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DRAFT OPINION 0000/2023 – C90000/0000 – 2023/0338(NLE))

On the proposal for a Council Decision on the conclusion, on behalf of the European Union, of the Economic Partnership Agreement between the Republic of Kenya, Member of the East African Community of the one part, and the European Union of the other Part

DEVE-PA-756189

Committee on Development · Rapporteur: Tomas Tobé

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The Committee on Development's draft opinion concerns the EU-Kenya Economic Partnership Agreement (EPA), a goods-only deal based largely on the draft EU-EAC EPA. It calls on the Committee on International Trade to recommend approval of the draft Council decision concluding the agreement. Kenya concluded negotiations on 19 June 2023 as the first East African Community (EAC) member, after other EAC states agreed in February 2021 that Kenya negotiate bilaterally pending progress on the EAC-wide EPA. The EPA includes a rendez-vous clause requiring negotiations on services and other trade-related issues within five years, allows temporary export taxes, asymmetric market access, and references sustainable development, regional integration and good governance. Its development pillar foresees capacity building and structural transformation support, prioritises development cooperation financing for implementation, and commits the EU to cover transitional fiscal losses from tariff phase-out while engaging in enhanced dialogue on fiscal reforms. The EPA adds an annex with binding trade and sustainable development provisions and a transparent dispute resolution mechanism, but foresees no parliamentary role in monitoring; a joint consultative committee is set up for private sector, civil society and social and economic partners. The rapporteur underlines the need for effective monitoring and appropriate financial support for implementing trade and sustainable development provisions, and believes the EPA can catalyse inclusive and sustainable development in Kenya and the EAC region.

Committee position. The Committee on Development calls on the Committee on International Trade, as the committee responsible, to recommend approval of the draft Council decision concluding the EU-Kenya Economic Partnership Agreement.

Key points

  1. Kenya concluded negotiations on an EPA with the EU on 19 June 2023, as the first EAC member to do so.
  2. EPAs are generally negotiated with regional blocs to foster regional integration, but differing EAC views impeded an EU-EAC EPA.
  3. Kenya, no longer a least developed country, sought an agreement to keep duty-free and quota-free access to the EU market; other EAC states agreed in February 2021 to a bilateral EPA pending the EAC-wide one.
  4. Kenya is the EU's most important EAC trading partner, representing nearly half of EU imports from the EAC and more than half of its exports to the EAC.
  5. The EU-Kenya EPA is largely based on the draft EU-EAC EPA, implementing it bilaterally between the EU and Kenya.
  6. The EPA is goods-only but has a rendez-vous clause requiring negotiations on services and other trade-related issues within five years of entry into force.
  7. The EPA allows temporary export taxes, asymmetric market access for EAC products, and includes objectives on sustainable development, regional integration and good governance.
  8. The development pillar supports capacity building and structural transformation, prioritises development cooperation financing for implementation, and commits the EU to cover transitional fiscal losses from tariff phase-out and to enhanced dialogue on fiscal reforms.
  9. The EPA improves on the draft EU-EAC EPA by including an annex with binding trade and sustainable development provisions and a transparent dispute resolution mechanism.
  10. No role for parliaments is foreseen in monitoring, but a joint consultative committee is set up to promote dialogue among private sector, civil society, academic, and social and economic partners, and can pronounce on all EPA matters.
  11. The rapporteur underlines the importance of an effective monitoring mechanism and appropriate financial support for partner countries to implement trade and sustainable development provisions, including international obligations in Annex V.
  12. The rapporteur believes the EPA can act as a catalyst for inclusive and sustainable development and growth in Kenya and the neighbouring EAC region.

Who is affected

  • Kenya: gains duty-free and quota-free access to the EU market and support for capacity building and structural transformation.
  • Other EAC partner states: agreed to Kenya's bilateral EPA pending progress on the EAC-wide EPA.
  • EU and Kenya: bound by the EPA's provisions, including the rendez-vous clause and trade and sustainable development annex.
  • Private sector, civil society, academic, and social and economic partners: can engage through the joint consultative committee.

Figures and deadlines

  • 19 June 2023: date Kenya concluded negotiations on an EPA with the EU.
  • February 2021: other EAC partner states agreed Kenya negotiate a bilateral EPA.
  • Nearly half: Kenya's share of EU imports from the EAC.
  • More than half: Kenya's share of EU exports to the EAC.
  • Five years: deadline from entry into force for negotiations on services and other trade-related issues.