Kenya secures landmark zero-duty trade deal with China

President William Ruto and Chinese President Xi Jinping during bilateral talks at the Great Hall of the People in Beijing, China, on September 3, 2024. [File, Standard]

The government has confirmed that it has secured a preliminary trade agreement with China that will allow 98.2 per cent of its goods to enter the Chinese market duty-free.

This formalises the long-awaited “early harvest” deal designed to narrow a massive and growing trade deficit with Beijing.  The announcement by Trade Cabinet Secretary Lee Kinyanjui marks a decisive step in Nairobi’s strategy to diversify its export markets, even as the country navigates geopolitical pressure from the United States.

The framework concludes months of technical negotiations aimed at gaining a foothold in China’s vast consumer market of 1.4 billion people.

“We are pleased to confirm that these engagements have resulted in a preliminary agreement that allows for 98.2 per cent zero-duty market access for Kenyan goods,” Kinyanjui said in a statement. “This early harvest framework is a monumental progression that signifies China’s commitment to strengthening our trade ties further.”

The deal specifically targets the challenges faced by Kenya as a middle-income country. While Beijing recently announced duty-free offers for several African nations, those provisions primarily applied to least developed countries, leaving Kenya at a competitive disadvantage in the region. This pact is a direct attempt to rebalance a heavily lopsided trade relationship. In 2023, China was Kenya’s largest source of imports, valued at approximately Sh459 billion ($3.12 billion). In stark contrast, Kenya’s total exports to China stood at just Sh29 billion ($197 million).

By eliminating China’s average import tariffs—which can reach 10 per cent on key primary products—the agreement makes Kenyan agricultural exports like specialty tea, coffee, macadamia nuts and avocados more competitive.

“The introduction of zero-duty access will unlock vast economic potential for Kenyan exporters,” CS Kinyanjui said, adding that the deal is expected to generate substantial employment and tangible benefits for the agricultural sector, the backbone of Kenya’s economy.

Despite recent concerns suggesting that the China deal had been “shelved” by Kenya to appease Washington, Foreign Affairs Principal Secretary Korir Sing’Oei had dismissed such claims as “unfounded,” asserting that Kenya sees “no tension” between securing market access in both the East and the West.

The Trade Ministry did not specify an exact implementation date for the new China tariffs, though it noted that the finalisation of bilateral instruments is the last remaining step. For Kenyan farmers and manufacturers, the deal offers a new lucrative market, said.