Billions at stake as Kenya negotiates delicate trade pacts

Passengers headed to Mombasa from Tanzania queue to get approval from the immigration department at the Taveta One Stop Border Point (File Standard)

NAIROBI, KENYA: Kenya is standing on shaky ground in terms of bilateral and multilateral trade treaties it has signed with partners owing to some standoff.

Since late last year, the Principal Secretary for Trade Chris Kiptoo has been holding high-level meetings with foreign representatives to make sure Kenya doesn’t lose out on preferential trade agreements signed in recent years.

This comes in the wake of changing global geopolitics and shifting power alliances after US President Donald Trump rose to power, and the UK’s intention to quit the European Union (EU) under “Brexit”.

Dr Kiptoo last week said his ministry will be holding a meeting with US officials to discuss the future of the African Growth and Opportunity Act (Agoa) under The National Trade Negotiation Council.

This follows recent pronouncements by Trump that his administration is considering reviewing Agoa and cutting down on preferential treatment that member States such as Kenya have been enjoying.

“We hope Trump keeps Agoa going. Former President Barrack Obama extended it by 10 years, and I am inclined to believe Trump will stick to that,” Kiptoo said.

“After that, Kenya and other East African Community (EAC) countries can negotiate a new arrangement with the US which maybe could be a free trade arrangement.”

 British delegation

The talks come after Trump recently reviewed the Trans-Pacific Partnership agreement - a free-trade agreement between the US and 11 other countries that border the Pacific Ocean, and rejected it.

Last Friday, Dr Kiptoo again held similar talks in Nairobi with a British delegation comprising of Sue Kitchens, the Deputy British High Commissioner to Kenya, and Graham Show, Chairman British Chamber of Commerce, the Kenyan Chapter.

The talks were supposed to explain Kenya’s stand on Brexit and the implications that it will have on trade and investment relations between Kenya and Britain. “Kenya is keenly keeping track of the on-going Brexit negotiations as the outcome is expected to have far reaching implications on the country’s economy. It is not certain whether or not the post- Brexit UK will continue to be party to the EU-EAC-EPA by the virtue of having signed the EPA in its own individual capacity,” Kiptoo said.

UK is playing its cards close to its chest, and is not letting it be known whether Kenya’s and other EAC member State’s exports will continue enjoying entry into the British market duty free and quota free after March 2019 when it finally exits the EU.

UK is one of the most significant trading partners of all the EAC Members in the EU bloc. In particular, 27.8 per cent of Kenya’s exports to the EU are destined for the UK market.

UK is the fourth leading export destination for its products, coming after Uganda, Netherlands and the US. Trade, inclusive of services, between Kenya and the UK was valued at over £1.5 billion in 2016.

Tanzania’s refusal

British investments in Kenya were valued at around £2.5 billion (Sh357.5 billion) in 2016. At present, there are over 220 British firms that have invested in Kenya - in almost all sectors of the economy.

Some of these companies include Barclays Bank, Standard Chartered Bank, GlaxoSmithKline, ACTIS (formerly CDC Capital Partners), De La Rue, Unilever among others.

Another worry that is painfully pricking the government’s back Tanzania’s continued refusal to sign the Economic Partnership Agreement deal between EAC countries and the EU. This has thrown into turmoil the agreement between the EU and the EAC for access to EU markets duty-free and quota-free is concerned.

Kiptoo said Tanzania has agreed to engage Kenya in talks. This is after similar talks held in Dar Es Salaam last November failed to bear fruit.

Failure to ratify EPA will see Kenya lose out - being its biggest market for flowers, tea, coffee, fruits and vegetables. “It is a good thing that Tanzania has accepted these talks again between January 27th and 28th and I hope this time, we can at last sort our trade issues once and for all.”