Brussels
KENYA'S TRADE RELATIONS
MINISTRY OF INDUSTRIALIZATION, TRADE AND COOPERATIVE DEVELOPMENT
For more information on the State Department of Trade , visit the website, http://www.industrialization.go.ke/index.php/departments/state-department-of-trade
The Economic/Trade Section of the Embassy is charged with the responsibility to facilitate orderly development and promotion of external trade, in line with the Ministry of Foreign Affairs’ new policy orientation of Economic Diplomacy.
TRADE WITH THE EUROPEAN UNION
Kenya has enjoyed a longstanding cordial association and trade relations with the European Communities, under the framework of the successive Lomé Conventions and the Cotonou Agreement. The cooperation began in the 1960’s, prior to the Lomé Convention, and has been in the areas of, inter alia: development finance, trade, political, industrial development, energy, socio-cultural, regional cooperation development, agriculture and environment, with the objective to increase exports income, promote industrialisation, and promote economic growth of developing countries.
To achieve these objectives, the European Union provided Kenya and other ACP countries preferential market access for primary products, essentially agriculture and other agro-based products, together with funds and other forms of assistance towards trade and private sector development. The preferences have been non-reciprocal, and are in the form of lower tariffs and/or tariff exemption in value-added (manufactured) products and agricultural products, provided they pose no direct competition with the Community products and do not discriminate among EU member states in terms of tariffs charged on their imports to Kenya.
The arrangement has benefited Kenya, particularly in the areas of horticulture and fisheries, due to the production and supply capacity potentials, and other agricultural products like tea, coffee, and sugar. ACP member states benefited at different levels, depending on their production and supply capacities. Surveys carried out show that ACP states that had production and supply capacity performed better in terms of exports compared with non-ACP developing countries that are at the same level of economic development.
This non-reciprocal market access treatment was operational until January 2008, at which time the new reciprocal and WTO-compatible trade arrangement, namely the Economic Partnership Agreements (EPAs), should have taken effect. However, the EPAs are currently still under negotiation for certain ACP member states, including Kenya.
Kenya’s exports to the EU are mainly agricultural commodities such as cut flowers, fruits and vegetables, which account for over 90% of total export value. Others are tea, coffee, fish and fisheries products, sugar, semi-processed tobacco, textile and clothing, coffee and handicrafts, among others. Though trade with the EU is heavily in its favour, it remains Kenya’s second largest market after COMESA. The United Kingdom, Germany, the Netherlands and France are leading EU destinations of Kenyan exports.
Kenya’s exports to this market have been growing significantly since the 1990s, due to the immense growth in the horticultural sub-sector. Overall, Kenya’s exports to EU have risen steadily over the past years by an average of over 14%, and were estimated at KSh. 89 billion in 2008.
The EU is Kenya’s major single source of imports, mainly industrial (finished) products such as motor vehicles and parts, aircrafts and associated equipments, medicaments, iron and steel products, data processing instruments, rubber tyres and other articles of rubber and plastic, medical and veterinary instruments, motor machinery, telecommunication equipment, electrical and electronic goods, refrigeration equipment, food processing machinery, refrigeration equipment, paper and paperboard, farm chemicals, textiles and clothing, and hides and skins.
Trade statistics
- Directorate General for Trade (European Commission)
- Kenya National Bureau of Statistics.
TRADE RELATIONS WITH BELGIUM AND LUXEMBOURG
Kenya’s trade relations with Belgium and Luxembourg have also been conducted in the framework of ACP-EU cooperation arrangements, and trade has been moderate over the years, with a modest and steady increase in the recent past, both in terms of volume and value.
Trade statistics
- Kenya National Bureau of Statistics
- Note that imports for Belgium and Luxembourg that enter through the Netherlands, particularly cut flowers, are not covered in these statistics.
OTHER SPECIAL TRADE ARRANGEMENTS WITH THE EU
Commodity Protocols
Certain products, particularly sugar, beef and veal, bananas and rice, enter the EU market under the Commodity Protocol or other special preferential market access arrangements, thus enabling countries to increase their EU market share for the affected products. The arrangement puts quantitative restrictions on countries that are not party to the arrangements in seeking entry to the market for these particular products. However, these products too encounter barriers in the form of Standards, Sanitary and Phythosanitary Standards (SPS) conditions, tariff escalation and tariff peaks, depending on the nature of the product in relation to EU strategic products.
These special preferential arrangements are continually being eroded in terms of price reduction and competition for market access. Other products not covered in the arrangement also face serious price decline and instability, for example coffee and cotton, together with other primary commodities whose prices have been declining over the years.
ACP- EU support institutions
These conduct programmes to promote enterprise development and assist in building capacity, to enable Kenya, among other ACP countries, to overcome some of the obstacles that are constraining production and exports to the EU market.
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Centre for the Development of Enterprises (CDE)
It supports, through co- financing, medium industrial and commercial enterprises, both in agribusiness and other sub-sectors. Under its decentralisation exercise, CDE opened a regional office in Nairobi to serve the Eastern Africa region at the end of 2004. The CDE antenna office in Nairobi has been operational over a time coordinating its regional activities.
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Pro Invest
This is a subsidiary of CDE which promotes investments and technology flow by supporting small, micro and medium enterprises through intermediary organisation, professional associations, and developing inter-enterprise partnerships.
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Investment Facility
The Investment Facility (IF) was established to promote the development of both private and commercially-run public enterprises in ACP countries. The European Investment Bank (EIB) manages and implements the Facility. Over and above the initial funds of 2.2 billion € allocated to the Facility, the Bank has made available more funds from own resources for lending. EIB has opened a branch in Nairobi, one of the three in Africa, in line with its regionalisation exercise.
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Technical Centre for Agricultural and Rural Cooperation (CTA)
CTA builds and strengthens the capacity of ACP states to produce for the EU market, through, interalia, processing and exchange of relevant market intelligence information, organizing support workshops and training seminars, and undertaking studies on areas of interest to ACP states. CTA builds capacity for trade negotiators as well.
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COLEACP (Pesticides Initiative Programme)
The Pesticides Initiative Programme (PIP) has been instituted by the EU to handle issues of capacity building to the horticultural industry players, in the context of complying with EU standards, SPS and regulations. It assists the ACP horticultural producers to meet the standards required by the EU market. Currently, it is running a pilot project in Kenya, being implemented by the Fresh Produce Exporters Association of Kenya (FPEAK). Support normally includes sponsorships for workshops, seminars, short specialised trainings, research and dissemination of information to relevant industry stakeholders. The programme is in its second phase where training of technical personnel and other horticultural produce handlers, among other activities, is being undertaken. The programme is being reviewed with a view to expanding its mandate and activities, to include inter alia, provision of facilities to the testing laboratories for the relevant institutions.