Assessing the Implementation of the Kenya-EU EPA and Its Broader Economic Impact

Background
The Kenya-EU EPA emanated from earlier efforts by the EU and East African Community (EAC) to conclude a bloc-to-bloc EPA. The negotiations for the EU-EAC EPA were finalised on 16 October 2014. The initial regional EPA was designed to coordinate economic cooperation between EU and EAC members states at a regional level. However, the EPA failed to take effect because it only garnered signatures from Kenya, Rwanda and the EU despite requiring the signature and ratification by all EAC member states to enter into force.

Although the initial attempt was unsuccessful, Kenya actively pursued the EU-EAC Economic Partnership Agreement (EPA ). In the absence of the EPA, by January 2017, trade tariffs between the member states of the EAC and the EU would inevitably rise. The change in tariff regime would not have substantially affected most EAC member states, as their status as Least Developed Countries would grant them continued duty-free quota-free entry to the EU market under the Generalised Scheme of Preferences, under the ‘everything but arms’ provision. However, as the only Lower Middle Income Country in the EAC, Kenya did not qualify for this preferential tariff treatment designated for Less Developing Countries.

During the 21st Ordinary EAC Summit of Heads of State held on 27 February 2021, the EAC Heads of State recognised the importance of the EPA to select EAC member states and agreed to allow EAC member states to bilaterally engage with the EU in negotiations to conclude an EPA based on the principle of variable geometry, which allows Partner States in an integration bloc to implement integration projects at different paces. Building off this decision, Kenya and the EU launched a strategic dialogue and on 19 June 2023 announced the conclusion of political negotiations on a bilateral EPA, which entered into force on 1 July 2024.

The EPA remains open for accession by other EAC member states. Furthermore, it contains a rendezvous clause to include additional provisions once Kenya or, upon accession, any other EAC member state, is prepared to take up commitments in areas such as trade in services, competition policy, investment, and private sector development, amongst others, within five years following the entry into force of the EPA.

Implications for Kenya-EU Trade Ties
The EU is Kenya’s most important export market. Exports from Kenya to the EU amounted to EUR 1.2 billion in 2022 which was 16 percent of the total exports for the year. The exports primarily consist of vegetables, fruits, and flowers. The EPA is expected to propel trade flows in the following ways:

1. Duty-free and quota-free access to the EU market
   The most evident benefit for Kenya exporters is the duty-free and quota-free access to EU markets immediately upon the entry into force of the bilateral EPA. Kenya’s export tariff system to the EU has shifted from the interim Generalised Scheme of Preferences provided by the original EU-EAC EPA, set to end in 2027, to the new EPA. The bilateral EPA guarantees stability and consistency for Kenya’s preferential tariff arrangements when exporting to the EU under an ‘everything but arms’ approach.
2. Sustainable agricultural development in Kenya
   Kenya primarily exports agricultural products to the EU. The agriculture provisions of the EPA are intended to promote sustainable agricultural development, with income and job creation in line with the EU Green Deal. Further, the EU will provide development assistance to build the capacity of Kenyan farmers to enable them to comply with the EU import standards more comprehensively.
3. Trade and sustainable development
   The Kenya-EU EPA is the most ambitious EU trade agreement with a developing country in terms of sustainability provisions on climate action, labour rights and environmental protection. The EPA dedicates an entire chapter to Trade and Sustainable Development with binding and enforceable commitments, covering fundamental labour rights, gender equality and the implementation of obligations under multilateral environmental agreements.

While the EPA offers significant opportunities, it also presents challenges that require careful consideration. For example, Article 14 (4) contains provisions that obligate Kenya to extend any favourable treatment it grants to exports from major trading economies to the EU. Given the broad definition of a “major trading economy” in the EPA, this could encompass a wide range of countries and trading blocs. Such a requirement may influence Kenya’s ability to fully tailor its trade agreements with other significant partners to align with its unique economic interests and priorities.

The EPA aims to align Technical Barriers to Trade (TBT) between the parties, as outlined in Article 45, and the EU commits to helping Kenya develop a harmonised framework for Sanitary and Phytosanitary (SPS) measures under Article 93. However, these provisions overlook the ongoing efforts to harmonise TBT and SPS measures across Africa under the African Continental Free Trade Area (AfCFTA) Agreement. As a result, Kenya may face conflicting obligations, leading to inefficiencies, increased administrative burdens, and challenges in meeting both sets of requirements.

Should you have any questions regarding the information in this legal alert, please do not hesitate to contact, Daniel Ngumy and Luisa Cetina.

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Contributors
1. Bettina Okinyi – Associate
2. Mdathir Timamy – Associate
3. Mark Gitau – Intern