By Matthew Magare
Kenya signed an Economic Partnership Agreement (EPA) with the UK on 8 December 2020, which took effect on 1 January 2021.
The EPA is part of the UK’s transitional efforts following Brexit. The Agreement is based on the text of the Economic Partnership Agreement between the East African Community Partner States and the European Community and its member states (the “EAC-EU EPA”).
The EPA provides for duty-free and quota-free access of Kenya goods into the UK market. Some of Kenya’s leading imports to the UK include tea, coffee, spices, vegetables, live trees and flowers. The value of Kenya’s exports to the UK as at 2019 is GBP 607 million. These exports will maintain tariff-free market access to the UK.
Concomitantly, UK business exporting goods into Kenya will continue to enjoy tariff-free access. Some of the UK’s primary exports to Kenya include, vehicles, machinery, mechanical appliances and pharmaceutical products. According to a Parliamentary Report presented by the Secretary of State for International Trade to the UK Parliament, the total value of UK exports is GBP 800 million.
The coming into effect of the EPA means Kenya maintains preferential access to the UK market. A 2007 European Commission Sustainability Impact Assessment concluded the net impact of EPA’s on developing countries’ economies was positive. The existence of a free trade agreement with the EU led to job creation and increased GDP. The recently signed EPA shall ensure these benefits continue to be maintained.
Exporters wishing to benefit from the provisions of the EPA should be cognizant of the rules of origin. In free trade agreements, rules of origin are used to determine the economic nationality of a good. Goods can be wholly obtained, which means they are wholly obtained or produced entirely in a single country, for example, live animals or minerals. Goods can also be deemed to originate from the exporting country based on substantial transformation. Substantial transformation means that the goods are made from material which comes from more than one country, and the origin is defined as that of the country where the goods were last substantially transformed.
The recently executed EPA will sustain development benefits for Kenya. These range from creating new business, trade and investment opportunities, to positive labour market impacts and support for farmers and consumers.
Our firm maintains an active international law trade practice. We are a regular contributor on the International Trade section of Afriwise. We advise clients on international trade provisions including export and import procedures and benefits available under FTAs. We are also versed in trade remedies including anti-dumping, countervailing duty and safeguarding measures available under Kenyan law.