Kenya-UK trade deal won’t harm EAC

I have taken a quick look at publicity material out of a recent media briefing to the Ministry of Trade and Industry on the recently signed trade agreement between Kenya and the United Kingdom. The pertinent issues and questions that arise are the following:

Is this trade agreement likely to lead to a significant increase in our access to British markets in any significant way?

Today, Kenya exports flowers worth $105 million to the UK annually. Is it conceivable that flower export volumes will increase substantially following the signing of the new trade deal?

We are told that the UK’s annual import market for textiles and apparel is valued at $27.7 billion, with Kenya selling a mere $2 million worth of products.

This is notwithstanding the fact that the Ministry of Trade and Industry projects in the documents it tabled at the media briefing that with the right incentives and policies, Kenya has the potential of exporting approximately $1 billion worth of textiles to the UK annually.

Is it realistic to presume that the new trade arrangement with the UK will stimulate this sector to surpass the performance of the existing EPZ programme?

The point is this. Improved access to the UK market can only help you when you have demonstrable capacity to ramp up export capacity in a sector where there is room and opportunity for significant trade-offs.

I don’t see the wherewithal within government to execute massive investment in export capacity in the near future. If anything the new trade arrangement has not altered market access in any major ways.

The truth of the matter is that when you examine what we have signed more closely, the rules governing trade and investments relations with the UK have not changed in any significant ways.

EXISTING EPA

Actually, what Kenya and the UK did was to domesticate the terms of the existing Economic Partnership Agreement (EPA) the European Union (EU) signed with the East Africa Community in 2016 — legally scrub the existing text — and to turn it into a bilateral agreement between the UK and Kenya with no reference to the EU.

The parties had an opportunity to negotiate a bilateral free trade agreement (FTA) but the circumstances caused by Brexit would not allow it.

Mark you, according to the terms of the Brexit withdrawal agreement, the UK remains part of the EU Customs Union and EU Single Customs Territory until January 1, 2021.

Signing a deal became urgent for Kenya because the country needed to access the UK market beyond 2020 when EU regulations will cease to apply to the UK.

Kenya had either to negotiate a bilateral deal with the UK or face the consequences of trading with the UK under manifestly disadvantageous WTO trading terms.

Making things even more complicated, Kenya could only negotiate a post-Brexit arrangement with the UK with the concurrence of Kenya’s regional partners under the East African Customs Union.

Although most of the EAC partner states agreed that copying and pasting the text of the existing EAC-EPA with the EU was the right thing to do, Uganda demanded that the transition period be extended to December 31, 2021.

Tanzania asked for postponement on the grounds of impending national elections. Kenya decided to go ahead to negotiate a bilateral deal with the UK.

Which begs the question: did Kenya betray EAC partner states by deciding to go solo in negotiating a bilateral agreement with the UK? The answer is no.

Apart from Kenya, all other members of the EAC are deemed Least Developing Countries, meaning that they will still be able to access the UK markets on non-duty free basis even after EU regulations will have ceased to apply to the UK.

If anything, the EAC Customs protocol allows members states to negotiate bilateral deals with third parties even without the concurrence of everybody.