What you should know about Kenya-EU Economic Partnership as it takes effect

• The long-awaited Kenya-European Union (EU) partnership entered into force on Monday, July 1, 2024, marking a major milestone
• Trade CS Rebecca Miano said the Economic Partnership Agreement (EPA) aimed at unlocking new economic opportunities for Kenyan exports
• EU Ambassador to Kenya Henriette Geiger commended the commencement of the EPA, noting that it is a major driver for job creation

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TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenya-European Union Economic Partnership Agreement has been implemented.

President William Ruto (l) pose for a photo with EU Representative for Foreign Affairs Vice-President Josep Borrell. Photo: Josep Borell. Source: Twitter

The EPA took effect on July 1, 2024, marking a major milestone in the EU-Kenya Strategic Partnership.

Speaking exclusively to TUKO.co.ke, European Union Ambassador to Kenya Henriette Geiger explained that the EPA is a key driver in the Kenyan government's job creation agenda.

"We welcome the agreement coming into force. It has the potential to be a strong driver for job creation for the youth in Kenya," said Geiger.

Trade Cabinet Secretary (CS) Rebecca Miano noted that the EPA opens duty-free and quota-free access for all Kenya's exports to the USD 18 trillion EU market.

"This will boost bilateral trade in goods, increase investment flows, strengthen the ties between reliable partners and facilitate mutually advantageous economic relations in a sustainable manner including stimulating job creation and economic growth," said Miano in a press statement published on Monday, July 1.

Miano said the Agreement will unlock new economic opportunities for Kenyan exports.

What's the value of EU-Kenya trade?

Total trade between the EU and Kenya reached over €3.5 billion (KSh 482.4 billion) in 2023, an increase of 16% compared to 2018.

It is balanced, with a €768 million (KSh 105.8 billion) slight surplus in favour of the EU.

The EU imports 10% of Kenya's vegetables, fruits, and flowers, while Kenya gets mainly mineral and chemical products and machinery from the union.

Why Kenya entered deal with the EU

According to the Kenya-EU agreement, the EPA was explicitly integrated as a key deliverable of the EU-Kenya Strategic dialogue, launched in June 2021, and it is a crucial component of engagement between the two partners.

The EPA aims to implement the provisions of the EU-East African Community (EAC) EPA that was concluded in 2014 and will be open for other EAC countries to join.

It will boost bilateral trade in goods and investment flows and contribute to sustainable economic growth.

The agreement will also be accompanied by trade-related development cooperation to support economic growth and job creation.

The Kenya-EU EPA foresees asymmetric removal of tariffs, liberalising access to the EU market to allow in all goods from Kenya (except arms) without tariffs or quotas.

Will Kenya-EU EPA support agriculture?

The EPA also focuses on sustainable agricultural development, including food and nutrition security, rural development and job creation in the agricultural sector.

The EU committed not to apply export subsidies and engagement in agriculture and food security, including transparency related to respective domestic policies.

EPA allows Kenya to protect farmers of sensitive agricultural products, either by excluding them from tariff cuts or by keeping the option of triggering safeguards in case of unforeseen, sharp and sudden increase of imports from the EU.

Is EPA supportive of industrial growth in Kenya?

The provisions in the deal will enhance the business and investment environment in Kenya, generating new trading and investment opportunities.

The free access of Kenya into the EU market without any time limit and the long-term free access of EU products to the Kenyan market increase incentives to invest in the East African country.

It also provides for labour standards, climate change and biodiversity, and gender equality. The EPA prevents both parties from lowering labour and environmental standards to attract trade or investment.

Kenya committed to liberalising the equivalent of 82.6% of imports from the EU by value.

"Under Kenya’s current tariff regime, more than half of these imports are already imported duty-free, not only from the EU but from the entire world. The remainder will be progressively liberalised within 15 years from the moment the EPA enters into application. 2.9% of it will be liberalised within 25 years," said the EPA implementation team.

Is EPA supportive of climate change solutions?

Kenya decided to exclude from liberalisation various agricultural products, wines and spirits, chemicals, plastics, wood-based paper, textiles and clothing, footwear, ceramic products, glassware, articles of base metal and vehicles.

In December 2023, EU and Kenya officially inked an Economic Partnership Agreement (EPA) designed to elevate trade between Kenya and the EU.

President William Ruto also sealed landmark deals worth a staggering KSh 680 billion (approximately $4.48 billion) in green energy investments at the COP 28 in Dubai.

What to know about Kenya's trade ties

• In March 2023, the UK-Kenya Economic Partnership Council signed its first trade agreement.
• US-Kenya trade talks are focused on pursuing high-standard commitments in a wide range of areas, including foreign workers' support.