Kenya and the UK in December signed a trade agreement that aims to promote regional trade and boost economic development for the two countries.
The agreement will ensure all Kenyan exports to the UK will have duty-free access to the UK market. Kenya’s top exports to the UK include tea, coffee, vegetables, fruits, and flowers.
Once signed and ratified by both sides, Kenyan exporters of flowers and other fresh vegetables will continue accessing the UK market under a duty free, quota-free arrangement, just the way they did when the UK was in the European Union.
The trade agreement is important as it will support Kenyan businesses that export to the UK by giving tariff free access to the highly competitive UK market. The deal will also give UK exporters access to the Kenyan market.
“This trade deal will build on the UK and Kenya’s historic ties and is the perfect springboard to increase our trading in future,” said UK’s Minister for Africa James Duddridge, echoing sentiments by Trade Minister Ranil Jayawardena, who signed the deal.
“Today’s agreement is also a first step towards a regional agreement with the East African Community, and I look forward to working with other members to secure an agreement to forge ever-closer trading ties,” said Jayawardena.
By negotiating this deal, Kenya was killing two birds with one stone. The UK preferred negotiating with the entire EAC member states to secure a wider market. But other EAC member states preferred negotiations to begin in 2021 after elections in Tanzania and Uganda. Burundi and South Sudan did not even show up at meetings.
But only Kenya could be punished if there was no deal by January, because it is the only one categorised as a Lower Middle Income Economy (Tanzania joined this year but will not be formally declared one until after three years) and would be subjected to taxation in UK markets.
As a compromise, UK and Kenya agreed on some geometric asymmetry, which allows ready partners to negotiate while leaving room for others to join later.
“Kenya adopted this (bilateral) approach because of the Brexit transition period’s fast-approaching deadline and the need to secure duty-free and quota-free market access to the UK,” explained Kenya’s Trade CS Betty Maina.
In 2019, Kenya’s exports to the UK surpassed 254 million pounds (KSh37.6 billion) while UK’s exports to Kenya amounted to 815 million pounds (KSh120.7 billion).
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