Kenyan firms get 12 years to shape up under UK deal

Kenyan manufacturers will get 12 years to grow their capacities to match their UK counterparts once parliaments of the two countries ratify their Economic Partnership Agreement (EPA), the Ministry of Trade has said.

This follows revelation that the trade pact between Kenya and UK will allow the latter to export goods to Kenya duty-free for a period of 25 years in a memorandum accompanying the agreement by Trade CS Betty Maina to the National Assembly.

But in a statement on Monday, the ministry says goods that will be granted free access into the country are those, which currently attract duty of 25 per cent or more, and make up 2.6 percent of the total imports into Kenya and East African Community.  The duty-free access, the ministry says, will take place 12 years after the deal is ratified.

Agricultural and industrial goods are excluded from free-access pact to protect local producers who are limited by the economies of scale.

"It is instructive that goods that attract 25 per cent or more duty when being imported into Kenya and other EAC partner States account for only 2.6 per cent of total trade that was subject to liberalisation under the EPA. Liberalisation of these products commences 12 years after the Kenya-UK EPA enters into force and takes place gradually over 13-year period," the Ministry said.

Finished products

"These are finished products that are considered to have minimal negative impact on Kenya and other EAC Partner States. Any industries that may be producing similar goods in Kenya and other EAC partners, will have 12 years before liberalisation starts to adjust. Requisite capacity and trade defence measures have been anticipated in the EAC-UK EPA for use to mitigate any negative effects to local industries producing similar intermediate products," it said.

In the EPA, Kenya will liberalise 82.6 per cent of its trade with the UK over a 25-year period, but with a moratorium of seven years, after which the free access of UK goods will gradually kick in.

The two countries are top trading partners with over Sh200 billion worth of goods exchanged between them in a year, with machinery, pharmaceuticals, clothing and liquor among the top imports Kenya receives from the UK.