Kenya Rejects China-EAC Trade Pact

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Enterprise Television- Kenya Rejects China-EAC Trade Pact

Kenya will not sign a free trade agreement that China has been negotiating with the East African Community (EAC) partner States since 2016, Trade principal secretary, Mr Chris Kiptoo has said.

Mr Kiptoo Monday said the decision, which could trigger diplomatic unease between Nairobi and Beijing, is intended to protect Kenya’s nascent manufacturing sector from being over-run by China’s cheaper and more efficient producers.

The current trade balance is skewed heavily in favour of China, and the proposed comprehensive free trade agreement (FTA) would see Chinese goods access the EAC market at more favourable tariffs.

“China already accounts for 25 per cent of Kenya’s import bill under the current common external tariff structure of zero per cent, 10 per cent and 25 per cent for raw materials, intermediate goods and final goods respectively. “This means that China is likely to get even a larger share of Kenya’s market once we enter into a free trade arrangement,” said Mr Kiptoo.

China has been negotiating for the creation of a free trade agreement with EAC for the past two years.

“China accounts for less than two per cent of our exports currently. An FTA with China might improve our export share but not significantly. A preferential trade agreement with China is what we prefer… an AGOA type of trade,” said Mr Kiptoo.

The Asian economic giant wrote to former EAC Secretary-general Richard Sezibera proposing to negotiate with the EAC partner states a comprehensive free trade agreement.

China also requested to undertake a joint feasibility study with the EAC on the proposed free trade area.

The EAC secretariat was expected to undertake a comprehensive cost-benefit analysis on the implications of negotiating a free FTA with third parties by June 30.

“The Chinese people are doing a lot here especially in the provision of services such as finance, development and we are happy with that. In the area of trade, there exists a huge imbalance which is making us feel we really need to see more in the other direction,” he said.