Kenya and EU Finalize Groundbreaking Trade Agreement

December 19, 2023

On Monday, Kenya and the European Union concluded the signing of a long-negotiated trade agreement aimed at enhancing the exchange of goods between the two markets. This move aligns with Brussels’ efforts to strengthen economic ties with Africa.

The Economic Partnership Agreement ensures that Kenya gains duty-free and quota-free access to the EU, its largest export market. In return, European goods will receive gradual tariff reductions.

This agreement marks the first comprehensive trade deal between the EU and an African nation since 2016. It comes in the wake of substantial investments by China in opulent infrastructure projects across the continent.

The agreement was reached after years of negotiations, concluding in June.

“Although today represents a moment of monumental promise, it is also the beginning of a historic partnership for historic transformation,” Kenyan President William Ruto said at a ceremony attended by European Commission chief Ursula von der Leyen in Nairobi.

“The core of this arrangement is to put real money into the pockets of ordinary people,” added Ruto.

Win-Win Situation

EU Chief von der Leyen described the partnership as a “win-win situation on both sides” and urged other East African nations to join the pact.

“We are deepening trade ties and building up our economic resilience,” she said.

“We are opening a new chapter in our very strong relationship and now our effort should be focused on implementation,” von der Leyen added.

The approval of both the Kenyan and European parliaments is required to ratify the deal and bring it into force.

The European Union highlighted that this agreement represents “the most ambitious economic partnership” it has with a developing country.

The agreement incorporates commitments to sustainable development, encompassing areas such as labor rights and environmental protection, as stated by the EU.

“A dedicated chapter has been included on economic and development cooperation, aimed at enhancing the competitiveness of the Kenyan economy,” the EU said.

According to government data, the 27-nation bloc constitutes more than 20 percent of Kenya’s total exports, primarily in agricultural products such as vegetables, fruits, and the renowned tea and coffee.

EU figures indicate that the overall two-way trade between the markets reached 3.3 billion euros ($3.6 billion) in 2022, marking a 27 percent increase since 2018.

EU Counters China’s Belt and Road programme

In a move to counter China’s Belt and Road program, the EU announced in February that it would boost investments in Kenya by hundreds of millions of dollars through its Global Gateway initiative.

Kenya initially signed a trade deal with the EU in 2016, together with its counterparts in the then-six-member East African Community (EAC) trade bloc. However, most EAC countries did not sign the agreement, preventing it from fully taking effect.

President William Ruto stated that the EAC has now expanded to eight member nations, all of whom are invited to join the new deal.

“This agreement that we are signing today leaves the door open, and I say, wide open, for our EAC partners to join,” President William Ruto said at the ceremony.

Unlike the other EAC members classified as least-developed countries, which allows their exports to maintain access without the deal, Kenya, being a middle-income country, needed to pursue a separate and standalone arrangement.

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