Inside Politics

Kenya pins hope on new deal to secure UK market

Monday, October 14th, 2019 00:02 |

 By Rawlings Otini

Kenya’s fresh produce exports to the UK risk losing duty-free access to the lucrative market if a post-Brexit deal is not brokered by the end of this year.

UK, which is set to exit the EU bloc on October 31 and has begun to lay the groundwork to strengthen ties with African countries, including Kenya.

Kenyan exporters, however, have been assured of continued market access to the UK post-Brexit, but uncertainity looms if no deal is sealed after December 31. If no pact is ratified, locally grown vegetables, fruits, tea and flower exports, which currently enjoy a duty free access to the EU market could face World Trade Organisation (WTO) taxes of up to 12 per cent.

“Without a deal, it will not be just us, it will be everybody who has been trading with the UK. Every country must find a way of trading with them,” Trade ministry principal secretary Chris Kiptoo said.

Exports extension

Kiptoo confirmed Kenya had secured an extension to continue exports to the UK under existing arrangement with the EU till December but when the period lapses, then new arrangements must be negotiated.

He said there is need to diversify Kenya’s export markets towards Asia, especially China to reduce over reliance on Europe.

Demand for Kenyan produce in China is growing due to rising incomes in the Asian nation opened her market to some of Kenya’s agricultural exports.

Kenya’s exports to the UK were valued at Sh40 billion in 2018, most of which are vegetables, flowers, tea and fruits. The country earned Sh153.68 billion last year from fresh produce exports.

Flowers fetched Sh113.17 billion last year, compared with Sh82.25 billion in 2017, while vegetables accounted for Sh27.69 billion against Sh24.06 billion the previous year. Fruits  fetched Sh12.8 billion against Sh9 billion in 2017.

The flower industry provides jobs for almost half a million people directly and many more indirectly making it an important sector. Britain is the second largest export destination for Kenya’s cut flowers and vegetables after the Netherlands, taking almost 18 per cent of the flowers produced in the country.

Without a trade deal in place for Kenya, the UK would have to set tariffs according to rules set by the WTO.

This means that Kenya could face WTO tariffs of 8.5 to 12 per cent, costing its vegetables, fruits and flower exporters billions of shillings annually.

Britain had early this year said it wants to replicate all the existing trade deals the EU has, with more than 70 countries, which the UK would lose in the event of leaving without a deal.

Already, South Africa has secured a deal that allows for seamless and uninterrupted trade to continue UK.

When she visited Kenya last year, former Prime Minister Theresa May said Kenya would continue enjoying access to UK markets through the current duty free arrangement even after Brexit, before a new framework of trade is in place.

“Once we are outside the EU, we will have the opportunity to negotiate these trade deals on behalf of the UK rather than as part of the EU,” she added.

Lengthy process

But with a no-deal Brexit, it will be a process since fresh trade agreements normally take long to be actualised.

Brexit was originally due to happen on March 29. That was two years after May triggered Article 50 - the formal process to leave - and kicked off negotiations. But the Brexit date has been delayed twice.

If the UK leaves the EU customs union and single market on October 31, then the EU will start carrying out checks on British goods. This could lead to delays at ports, such as Dover. Some fear that this could lead to traffic bottlenecks, disrupting supply routes and damaging the economy.

Additional reporting by BBC

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