Kenya shaken as Britain rejects new EAC tariffs

By NATION AFRICA

The UK has demanded that its exports to Kenya be exempted from the new East African Community (EAC) tax charges which came into force on July 1, posing a big dilemma for Nairobi, which is bound by the decisions of the regional bloc.

Principal Trade Secretary Johnson Weru has said the UK is demanding Kenya abide by the provisions of an Economic Partnership Agreement (EPA) signed between the two nations – a demand which, if granted, could trigger similar demands from other nations.

In an agreement reached on May 5, 2022 by the EAC partner states, the Common External Tariff (CET) for imports entering the bloc was raised by up to 35% from July 1.

The levy is imposed on finished products imported from non-member states as part of a strategy to stimulate local industry and production.

Mr Weru said the UK had sought assurances “that the EAC-CET 2022 will not apply to them based on the standstill provisions of the Kenya-UK EPA, which are entered into force before the amendment. This presents a challenge for the implementation of the new CET in current trade agreements.”

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The new levy affects a product tax bracket that also includes iron and steel, edible oils, furniture, leather goods and fresh cut flowers.

Other products covered by the increased tax band of the CET include fruits, nuts, sugar and confectionery, coffee, tea, spices, headgear, ceramic products and paints.

This means that from July 1, imports of products entering Burundi, Kenya, Rwanda, South Sudan, Uganda and Tanzania now cost more.

Based on its EPA with Kenya, the UK wants Kenya not to apply CET levies on its products.

Kenya signed the EPA with the UK on December 8, 2020, before it was ratified by the UK Parliament on March 5, 2021 and by the National Assembly of Kenya on March 9, 2021.

Kenya is pursuing a new bilateral trade deal with the UK after Brexit, hoping to protect its economy after EAC partner states failed to reach an EPA with the EU. Only Kenya has signed and ratified the agreement.

Until the end of the Brexit transition period, Kenya enjoyed duty-free and quota-free access to UK markets through the EU’s Market Access Regulation (MAR).

As the UK did not replicate the MAR at the end of the transition period, Kenya would have faced increased tariffs without a trade agreement or other measures in place.

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