Economic partnership agreement with Kenya

In “A Stronger Europe in the World”

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State of play

On 29 February 2024, the European Parliament gave its consent to the conclusion of an economic partnership agreement (EPA), that the EU and Kenya had signed on 19 December 2023 (procedure 2023/0338(NLE), rapporteur Alessandra Mussolini, INTA, EPP, Italy),

To fully enter into force, the EPA has to be ratified by the EU and Kenya according to their own ratification procedures. 

What the agreement will change

As soon as the EU-Kenya EPA enters into force, it will immediately provide duty-free, quota-free EU market access to all exports from Kenya, combined with partial and gradual opening of the Kenyan market to imports from the EU. The text of the new negotiated agreement includes binding provisions on trade and sustainable development, and a transparent dispute resolution mechanism. Other EAC countries – including South Sudan and the Democratic Republic of the Congo, which joined the EAC in 2016 and 2022 respectively – can decide to join the agreement. 

Background 

Under the previous ACP-EU Convention (Lomé IV), ACP states benefitted from a preferential tariff system for their trade with the EU. This system was against the 'most favoured nation' principle of the World Trade Organisation (WTO), according to which preferential treatment granted to ACP countries should have been granted to other countries with a similar level of development. In 2000, to make the new ACP-EU Agreement (‘Cotonou’) compliant with WTO rules, a new provision was included, making it possible to negotiate different economic partnership agreements with regional groupings.

This agreement builds on negotiations for an EPA with the partner states of the East African Community (EAC) – at the time: Burundi, Kenya, Rwanda, Tanzania, and Uganda – which were finalised in October 2014. However, the signing of the EU-EAC EPA had been stalled because of discussions within the EAC on the consequences of the EPA for their economies. Except for Kenya, all EAC partner states are least developed countries, and still enjoy duty-free and quota-free access to the EU market. Kenya is the only EAC country to have ratified the agreement, in order not to lose free access to the EU market. The EAC initially envisaged the EU-EAC EPA as a bloc-to-bloc agreement – i.e. the EPA could only enter into force after it had been ratified by all EAC partners.   The negotiations with the East African Community (EAC: Burundi, Kenya, Rwanda, Tanzania, and Uganda) were finalised in October 2014. South Sudan which is an EAC member since 2016 and DR Congo which is an EAC member since 2016 were not part of the negotiations. 

A European Commission's impact assessment found that the agreement would increase the GDP of EAC ‘on average by 0.3 %' and ‘slightly reduce the poverty headcount in EAC countries'. On average, EAC exports to the world would increase by 1.1 % and imports by 0.9 % (the EU share of total EAC imports would grow from 10.6 % to 12.6 %).

Initially the EAC envisaged the ratification as a bloc. However, so far, only Kenya ratified the EPA and Rwanda signed it. The signing of the EPA agreement has been stalled because of discussions within the EAC.  The postponement of the ratification has few consequences for all EAC states but Kenya, since they are least developed countries (LDCs) and will continue to benefit from duty-free quota-free market access into the EU for 'Everything But Arms'.

At their 21st ordinary summit in February 2021, EAC heads of State authorised 'EAC states who wish to do so to commence engagements with the EU' without needing approval from all other EAC members ('principle of variable geometry'). This meant in practice that Kenya, which expressed the wish to individually access the EPA, would be able to move forward in the implementation. On 22 June 2021, Kenya and the EU formed a joint taskforce to prepare a Kenya-EU EPA, and agreed on 18 February 2022 to advance negotiations on an EPA, open for other EAC partner states to join. 

The EU and Kenya concluded negotiations on 19 June 2023. 

The Council endorsed the text on 12 December 2023), following the European Commission's proposals for its signature and conclusion (28 September 2023). 

References

Further reading

Author: Eric Pichon, Members' Research Service, legislative-train@europarl.europa.eu

 

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As of 20/03/2024.