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Britain rejects Kenya’s new EAC trade tariffs

Britain rejects Kenya’s new EAC trade tariffs demanding its exports to Kenya be exempted from the tax charges.

Nairobi, which is constrained by the choices of the regional bloc, is in a difficult situation as a result of the UK’s insistence that its exports to Kenya be exempted from the recently increased East African Community (EAC) tax levies that went into effect on July 1.

Johnson Weru, the principal secretary for trade, stated that the UK expects Kenya to follow by the terms of the Economic Partnership Agreement (EPA) they signed. If granted, this request could lead to similar requests from other countries.

The Partner States of the EAC agreed on May 5, 2022, to raise the Common External Tariff (CET) by up to 35% starting on July 1 for goods coming into the region.

In order to boost local industry and manufacturing, the charge is placed on imported finished goods from non-member States.

According to Mr. Weru, the UK had sought confirmation that the EAC-CET 2022 would not apply to them because to the standstill clauses of the Kenya-UK EPA, which went into effect before the modification.

This makes it difficult to implement the new CET under current trade agreements.

Iron and steel, food oils, furniture, leather goods, and freshly cut flowers are among the products that are subject to the new charge.

Fruits, nuts, sugar, confectionary, coffee, tea, spices, headgear, ceramic products, and paints are additional items that fall within the new CET tax band.

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

Based on its EPA with Kenya, Britain wants Kenya not to apply the 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 Kenya National Assembly on March 9, 2021.

Kenya is pursuing a new bilateral trade deal with the UK post-Brexit, hoping to cushion its economy after partner states of the EAC failed to conclude an EPA with the EU. 

Only Kenya signed and ratified the deal.

Until the end of the Brexit transition period, Kenya enjoyed duty-free, quota-free access to the UK’s 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 an increase in trade tariffs without a trade agreement or other measures in place.

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