Kenya moves to implement trade deal with EU as neighbours lag

European Council President Charles Michel (right) welcomes President of Kenya Uhuru Kenyatta

European Council President Charles Michel (right) welcomes President of Kenya Uhuru Kenyatta prior to a meeting at the European Council headquarters in Brussels, on June 21, 2021.  

Photo credit: Olivier Hoslet | POOL | AFP 

Kenya will begin implementing a key trade deal with the European Union (EU), after partners in the East African region allowed Nairobi to go first.

The revelations emerged on Monday night as President Uhuru Kenyatta toured Brussels, the Belgian capital that also hosts the headquarters of the European bloc. 

A communique released after the meeting with EU chiefs indicated Kenya will be allowed to move forward with implementing the agreement, even after EAC member states hold reservations.

“Trade relations between Kenya and the European Union are an important underpinning of the Strategic Dialogue and the two partners will seek ways to strengthen their cooperation in this field,” said a joint statement issued after the two sides agreed on implementing relations under the Strategic Dialogue Framework.

“[This will be through] the implementation by Kenya and the European Union, based on the principle of 'variable geometry', of the Economic Partnership Agreement between the European Union and the East African Community.”

The Strategic Dialogue Framework, the communique said, will be based on “solid bilateral and multilateral partnership between the European Union and Kenya and interest to mutually cooperate.” 

The two sides will seek to enhance cooperation on political, economic, governance and human rights issues.

And Prof Jacob Kaimenyi, Kenya’s ambassador to the EU, said Kenya wants to strengthen the way it trades with the bloc, without hurting its obligations under the East African Community (EAC).

'Hurt their industries'

All EAC member states were supposed to sign the Economic Partnership Agreement with the EU. But after four years of waiting, only Rwanda and Kenya signed, with other countries citing reservations about the possibility of the deal hurting their local industries.

“We want to move ahead because there are two parallel systems here,” Prof Kaimenyi said, referring to the negotiations under the EAC and the option to enter the agreements at various times, formally known as variable geometry.

“That matter is going to be raised and it is a matter which is very important to us. For a long time, we have been saying there must be a strategic way of dealing with Kenyan issues with the European Union.”

Prof Kaimenyi spoke in an interview with PSCU on the day the President met with King Philippe of Belgium, and later with European Council President Charles Michel. 

President Uhuru Kenyatta Brussels King Philippe Belgium

President Uhuru Kenyatta with His Majesty King Philippe of Belgium when they held talks at the Royal Palace in Brussels.

Photo credit: Courtesy | PSCU

Prof Kaimenyi suggested Kenya was also discussing a tax agreement with Belgium to “make it easier for us to do business.”

“We want to encourage a situation where it is made easier, so that there is no double-taxation. That matter is going to be addressed here,” he said.

In February, EAC member states had endorsed Kenya’s proposal for individual accession to a trade deal with the EU, seeing it as a cure for wrangles over the agreement.

First tabled in 2016, only Kenya and Rwanda had signed and ratified it, while Uganda, Tanzania, Burundi and South Sudan dragged their feet, arguing it could damage their nascent industries.

Variable geometry in international trade means countries committed to a specific agreement involving trading blocs may be allowed to proceed implementing it while members with reservations get time to think about the deal.

In the EAC, however, the Economic Partnership Agreements between the bloc and the EU were to be valid only after all members signed on.

An EAC summit in Kampala in 2018 had agreed in principle to try variable geometry even though Uganda had raised reservations about the potential for such a move to weaken the strength of the bloc and ambitions for more integration.

Kenya, however, says this arrangement will allow the EU to disburse development funds for those who join, while it negotiates with the rest.

Kenya wants to sustain its market in the EU for coffee, tea and fresh flowers. The EAC exported goods worth $2.29 billion in 2019 and imported $3.86 billion from the EU.
And the EU buys 30 per cent of its fresh flowers from Kenya, making it an important horticultural market for Nairobi. 

However, as Kenya is the only country in the region considered to be a lower middle-income economy, Tanzania, Uganda, Rwanda and Burundi, all categorised as least developed countries, could still be allowed to export their goods duty-free and quota-free under an arrangement called ‘everything but arms’.