Economy

British MPs delay nod of Kenya, UK trade deal over EAC disputes

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President Kenyatta meeting with UK Prime Minister Boris Johnson. FILE PHOTO | NMG

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Summary

  • The British Parliament is seeking more time to ratify a new trade deal between Kenya and the UK, exposing tensions over the move between Nairobi and its East Africa Community (EAC) partners.
  • The House of Lords -- Britain’s upper house of Parliament -- backed a proposal by its International Agreements Committee for a 21-day extension of the initial February 10 ratification deadline.

The British Parliament is seeking more time to ratify a new trade deal between Kenya and the UK, exposing tensions over the move between Nairobi and its East Africa Community (EAC) partners.

The House of Lords -- Britain’s upper house of Parliament -- backed a proposal by its International Agreements Committee for a 21-day extension of the initial February 10 ratification deadline amid concern that the UK government had not addressed risks of the new pact with Kenya and its impact on regional cohesion in East Africa.

The delay proposal is also attributed to the fact that the UK government has not explained what other options it considered for ensuring continuity of trading arrangements with Kenya and why it chose not to replicate the EU’s Market Access Regulation (MAR) that guided economic partnerships between the two sides prior to Britain formally ditching Brussels in December 2020.

“...Lord Goldsmith to move to resolve that this House calls upon Her Majesty’s Government, in accordance with section 21 of the Constitutional Reform and Governance Act 2010, to extend the scrutiny period for the Agreement establishing an Economic Partnership Agreement between the United Kingdom of Great Britain and Northern Ireland, of the one part, and the Republic of Kenya, a Member of the East African Community, of the other part, laid before the House on 17 December 2020, by 21 sitting days,” said the motion relating to the treaty the UK is negotiating with Kenya.

The ratification of the deal by both the British and Kenya parliaments is mandatory.

Kenya’s Trade and Industrialisation Cabinet Secretary Betty Maina sought to play down the delayed ratification of the trade deal with Britain, terming it ‘an administrative’ matter.

“That’s normal process for ratification. Even our parliament took time to review,” she said in a response to queries by the Business Daily.

A review of the report tabled by the UK Parliament’s International Agreements Committee, however, exposed disagreements between and its EAC partners over Nairobi’s bilateral trade with Britain.

“Concerns have been expressed that the UK-Kenya Agreement may have disruptive political and economic impacts on the East African Community, and during negotiations between the UK and Kenyan governments in 2020, other EAC members expressed opposition to the two countries’ bilateral decision to roll over the EU-EAC EPA, expressing their preference to renegotiate a future deal as one trading bloc” the UK parliamentary committee noted.

Some civil society groups have also argued that the UK-Kenya agreement could disrupt regional trade within the EAC because it has been a customs union since 2005, applying zero customs duties on goods and services within the bloc and a common external tariff to imports from countries outside of the EAC.

Kenya is pursuing a new bilateral trade deal with the UK post-Brexit, hoping to cushion its economy after partner states of the EAC failed to conclude an Economic Partnership Agreement (EPA)with the EU. Only Kenya signed and ratified the deal.

Until the end of the Brexit transition period, Kenya enjoyed duty-free, quota-free access to the UK’s markets through the EU’s MAR. As the UK did not replicate the MAR at the end of the transition period, Kenya would have faced an increase in tariffs without a trade agreement or other measures in place.

The UK-Kenya agreement has been provisionally applied since January 1, 2021, pending the completion of full ratification procedures. On December 23,2020, the parties agreed to a memorandum of understanding (MoU) which recognised that the necessary domestic procedures required to give effect to the UK-Kenya agreement would not have been completed by December 31, 2020.

The MoU allows the parties to treat the provisions of the signed agreement as having effect between them until its formal entry into force. It states that the parties will use their best endeavours to bring the agreement into effect within three months of the MoU coming into effect.

In the half-finished EPA deal, the EU allowed Kenya interim duty-free market access although this cannot be relied on until other remaining partners of the EAC put ink to paper to make it binding.