logo
ADVERTISEMENT

Kenya's solo trade deals irk EAC members, thaws ties with key states

The country has had issues with Uganda and TZ among others.

image
by The Star

Kenya18 January 2024 - 17:44
ADVERTISEMENT

In Summary


• Kenya signed the Economic Partnership Agreement with the EU in December, a pact that Tanzania has been adamant to adopt.

• It is also pushing for a strategic deal with the US whose talks are ongoing.

Long distance trucks along the Malaba-Bungoma highway headed to Uganda/

Kenya's pursuit of solo trade deals with key global markets has continued to annoy other East African Community member states, amid fresh fallouts with Uganda and Tanzania.

This at a time when the EAC market remains Kenya's biggest export market, according to official data by the Kenya National Bureau of Statistics.

While the region has had its fair share of challenges since the dissolution of the former East African Community in 1977, and the signing of the treaty for the establishment (re-establishment) of the East African Community in Arusha on November 30, 1999, latest trade developments have weighed down the relationship.

This has been more pronounced between Kenya and her next-door neighbours, Uganda and Tanzania.

Among the major trade deals Kenya has penned in exclusion of other EAC member states is the Economic Partnership Agreement (EPA) with the European Union signed in Nairobi last December.

Negotiations on EPA between the East African Community and the EU (EAC-EU EPA) were concluded in 2014.

However, only Kenya and Rwanda warmed up to the pact with Kenya signing and ratifying the agreement in September 2016.

Tanzania has been unhappy about the trade pact arguing that it has “serious consequences” on its revenues and the growth of its industries.

Its Parliament passed a motion in November 2016 rejecting the EPA, a move that angered Kenya, which felt it, would miss out on free market access to the EU, while Tanzania continued to access the markets.

All EAC countries were accessing EU market duty and quota free under different arrangements, which included the Market Access Regulations (MAR) 1529, while Least Developed Countries enjoy access through the Everything But Arms arrangement.

According to data analyst and financial expert Mihr Thakar, the West perceives Kenya as the most developed and stable democracy in the region, therefore finds an easy pathway for mutually amicable discussions, especially within the backdrop of deep, existing security cooperation.

“There would obviously be some discontent from EAC partners but this is inevitable and should be anticipated and alleviated within diplomatic channels available,” Mihr told the Star.

“It goes without saying that there is a cost that autocratic leadership carries when forging partnerships with democracies. However, EAC partners are also making significant deals that exclude Kenya, such as the Uganda-Tanzania crude oil pipeline.”

Kenya went ahead solo under the "variable geometry" provision, which allows certain members states to implement trade agreements faster than others or before others which are not ready.

“The EU is not just a giant, lucrative market, it is a premium market whose demand guarantees higher earnings for our products and will drive our export production to higher levels of competitiveness,” President William Ruto said during the signing at State House Nairobi.

On 3 November 2020 Kenya signed a post-Brexit preferential trade deal with the UK, creating a long-term treaty shielding East African Community (EAC) exports from the high tariffs.

The country is also pushing for a trade deal with the US amid a frosty relation with both Tanzania and Uganda, which has seen tit-for-tat reactions on market access and investments.

While talks on the Strategic Trade and Investment Partnership (STIP) are ongoing, the US is seen to be cautious as it closes on a deal with Kenya, on the back of the EAC integration and the African Continental Free Trade Area (AfCFTA) which is taking shape.

During her July 2023 visit to Nairobi, US Trade Representative Ambassador Katherine Tai met East African Community leadership, besides being hosted in a round of consultations with Kenyan officials led by Trade CS Rebecca Miano and Presidential Advisor Adan Mohammed.

During a forum at the Center for American Progress (CAP), highlighting how the US is taking a new approach to trade, Tai seemed to be pointing to strong consideration of existing trade agreements that Kenya has, likely to influence the outcome of the STIP.

She noted that since AGOA was renewed in 2015, the AfCFTA has come into being; hence the US programme to support African economic development should reflect “this important milestone.”

“We recognise that a successful new trade paradigm must reimagine trade and development as a partnership and a more equitable two-way street,” Tai said during a fireside chat with CAP President and CEO Patrick Gaspard, in the US.

Regional peers have keenly been following Kenya’s talks with the US.

A source close to EAC secretariat told the Star in confidence that led by Tanzania, other EAC members states are concerned about Kenya's solo trade deals that do not factor in regional integration. 

"Regional peers are yet to heal from Kenya's recent solo mission to sign the Economic Partnership Agreement with the European Union,'' he said.

There have been a number of recent incidences that have also pointed to the delicate relationship between Kenya and her peers, amid diplomatic tiffs with at least five countries.

The wrangles spring from business interests, politics, policies and public gaffe by top government officials that have triggered a massive diplomatic fury.

Out of the five countries Kenya has locked horns with, four are from the East Africa Community bloc, and are her biggest trading partners.

They are Tanzania, Uganda, the Democratic Republic of Congo and Rwanda. Kenya has also clashed with Sudan.

International Relations expert Prof Macharia Munene says that Kenya is increasingly becoming isolated in the region because of the ‘bad’ policies by the Kenya Kwanza regime.

“Kenya is not at war with her neighbours but it is confused and looks isolated in the region. Policymakers are confused and they don’t seem to know what they are doing,” he said.

Last week, Tanzanian authorities banned Kenya Airways flights to Dar es Salaam with effect from January 22. The ban was, however, lifted a day after Kenya ceded to Tanzania's demand.

The Tanzania Civil Aviation Authority director general Hamza Johari said the decision to ban Kenyan flights had been reached after Kenya refused its request for all-cargo flight operations by Air Tanzania. 

Uganda has also taken Kenya to the East African Court of Justice over an oil importation deal, as it pushes to import its own products.

In the case, Uganda said the Kenyan government denied it the licence to operate locally and handle oil imports headed to its market.

East African Community and Regional Development Cabinet Secretary Peninah Malonza has however downplayed the dispute, saying each EAC member state was founded on its democratic principles and is therefore entitled to pursue its best trade interests.

The East African region and the Common Market for Eastern and Southern Africa (COMESA) were the single biggest trade blocs that consumed Kenya’s exports during the third quarter of 2023, official data indicates.

According to the Kenya National Bureau of Statistics, the value of Kenya’s exports to the EAC totalled $496.7 million (Sh80.3  billion) up from $431 million (Sh69.7 billion) in the corresponding period in 2022.

Kenya Diaspora Alliance chairman Shem Ochuodho has emphasised on the need for Kenya to maintain good relations with her neighbours for mutual benefit.

“It is good that we have good neighbourliness that is mutually beneficial to all the parties,” he said.

 


ADVERTISEMENT

logo© The Star 2024. All rights reserved