The suspension of the Kenya and European Union trade deal by East African Court of Justice (EACJ) creates uncertainty for exporters and investors, who have benefited from duty-free access to the European market.

The EACJ last week suspended Kenya’s Economic Partnership Agreement (Epa) with the EU, raising concerns among farmers, investors, and policymakers about the stability of one of Kenya’s most lucrative trade arrangements.

Now experts say the case, while seeking to address gaps in region-wide trade deals with external parties, would erase the trade benefits for Kenya.

Maurice Mwaniki, associate director of Indirect Taxes at PwC Kenya, said that, considering the perishable nature of agricultural products, the suspension will have an immediate impact on Kenyan farmers and exporters, who are already grappling with the EU Deforestation Regulation, which requires businesses to demonstrate that products sold or exported to the EU do not come from recently deforested or degraded land.

The EACJ injunction resulted from a petition by Kampala-based NGO Clep East Africa, who argued that Kenya’s trade pact with the EU violated certain provisions of the East African Community Common Market.

The petitioner was granted orders blocking Kenya and the EAC Secretary-General from implementing the Epa, noting that Kenya violated the EAC Treaty by signing the agreement.“Kenya proceeded with the Epa under the EAC Treaty and its protocols, invoking the principle of variable geometry, which allows partner states to implement agreed programmes at different speeds,” Mr Mwaniki explained.“This approach was endorsed by the 21st Ordinary Summit of EAC Heads of State in 2021, permitting countries ready to implement the Epa to do so while others joined later. This will be an interesting case to watch, considering Kenya acted on the EAC’s cited resolution.”CS Kinyanjui assured Kenyan exporters that they would continue to access the EU market as the government files an appeal at the Arusha-based regional court.“We wish to assure all Kenyans, our trading partners, and trading entities that Kenya will continue to trade with the EU. Steps are being taken to ensure continuity, predictability, and protection of our existing commercial arrangements,” the minister said.“The Trade ministry, in consultation with the Attorney-General, has already initiated immediate steps, including seeking redress for this ruling through the appropriate appellate mechanisms. These aim to set aside the injunctive orders and allow continued implementation of the Epa pending the hearing and determination of the reference.”He said Kenya would engage with its EAC partners on Article 37 of the EAC Protocol, which is meant to facilitate transparency rather than prohibit sovereign trade action.“The over-judicialisation of Article 37 only encourages forum shopping, reduces policy space, and makes the EAC appear anti-development in the eyes of investors and external partners,” the minister explained.

Clep East Africa also faulted the EAC Secretary-General for “abdicating responsibilities under the Treaty by failing to warn or stop Kenya from entering into the illegal Epa with the EU, and for Kenya’s failure to share a renegotiated Epawith partner states.”Negotiations for the EU–Kenya Epa concluded on June 19, 2023, followed by the signing of the Agreement on December 18, 2023 and ratification on April 24, 2024. The Epa came into force on July 1, 2024, granting Kenya preferential access to the EU market and reinforcing its global trade position.

Data shows that by the end of 2024, EU–Kenya trade in goods reached $3.87 billion, with EU imports valued at $1.61 billion and exports at $2.26 billion.

Kenya’s horticulture industry alone generated $1.05 billion in 2024, with the EU as the primary destination for cut flowers and fresh produce.

Beyond these sectors, the Epa has opened up opportunities for smaller industries. For example, Kenya’s specialty coffee exports to niche EU markets have grown under the duty-free access, benefiting smallholder farmers and cooperatives.

Similarly, artisanal leather goods and handicraft, though representing a modest share of total exports, have gained traction in EU boutique markets, creating income streams for micro enterprises.

Kenya’s coffee sector — driven by nearly 70 percent smallholder farmers organised in cooperatives — exports 55 percent of its produce to the EU access under the Epa.

© Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).