The European Union and Kenya have formally concluded the negotiations on the ambitious trade agreement that is aimed at implementing the bilateral and regional economic partnership (EPA) between the European Union and the Eastern Africa Community (EAC). The EPA was negotiated in 2014 but only Kenya and Rwanda ratified it.
The agreement is a leap forward towards Kenya-European Union trade in goods, development and sustainability. The EU is Kenya’s second largest trading partner and Kenya’s most important market destination. The total trade between Kenya and the EU was 3.3 billion pounds in 2022, a 27% increase from 2018. In 2022, the EU was Kenya’s top market destination with 16% of 2022’s total exports followed by Uganda at 12% and the USA at 8%.
Kenya’s exports to the European Union are 1.2 billion pounds and are mainly comprised of flowers, vegetables and fruits while Kenya’s imports from the EU amount to 2.02 billion pounds and are mainly comprised of chemical products, mineral products and machinery.
The EPA between the EU and Kenya is therefore a significant milestone and is the first agreement of a kind with an EAC nation.
What does Kenya stand to gain from the Kenya-EU Economic Partnership agreement according to the European Commission.
1.Trade and investment, opportunities for business in the EU and Kenya
Kenya stands to gain duty free access to the European Union market for her exports apart from firearms. On this note, the EU will also export some products to Kenya thus creating an environment for trade, investment and product diversification.
2. Agriculture, industrial development and diversification of trade
Provisions on agriculture will aim at sustainable agricultural development, including food and nutrition security, rural development, including the sustainable use and management of natural and cultural resources, and income and job creation in the agricultural sector in Kenya. These measures will guarantee that the EU will not apply export subsidies for agriculture products, even in times of market crisis.
EU development assistance, through trade capacity-building measures, will support farming and rural employment, and farmers' capacity to comply with agricultural standards. This alignment of standards will make it easier to comply with the requirements necessary to bring those products into the EU and open trading opportunities in the agricultural sector.
3.Trade and sustainable development
The agreement includes a dedicated chapter on Trade and Sustainable Development that covers labour, gender equality, as well as environmental and climate matters. This includes the respect and promotion of the International Labour Organization fundamental rights, and the implementation of UN standards and obligations to prevent gender discrimination and support women’s empowerment.
It also commits the parties to the implementation of multilateral environmental agreements (e.g. the Paris agreement on climate change), and contains obligations to combat illegal wildlife trade, illegal logging, and illegal, unreported and unregulated fishing.
4.Implementation and monitoring
The agreement will offer the possibility of adding new areas once Kenya is ready to take up such commitments. For instance, provisions on trade in services, competition policy, investment and private sector development, intellectual property rights, transparency in public procurement could be envisaged to be added within five years following the entry into force of the deal.
Kenya is now in a great position to leverage on the EU market access to diversify her export products. The Kenya Export Promotion and Branding Agency is keen on undertaking market research in Europe to have a better understanding of product specification and embark on training and capacity building initiatives with the aim of empowering our local SMEs.
Kenya can claim a share of the 440 million consumers in the European Union. The nation is embarking on value added initiatives across the exports value chains on tea, coffee, avocado, fruits and flowers all which have ready markets in the European Union. Recently, the leading export agency through a collaboration with Open Gate Sweden recruited 10 SMEs in the three promising products namely nuts and seeds, herbs and spices, and tea and took them for a market exploration trip to Stockholm, Sweden. The SMEs were able to create business linkages and to understand customer preferences in Sweden before embarking on products exports.