Brexit: Kenya gets more time to trade

Kenyan roses are prepared for export to the European market. A new deal will ensure that trade between the UK and Kenya is not interrupted by Brexit. FILE PHOTO | NMG 

In Summary

• Under two-year deal, the UK has committed to provide duty-free, quota-free access to Kenyan goods exported to the UK.
• The British government intends to replicate the existing trade deals that the EU has with more than 70 countries.
• UK is the second-largest export destination for Kenya's cut flowers after the Netherlands

By JAMES ANYANZWA
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Kenya has reached an agreement to continue trading with Britain under preferential terms even after the UK’s exit from the European Union.

Under the deal, the UK has committed to provide duty-free, quota-free access to Kenyan goods exported to the UK.

The two-year deal is expected to give the UK government time to work on new trade agreements to replace the current European Union pacts.

Other East African nations, which are classified as Least Developed Countries (LDCs) unlike Kenya which is a Lower Middle Income Country, will also continue trading with the UK under the duty free, quota free arrangement with the EU after the anticipated October 31 Brexit.

The British government intends to replicate the existing trade deals that the EU has with more than 70 countries: The UK would lose the deals in the event of immediate exit from the EU on October 31 without a 21- month transition period.

Under the current EU deal however, countries in the same category as Kenya will be expected to implement tariff liberalisation on imports within a specified timeline, with the exception of some domestically sensitive products.

The UK may also adopt, with modifications, some of the current EU policies in its trade relations with the world.

“I can confirm for Kenya. It is a unilateral decision of the UK. No agreement was signed. UK just let us know,” Kenya’s Principal Secretary in the department of trade Chris Kiptoo told The EastAfrican.

The EAC member states are currently navigating a rough terrain of stalled economic partnership agreements (EPAs) with the EU, after Tanzania, Uganda and Burundi refused to sign the pact citing varying economic and political interests.

EPAs give EAC products 100 per cent access to the EU market, while only 82.6 per cent of imports from the EU by value are allowed into the EAC market.

The other 17.4 per cent, which is largely agricultural and dairy products, are labelled as “sensitive” products and are set to be progressively liberalised within 15 years from the time the agreement enters into force.

The status of Uganda, Rwanda and Burundi as LDCs has given them unrestricted preferential market access to the British market.

Without such a trade deal in place for Kenya, the UK would have to set trade tariffs according to rules set by the World Trade Organisation’s Most Favoured Nation guidelines after Brexit. Kenya constitutes about 0.1 per cent of UK’s trade, exporting products like flowers, vegetables, fruit, tea and coffee.

UK is the second-largest export destination for Kenya's cut flowers after the Netherlands, buying almost 18 per cent of the flowers produced in the country.

On September 10, the UK initialled an EPA with the Southern African Customs Union and Mozambique.

“This trade agreement, once it is signed and takes effect, will allow businesses to keep trading after Brexit without any additional barriers,” said Liz Truss, UK’s International Trade Secretary.

The agreement allows businesses to continue to trade on preferential terms with South Africa, Botswana, Lesotho, Namibia, eSwatini and Mozambique.

Trade between the UK and SACU+M nations was valued at $12 billion last year. The UK exported machinery and mechanical appliances worth $507 million in 2018, motor vehicles worth $415 million, and beverages, including whisky, worth $168 million.

UK Prime Minister Boris Johnson is committed to leaving the EU on October 31, despite MPs passing a law that could extend the Brexit deadline into next year.

Overnight, the UK would leave the single market and Customs Union—an arrangement to help trade between EU members by eliminating checks and taxes on imports.