-EAC EPA in October 2014.  Only Kenya and Rwanda signed the EPA, but other EAC member states were reluctant to ratify the EPA leading to protracted discussions and delay in the ratification process.  Kenya and the EU therefore launched a strategic dialogue marking 'the stepping up of EU-Kenya bilateral relations' in June 2021 and agreed on 17 February 2022 to advance negotiations on a bilateral EPA.  They concluded negotiations on 19 June 2023.  The EU and Kenya signed the agreement on 18 December 2023 in Nairobi which then came into force on 1 July 2024.

Features of the EPA

The EPA has various provisions geared towards promoting growth and development and the gradual integration of Kenya into the world economy including amongst others:

a)     Elimination of import and export tariffs.  The EU-Kenya EPA provides for duty free, quota free access to the EU market for all Kenyan products.  However, customs duties applicable to products originating in the EU imported into Kenya would be eliminated progressively.  The customs duties would be abolished over a period of 15 to 25 years depending on the category of products.

b)    Most-favoured nation clause.  Under the EPA, if the EU or Kenya enters a trade agreement granting more favourable treatment to third countries, the same treatment becomes applicable to trade between Kenya and the EU.  The clause is asymmetric: it concerns any trade agreement the EU concludes; for Kenya, it will be limited to trade agreements with major trading economies.

c)    Trade defence mechanisms.  The EPA allows either party to forego the elimination of customs duties in a particular territory for a limited duration where this would occasion serious injury to the domestic industry producing like or directly competitive products in the territory of the importing party.  This would be monitored by the EPA Council established under the EPA.

d)    Alignment of technical barriers to trade.  The EPA aligns these with WTO standards.

Conclusion

There has been some concern that the EPA would place local products in competition with subsidized products from the EU.  Additionally, EAC countries apply a common external tariff on goods being imported from outside the EAC which may be disrupted by the EU-Kenya EPA.  However, it may be worth assessing the outcome of the EPA given the mechanisms to protect local products including trade defence mechanisms and the asymmetry in applying the import and export tariffs.

If you wish to discuss these topics, please contact:

Viva Africa Consulting LLP (WTS Kenya)