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Africa Business News of Monday, 1 March 2021

Source: theeastafrican.co.ke

Kenya-UK trade deal specifies products with duty and quota-free access

Kenya and the United Kingdom signed an Economic Partnership Agreement (EPA) in 2020, granting Kenyan products duty-free quota-free access to the British market.

According to the agreement, Customs duties shall be entirely eliminated on all products of Chapters 1 to 97 of the Harmonised System, including sugar and sugar confectionery, pharmaceutical products, beverages, spirits and vinegar except those of Chapter 93 (Arms, Ammunitions, parts and accessories) thereof, originating in an EAC Partner State on the date of entry into force of the agreement.

Uganda, Rwanda, Burundi and Tanzania will still enjoy duty-free quota-free access to the UK market under the Everything-but-Arms (EBA) initiative that was introduced in 2001 under the European Union Generalised Scheme of Preferences.

Preferential treatment

These countries will still be accorded preferential tax treatment in the UK market regardless of whether they sign the EPA agreement with the British Government or not.

The EPA agreement allows for gradual and partial reduction of tariffs on some but not all UK exports to Kenya.

This phased liberalisation will be spread over 25 years from the commencement of the agreement.

According to the agreement this phased liberation will start 12 years after the agreement takes effect where each duty shall be reduced to 95 per cent of the basic duty, followed by gradual elimination of duty until the full elimination after 25 years.

UK goods to the EAC such as crude oil, chalk, vegetable seeds, motor spirit, aviation spirit and petroleum oils will have Customs duty progressively abolished for 15 years, starting seven years after the agreement takes effect.

Customs duties applicable to products originating in the UK imported into an EAC Partner State for some goods shall be excluded from any of the regimes of tariff phase-down.

The parties recognise that the elimination and/or substantial reduction of tariffs as set out in this Agreement will be a challenge for the EAC Partner State(s).

With regard to revenue losses linked to the reduction of tariffs, the UK may engage in an enhanced dialogue on fiscal adaptation measures and reforms and establish cooperation modalities to support fiscal reform.