Kenya is anticipated to receive a big trade advantage following China’s agreement to launch trade talks that will see most of Kenya’s exports gain tariff-free entry into China, presenting a much-needed lifeline for Kenya’s exporters who are operating in an increasingly tough international trade environment.
Trade Cabinet Secretary Lee Kinyanjui reported that a breakthrough had been attained as a result of recent engagements with Beijing, as indicated by the announcement on Thursday that 98.2pc of Kenyan goods would have access to the Chinese market duty-free when the treaty is implemented.
This means that exports from Kenya will not attract import taxes, which in the past often increased their cost of production and competitiveness, especially for foods and products.
“We are happy to report that these discussions have yielded a preliminary agreement that will facilitate 98.2 percent zero duty market access for Kenyan products,” Kinyanjui said.
“The introduction of zero duty access would unlock the vast economic potential for Kenyan exporters to diversify our export baskets especially in the agricultural sector which is the backbone of our economy.”
Leveling the Playing Field
China’s existing duty-free and quota-free trading arrangement has generally excluded Least Developed Countries (LDCs) from Africa but was discriminatory to developing countries such as Kenya. To fill this gap, Kenya negotiated to attract an equivalent trading arrangement and resulted in an “early harvest” scheme that is current today.
The deal will be an impetus for increasing Kenya’s exports in areas such as agricultural products, horticultural vegetables, and processed goods. The agreement will stimulate profitability and employment generation in different sectors.
However, this comes at a critical time, given that Kenyan exporters are currently dealing with new trade barriers in the U.S. market, including a 10% baseline tariff that must be paid by Kenyan exports entering into America. This is making China an attractive alternate market that offers stable trade conditions.
According to trade analysts, access to this market without paying tariffs may mitigate any challenges that might arise from other markets for Kenyan companies. The Chinese market is one of largest consumer markets internationally.
On the other hand, there was some reprieve for Kenyan exporters who had targeted the U.S. market following the vote in the U.S. House of Representatives to extend the African Growth and Opportunity Act (AGOA).
In the House on Monday, January 12, the extension was passed with 340 votes for and 54 votes against, which extended a trade agreement offering eligible African nations duty-free access to the US market.
The legislation is set to go to the U.S. Senate before it is signed into law.
AGOA, which came into effect in 2000, is set to lapse in September 2025, triggering worries in economies on the continent largely dependent on AGOA. Kenya, led by President William Ruto, is one of the strongest proponents of extension of AGOA, considering its key role in investment, industrialization, and job creation.
On welcoming the vote by the House of Representatives, the Foreign Affairs Principal Secretary Korir Sing’Oei considered it a great gesture for US-Africa trade relations. He commended President Ruto for leading the way on behalf of Africa for the extension. He looked forward to a similar vote by the Senate.
