TRADE PACT

Kenya-UK finally give life to trade deal

The EPA was approved for ratification by the Houses of Parliament in Kenya and the UK earlier this month

In Summary
  • This now allows Kenya unfettered access to the UK market - free of duty and quota restrictions.
  • The agreement is very important to both large businesses and small producers as they rely on the duty free access to compete.
CS Industrialisation, Trade and Enterprise Development Betty Maina and British high commissioner to Kenya Jane Marriott sign MOU for Kenya-United Kingdom economic partnership agreement that aims to foster and promote trade between the two countries on Monday, 22 March at Sarova Panafric.
CS Industrialisation, Trade and Enterprise Development Betty Maina and British high commissioner to Kenya Jane Marriott sign MOU for Kenya-United Kingdom economic partnership agreement that aims to foster and promote trade between the two countries on Monday, 22 March at Sarova Panafric.
Image: WILFRED NYANGARESI

The Kenya and UK Economic Partnership Agreement has taken effect after the two countries concluded the requisite domestic processes for its ratification.

This now allows Kenya unfettered access to the UK market - free of duty and quota restrictions and protects developing firms from competition in the domestic market from UK exporters for 25 years.

UK Prime Minister's Trade Envoy to Kenya Theo Clarke said without the agreement an with an 8 per cent tariff on flowers and 12 per cent on vegetables  such as fresh beans,  goods from Kenya would be priced higher in the UK market.

This he said would be damaging for Kenyan traders competing with countries enjoying duty free access.

Clarke said the agreement is a boost to large businesses and small producers as the duty free access gives them fair competition.

“We’re all keen to see the volume of our trade increase, along with the jobs and mutual prosperity that it will bring,” said  Clarke .

The EPA was approved for ratification by the Kenyan and UK Parliament's  earlier this month.

Trade Minister Betty Maina said the deal was subjected to a rigorous process including review by the Parliamentary Committee on Trade, Industry and Cooperatives; and public participation as required by the constitution and  Treaty Making and Ratification Act.

“This agreement is an important instrument that will enable Kenya to expand its trade with the UK, and extend its networks in other developed markets,” she said.

Maina said the EPA is expected to help Kenya  rapidly scale up the value of exports to the UK from an average of Sh40 billion annually to Sh1 trillion.

Exports to the UK from Kenya include coffee, tea, flowers, fruits, vegetables, textiles, and apparel, as well as in our emerging priority value chains such as pulses, honey, nuts, minerals, edible herbs, fisheries, livestock, leather and footwear.

“We have conducted a robust market analysis that shows if we capture just five per cent of the UK market for these export products, the Sh1 trillion target is achievable,” said Maina.

She added that Kenya looks forward to deepening trade and development cooperation with the UK upon full implementation of the Integrated National Export Development and Promotion Strategy to support the innovation and growth of  Medium, Small and Micro Enterprises.

“This partnership provides the much-needed certainty that business and investors require, ensuring that key exporting sectors remain competitive and provides longer term protection for sensitive Kenyan products in the market place,” said British High Commissioner, Jane Marriott.

The agreement also allows for a phased and gradual liberalisation to the tariffs faced on some, but not all, imports from the UK.

The first reduction of tariffs will be on capital goods that feature largely raw material for local industries seven years afer ratification (2028).

The reduction of tariffs on intermediary and finished goods will meanwhile occur between 2033 and 2046.

To protect sensitive industries in Kenya, over 1,400 UK exports are excluded from liberalisation altogether, meaning in 2046 these imports will face the same tariffs as they do now.

Kenya’s private sector has welcomed the trade pact, stating that the deal provides an opportunity for investment and growth of local industries, particularly in the wake of the Covid-19 pandemic.

Currently Kenya’s export to the UK represent barely five per cent of the country’s total bilateral trade leaving immense opportunity for further exports.

Kenya-UK balance of trade is tilted in favour of the latter with exports in 2020 standing at Sh49.5 billion against imports of Sh29.3 billion in 2019.

CS Industrialisation, Trade and Enterprise Development Betty Maina and British high commissioner to Kenya Jane Marriott view exhibition by Thika Cloth Mills Ltd during notes exchange of Kenya-United Kingdom economic partnership agreement that aims to foster and promote trade between the two countries on Monday, 22 March at Sarova Panafric
CS Industrialisation, Trade and Enterprise Development Betty Maina and British high commissioner to Kenya Jane Marriott view exhibition by Thika Cloth Mills Ltd during notes exchange of Kenya-United Kingdom economic partnership agreement that aims to foster and promote trade between the two countries on Monday, 22 March at Sarova Panafric
Image: WILFRED NYANGARESI