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Following several debates, the Kenyan Parliament on 9 March 2021 finally ratified the Kenya-UK Economic Partnership Agreement (EPA) which seeks to ease long-term trade between the two countries for a 25-year duration. Through an explanatory memorandum analysing the EPA, some of its expected benefits include an increase in market access to the UK, greater foreign direct investment as well as a gradual opening of Kenyan markets.
The EPA was initially signed on 3 November 2020 in order to continue the duty-free, quota-free preferential treatment of goods that Kenya and the UK had enjoyed pre-Brexit. Subsequently, on 23 December 2020, Kenya and the UK agreed to a Memorandum of Understanding (MoU) which recognised the domestic ratification processes required to give effect to the EPA. The MoU stated that Kenya and the UK should use their best endeavours to bring the EPA into effect within three months of the MoU coming into effect. Under conditions of the MoU, Kenya and the UK had been provisionally applying the EPA since 1 January 2021.
Setback in Ratification of the EPA
The EPA was laid before the British Parliament on 17 December 2020, with the scrutiny scheduled to end on 10 February 2021. However, the British Parliament sought a 21-day extension of the scrutiny period over questions around regional tension between Kenya and the East African Community (EAC) Partner States, as well as the issue of whether the UK Government had considered other options to continue trading arrangements with Kenya such as a replication of the EU Market Access Regulations.[i] Upon lapse of the 21 days on 2 March 2021, the British Parliament ultimately endorsed the EPA despite scrutiny from some of the British MPs on certain provisions of the EPA, including a five-year timeframe from ratification for the enforcement of transparency in public contracts and tenders which was seen as unduly long. The EPA provides that other trade-related issues, such as competition policy, intellectual property rights and private sector development, will be negotiated within five years after ratification. For the UK, the EPA is a significant development in the UK’s foreign engagement strategy post-Brexit.[ii]
The Kenyan Parliament similarly delayed ratification of the EPA due to concerns surrounding reports being tabled before it that did not contain necessary annexures on types of goods, relevant customs details as well as joint statements from Kenya and the UK. The Kenyan Parliament was only willing to ratify the EPA once it was fully aware of its details. Furthermore, the Kenyan Parliament had also queried the current tensions arising from negotiating a trade deal without other EAC Partner States. More specifically, Kenyan Parliamentarians posed the question of whether negotiating a separate trade deal with the UK would undermine the EAC as a whole and also raised concerns about losing out on tax revenue due to the influx of UK imports which would be subject to lower tariffs.[iii]
Inadequate public participation in the negotiation phase of the EPA was also a concern raised by the Kenyan Parliament. This was also the issue of contention in a lawsuit that was jointly filed by the Kenya Small-Scale Farmer Forum and Econews Africa in the High Court where the petitioners sought to ensure transparency and effective participation before the ratification of the EPA.[iv]
Consensus on Ratifying the EPA
After several sittings and motions relating to proposed amendments to the EPA, the Kenyan Parliament approved the ratification of the EPA, stating that the objective of the agreement is aligned with the Kenyan food security agenda, it will benefit Kenyan farmers, and shield the economy from losing a market of over KES 40 billion (approx. USD 365 million). Parliament noted that the Trade Committee did indeed, through consultation with the private sector and other stakeholders, list sensitive products such as animal and fisheries products which, if imported from the UK, will attract heavy import duty.
The EPA has therefore now been ratified by both Kenya and the UK Parliaments and is currently awaiting an exchange of ratification instruments. As part of the next steps, the Kenyan Parliament will, within 30 days, request the Cabinet Secretary for Industrialisation to prepare the instruments of ratification. The Cabinet Secretary will then deposit the signed treaty with the relevant international body (in this case, the World Trade Organisation) and a copy deposited with the Registrar of Treaties.[v]
It is important to note that the EPA remains open to any other EAC country to join. Article 143 of the EPA enables other Partner States of the EAC to make an accession request to the EPA Council.[vi]
Should you have any queries or need any advice with respect to international trade law, please do not hesitate to contact Atiq Anjarwalla, Daniel Ngumy, Luisa Cetina, or the ALN Kenya International Trade Law Team at [email protected].