Opinion & Analysis

Could the EU’s trade deal with Kenya strengthen the African Continental Free Trade Area?

In December, the EU and Kenya signed a trade agreement featuring strong provisions on environmental, social and labour standards. Niels Keijzer, Frederik Stender and Tim Vogel write that as Kenya walks the fine line of compliance, the outcome could not only shape the country’s economic landscape but also have implications for Kenya’s role in the African Continental Free Trade Area.

Trade policy is a tough business in today’s competitive global landscape. Despite its considerable experience in this area, the European Union has experienced this first-hand. While the trade agreement between the EU and the Southern American trading bloc Mercosur remains in limbo, the EU’s trade negotiations with Australia collapsed due to differing ideas about market access. Talks on agreements with Indonesia and India are also not going smoothly. A common stumbling block is the EU’s desire to use trade agreements to promote its values and standards in a variety of areas.

Further below the public radar, however, the EU has recently concluded such a “comprehensive” trade agreement – and with a close and growing market. After reaching a political agreement in the summer of 2023, the EU signed a trade agreement with Kenya on 18 December. The agreement will enter into force once the European Parliament has given its consent and the EU and Kenya complete their respective legal procedures.

The agreement
The EU-Kenya agreement features among the EU’s most ambitious trade agreements concluded with developing countries, not just in relation to trade but also with respect to broader objectives. Beyond the conventional focus on tariffs, the agreement encompasses dedicated measures to promote sustainable development, including provisions addressing environmental protection, mitigating and adapting to climate change, promoting gender equality and strengthening labour rights.

The agreement rose like a phoenix after seemingly being blocked for years. Originally concluded in October 2014 as an Economic Partnership Agreement between the EU and the then five members of the East African Community (EAC), the agreement faced persistent obstacles, mainly because Burundi, Rwanda, Tanzania and Uganda had reservations about pursuing a reciprocal trade agreement with the EU. As least-developed countries, these countries already had duty-free market access to the EU as part of the “Everything but Arms” scheme. Following years of consultations, Kenya ultimately opted to forge ahead independently, seeking an exclusive agreement with the EU.

Opportunities and concerns
There is much to gain for the EU in Kenya. Strategically, Kenya is an important gateway to the entire Eastern Africa region and home to a growing tech industry in the “Silicon Savannah”. In the broader context, Kenya is one of Africa’s most vibrant markets and already has trade deals either signed (United Kingdom, derived from the 2014 EU agreement) or in the pipeline (United States and United Arab Emirates). The EU was, therefore, keen not to miss out on Kenya’s market opportunities.

On the Kenyan side, the agreement secures continuous access to EU markets, replacing a temporary arrangement on duty-free exports at the bloc’s discretion. In the medium to long term, Kenya could benefit from EU investment and cheaper access to (industrial) intermediate products, both of which would enable Kenya to further integrate into EU value chains.

There are also critical voices about the agreement. Some fear the agreement could jeopardise not only existing economic integration within the EAC but also under the newer African Continental Free Trade Area (AfCFTA), which was established between 54 African countries in 2018. This is the first trade agreement concluded between the EU and an African country since the AfCFTA was established. The concern is that preferential ties between the EU and Kenya could shift Kenya’s trade patterns away from Africa.

Adding to these concerns, the agreement could become a double-edged sword for Kenya. On the one hand, the inclusion of non-trade chapters could positively advance Kenya’s development in a number of fields, including gender equality, where the country continues to have problems. On the other hand, implementing the sustainability provisions in particular will take up a significant part of the country’s institutional and technical capacity, not least because the agreement includes the means for their enforcement.

Kenya may need to amend domestic laws to meet some of the obligations in the agreement and free up resources and capacity to shoulder its administrative and transparency requirements. For instance, the monitoring capacity for implementation of ILO conventions, which now have greater relevance and binding force, may need to be expanded further. Given finite budgetary and human resources, the Kenyan authorities may face a trade-off between their engagement in the EU-Kenya agreement and their significant contribution to realising the AfCFTA.

Could the agreement strengthen the AfCFTA?
Despite these concerns, from another, more optimistic perspective, the EU-Kenya agreement could have positive implications for the AfCFTA. Negotiations among the participating African Union member states were repeatedly interrupted during the COVID-19 pandemic and the AfCFTA is currently hovering between negotiations and implementation.

Protocols on the more traditional topics such as trade in goods and services and on dispute settlement are already in force. Negotiations on investment, intellectual property and competition policy have also just been concluded. However, overall implementation has been delayed as negotiations on rules of origin for some key products have not yet been concluded. Meanwhile, Kenya is playing a key role in a pilot phase among selected members in certain sectors and is already helping to making it a reality.

Kenya’s accumulated negotiating experience with the EU enables its trade negotiators and experts to influence the ongoing AfCFTA negotiations, for example on issues that go beyond traditional areas of trade agreements, such as youth and gender. Its newly gained knowledge could prove useful for conducting the remaining AfCFTA negotiations in a structured manner and bringing them to a positive conclusion with renewed momentum.

This is certainly conceivable, even in areas for which the AfCFTA currently has no mandate, such as the greening of intra-African trade. The current framework pays limited attention to environmental aspects, although they play a decisive role in the African Agenda 2063 and both civil society and the Secretary General of the AfCFTA, Wamkele Mene, have called for the inclusion of environmental provisions in the AfCFTA.

Given the enormous environmental and climate change-related challenges in many places on the continent, such as land degradation and biodiversity loss, many countries have a vested interest in this topic. Since Kenya has already made progress in incorporating climate action into its national law, the country could play a pioneering role by disseminating more extensive environmental and climate policy instruments from the agreement with the EU.

Is this optimism misplaced? Perhaps. The litmus test for the EU-Kenya agreement lies primarily in its ability to deliver on Kenya’s development. In light of the EU’s objective of concluding similar agreements with other African states or deepening existing ones, the success of the agreement is clearly a shared goal for both signatory parties. A robust partnership, frequent consultations, rigorous monitoring mechanisms and, crucially, EU backing for Kenya that goes beyond the mere making of the agreement are imperative for its success, potentially gearing it towards the achievement of broader objectives.

About the authors:

Niels Keijzer is a Senior Researcher and Project Lead at the German Institute for Development and Sustainability (IDOS). His research interests include EU-Africa relations and the European Union’s policies for international cooperation and development.

Frederik Stender is a Senior Researcher at the German Institute of Development and Sustainability (IDOS). His research focuses on trade policy.

Tim Vogel is a Post-Doctoral Researcher in Economics at the German Institute of Development and Sustainability (IDOS). His work focuses on trade policies in a development context.

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