Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2023/0337(NLE)**

**PROPOSAL**

**Brussels, 28 September 2023**
**(OR. en)**

**13532/23**

**ACP 87**
**WTO 143**
**COAFR 323**
**RELEX 1100**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

date of receipt: 28 September 2023

To: Ms Thérèse BLANCHET, Secretary-General of the Council of the
European Union

No. Cion doc.: COM(2023) 559 final

Subject: Proposal for a COUNCIL DECISION on the signing, on behalf of the
European Union, of the Economic Partnership Agreement between the
Republic of Kenya, Member of the East African Community of the one
part, and the European Union of the other Part

Delegations will find attached document COM(2023) 559 final.

Encl.: COM(2023) 559 final

13532/23 PS/br

## RELEX.2 EN

EUROPEAN

COMMISSION

Brussels, 28.9.2023
COM(2023) 559 final

2023/0337 (NLE)

Proposal for a

**COUNCIL DECISION**

**on the signing, on behalf of the European Union, of the Economic Partnership**
**Agreement between the Republic of Kenya, Member of the East African Community of**

**the one part, and the European Union of the other Part**

# **EN EN**

**EXPLANATORY MEMORANDUM**

**1.** **CONTEXT** **OF** **THE** **PROPOSAL**

**•** **Reasons for and objectives of the proposal**

The attached proposal for a Council Decision constitutes the legal instrument for the signing
of the Economic Partnership Agreement (EPA) between the Republic of Kenya, member of
the East African Community (EAC), of the one part, and the European Union (EU) (‘EUKenya EPA’ or ‘the Agreement’).

The negotiated texts of the EPA have been made public and can be found on the following
link: [https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-](https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac/eu-kenya-agreement/text-agreement_en)
[and-regions/east-african-community-eac/eu-kenya-agreement/text-agreement_en.](https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac/eu-kenya-agreement/text-agreement_en)

The Agreement aims at the bilateral implementation of the provisions of the EPA between the
EU and the EAC Partner States (Burundi, Kenya, Rwanda, Tanzania, and Uganda), the ‘EUEAC EPA’, for which negotiations were finalized on 16 October 2014. The EU, Kenya and
Rwanda signed the EU-EAC EPA in September 2016, and Kenya ratified it the same month.
However, the regional EU-EAC EPA was never provisionally applied, as not all EAC
members signed and ratified the agreement (which was a requirement of the EU-EAC EPA
for its entry into application).

In February 2021, the EAC Ordinary Summit of Heads of State decided to allow individual
EAC countries to proceed with the bilateral implementation of the EU-EAC EPA under the
principle of ‘variable geometry’. On 4 May 2021, Kenya notified the European Commission
requesting to move forward in this sense.

On 17 February 2022, Executive Vice-President Valdis Dombrovskis, on behalf of the EU,
and Ambassador Raychelld Omamo, on behalf of Kenya, signed a Joint Statement at the
margins of the EU-African Union Summit agreeing to advance negotiations on the EU-Kenya
EPA, which will remain open for other EAC Partners States.

Negotiations aiming at introducing the necessary adjustments to bilaterally implement
between Kenya and the EU the provisions of the EU-EAC EPA were concluded on 24 May
2023 at technical level, and on 19 June 2023 at political level during EVP Dombrovskis’ visit
to Kenya. In the course of the negotiations, the Parties agreed to some adjustments to the
original agreement that make it possible to implement it on a bilateral basis, including in the
area of Rules of Origin (RoO) and development assistance. Moreover, a new Annex on Trade
and Sustainable Development was added to the Agreement.

The foreseen conclusion of this Agreement comes at a timely moment.

Firstly, Kenya is a growing economy and a key regional economic player. Kenya is the ninth
largest economy of the African continent and East Africa’s main economic hub. It achieved
broad-based growth averaging 4.8% per year between 2015-2019, significantly reducing
poverty, from 36.5% in 2005 to 27.2% in 2019. The economy staged a strong recovery after
the COVID-19 pandemic, with GDP growth projected at 5.5% in 2022 and the poverty rate
resuming its trend decline after rising earlier in the pandemic. Looking ahead, Kenya’s
medium-term growth remains bright according to World Bank. Real GDP is anticipated to
rise to 5.0 % in 2023 and 5.2 % on average in 2024-25. This near-term growth forecast is
above Kenya’s estimated potential GDP growth rate of 4.9 % and the pre-pandemic average
(2010-2019) of 5.0 %. Real per capita incomes are expected to grow, increasing from 2.8
percent in 2022 to 3.1 %.

# EN 1 EN

Secondly, the economic relations between the EU and Kenya are well established. The EU is
Kenya’s second largest trading partner. Total trade between the EU and Kenya reached €3.3
billion in 2022, with an increase of 27% compared to 2018. EU’s imports from Kenya
are €1.2 billion and are mainly vegetables, fruits, and flowers, with Kenya’s intention to
increasingly export more complex goods and increase value addition in exported goods. EU
exports to Kenya amount to €2.02 billion and are mainly mineral products, chemical products,
and machinery. Those are important inputs to Kenya intention to deepen their industrial
sectors. The EU is the first export destination for Kenya, with 16% of its total exports in 2022,
followed by Uganda (12%) and USA (8%). EU is ranked in the third place with 10% of total
Kenyan imports.

–
A trade agreement with Kenya covering trade in goods, development cooperation and
sustainability – would preserve and even boost EU’s market share in a booming market and
will strengthen Kenya’s position in the region [ 1] . The EU’s engagement with Kenya would
encourage the country to promote trade liberalisation within the EAC region (as the
Agreement will remain open to accession of other EAC Partner States).

Thirdly, from a more geo-political perspective, Kenya increasingly plays a leading regional
and international role – notably in promoting peace and security in the neighbouring countries
and supporting the global sustainability agenda. The EU has identified Kenya as a key player
for more engagement in regional affairs, notably in Ethiopia and Sudan [2] . Kenya hosts the only
UN headquarters on the African continent (UN Environment Programme/UNEP and UN
Human Settlements Programme/UN-Habitat) and had a temporary seat at the UN Security
Council (2021-2022). Besides, Kenya has a pioneering role in sustainability efforts on the
African continent and is a reliable ally in the fight against climate change. It co-leads the
Coalition of Trade Ministers on Climate initiatives launched in 2023 together with the EU and
other international partners.

In the light of the current international political context, the timely conclusion of these
negotiations with a key partner like Kenya also sends a strong signal of the joint commitment
to a rules-based trading system and sustainability.

**•** **Consistency with existing policy provisions in the policy area**

The above objectives are consistent with the Treaty on the European Union (TEU) that
provides that the EU should _“encourage the integration of all countries into the world_
_economy, including through the progressive abolition of restrictions on international trade”_ . [3]

The conclusion of this Agreement is fully in line with the EU’s ambition to foster its trade
relations with African partners as laid down in the EU’s Africa strategy (2020) [4], the Trade

1 Over 2015-2019, Kenya's economic growth averaged 5.7%, making it one of the fastest growing
economies in Sub-Saharan Africa. The performance of the economy has been boosted by a stable
macroeconomic environment, positive investor confidence and a resilient services sector. (source:
World Bank).

2 In May 2021, the Council Conclusions on the Horn of Africa have identified Kenya as a key partner to
pursue an agenda of shared values and interests, promoting peace and security, prosperity and
democratic stability in the region, as well as multilateralism.

3 Article 21(2)(e) TEU.
4 JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL “Towards
a comprehensive Strategy with Africa”, [communication-eu-africa-strategy-join-2020-4-final_en.pdf](https://international-partnerships.ec.europa.eu/system/files/2020-03/communication-eu-africa-strategy-join-2020-4-final_en.pdf)
[(europa.eu)](https://international-partnerships.ec.europa.eu/system/files/2020-03/communication-eu-africa-strategy-join-2020-4-final_en.pdf)

# EN 2 EN

Policy Review (2021) [5] and the Sustainable Trade Policy Review Communication (2022) [6] .

In particular, this proposal implements the Partnership Agreement between the members of
the African, Caribbean and Pacific (ACP) Group of States of the one part, and the European
Union and its Member States, of the other part [7] (‘ACP-EU Partnership Agreement’), which
calls for the conclusion of WTO-compatible Economic Partnership Agreements.

In fact, this Agreement aims at bilaterally implementing the provisions the EU- EAC EPA
under the principle of ‘variable geometry’. The Agreement will remain open to accession of
other EAC Partner States.

The EPA between the EU and Kenya was also explicitly integrated as a key deliverable of the
EU-Kenya Strategic dialogue, launched in June 2021, and it is a crucial component of EU’s
Africa engagement strategy.

**•** **Consistency with other Union policies**

The objectives are consistent with other EU policies, notably the EU’s development and
environmental policies.

The Kenya EPA is a development-oriented trade agreement. It offers asymmetric market
access to Kenya, which allows it to shield sensitive sectors from liberalisation; it provides a
large number of safeguards and a clause for infant industry protection; and it eliminates the
use of export subsidies in trade between the Parties. These provisions contribute to the
objective of Policy Coherence for Development and are consistent with Article 208(2) of the
Treaty on the Functioning of the European Union (TFEU).

Besides, the Agreement includes an ambitiuos Trade and Sustainable Development annex
covering environmental, social, labour, human rights and gender equality issues. Hence, the
objectives of the Agreement are in line with EU’s environmental, climate and social policies
and with internationally agreed commitments.

**2.** **LEGAL** **BASIS,** **SUBSIDIARITY** **AND** **PROPORTIONALITY**

**•** **Legal basis**

In accordance with Opinion 2/15 on the EU-Singapore FTA of the Court of Justice of 16 May
2017, all the areas covered by the EPA would fall within the exclusive competence of the EU
and, more particularly, within the scope of Article 207 TFEU.

As a result, this Agreement is to be signed by the Union pursuant to a decision of the Council
based on Article 218(5) TFEU.

5 COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE
COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE
[OF THE REGIONS Trade Policy Review – An open, sustainable and assertive trade policy EUR-Lex -](https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2021:66:FIN)
[52021DC0066 - EN - EUR-Lex (europa.eu)](https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2021:66:FIN)
6       -       https://eur lex.europa.eu/legal
[content/EN/TXT/?uri=CELEX%3A52022DC0409&qid=1656586727707](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0409&qid=1656586727707)
7 OJ L 317, 15.12.2000, p. 3 Agreement as amended by the Agreement signed in Luxembourg on 25 June 2005 (OJ
L 209, 11.8.2005, p. 27) and by the Agreement signed in Ouagadougou on 22 June 2010 (OJ L 287, 4.11.2010, p.
3).

# EN 3 EN

**•** **Subsidiarity (for non-exclusive competence)**

This EPA as presented to the Council does not cover any matters that fall outside the EU’s
exclusive competence.

**•** **Proportionality**

Trade agreements are the appropriate means to govern market access and the related areas of
comprehensive economic relations with a third country outside the EU. No alternative exists
to render such commitments and liberalisation efforts legally binding.

This initiative pursues directly the Union's objective in external action and contributes to the
political priority of 'EU as a stronger global actor’. It is in line with the EU Global Strategy’s
orientations to engage with others and revamp its external partnerships in a responsible way,
in order to attain the EU's external priorities. It contributes to the EU’s trade and development
objectives.

**•** **Choice of the instrument**

This proposal is in accordance with Article 218(5) TFEU, which envisages the adoption by
the Council of decisions on singing of international agreements. No other legal instrument
exists that could be used in order to achieve the objective expressed in this proposal.

**3.** **RESULTS** **OF** **EX-POST** **EVALUATIONS,** **STAKEHOLDER**
**CONSULTATIONS** **AND** **IMPACT** **ASSESSMENTS**

**•** **Ex-post evaluations/fitness checks of existing legislation**

This EPA aims at the bilateral implementation of the provisions of an already concluded
regional free trade agreement (the EU-EAC EPA). It is in line with the updated negotiating
directives [8] . For these reasons, the Better Regulation requirements do not apply.

An ex-post evaluation of the Agreement might be foreseen in the future.

**•** **Stakeholder consultations**

Not applicable.

A presentation of the Trade and Sustainable Development Annex of the Agreement (which
constitutes the main novelty compared to the EU-EAC EPA) was held for stakeholders in the
context of a Civil Society Dialogue in March 2023.

**•** **Collection and use of expertise**

Not applicable.

8 COUNCIL DECISION (EU) 2020/13 of 19 December 2019 amending the negotiating directives for the
negotiation of Economic Partnership Agreements with the African, Caribbean and Pacific countries and
regions, to the extent that they fall within the competence of the Union, OJ L6/101, 10.1.2020.

                  -                   https://eur lex.europa.eu/legal
[content/EN/TXT/?uri=uriserv%3AOJ.L_.2020.006.01.0101.01.ENG&toc=OJ%3AL%3A2020%3A006](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2020.006.01.0101.01.ENG&toc=OJ%3AL%3A2020%3A006%3ATOC)
[%3ATOC](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2020.006.01.0101.01.ENG&toc=OJ%3AL%3A2020%3A006%3ATOC)

# EN 4 EN

**•** **Impact assessment**

An impact assessment is not required at this stage. As this Agreement it aims at the bilateral
implementation of the provisions of an already concluded regional free trade agreement (EUEAC EPA), conducting additional impact assessments is not required by the Better Regulation
toolbox.

Previously, a Sustainability Impact Assessment (SIA) for all EPAs was launched in 2002. The
outcome of this SIA covered both the negotiations, for the Framework EU-EAC EPA,
concluded in 2007 (FEPA), and for the comprehensive trade in goods EU-EAC EPA
concluded in October 2014.

Following the conclusion of the EU-EAC EPA in October 2014, an ‘Economic analysis of
negotiated outcome’ was carried out in 2018 to assess the economic impact of the EU-EAC
EPA on the Parties.

**•** **Regulatory fitness and simplification**

This Agreement is not subject to REFIT procedures; it does not imply any costs for the Union
SMEs; and it does not raise any issues from the viewpoint of the digital environment.

**•** **Fundamental rights**

The proposal does not affect the protection of fundamental rights in the Union.

**4.** **BUDGETARY** **IMPLICATIONS**

Kenya already benefits from the Market Access Regulation (MAR) which offers duty-free
quota-free market access into the EU like under an EPA. The MAR aimed at granting market
access to the EU to those ACP countries having made the effort to conclude, sign and ratify
an EPA which eventually could not be provisionally applied for reasons going beyond their
willingness. This was the case for Kenya with the 2014 EU-EAC EPA, which could not be
provisionally applied due to the lack of signature and ratification of the EPA by all EAC
members.

Therefore, there will be no budgetary implications given that the Agreement will continue
Kenya’s market access into the EU in the same terms.

**5.** **OTHER** **ELEMENTS**

**•** **Implementation plans and monitoring, evaluation and reporting arrangements**

The Agreement includes institutional provisions which set up ministerial, senior official and
technical bodies to oversee, steer and support its implementation, operation and impact and
take necessary action.

At ministerial level, the EPA Council will be established and will have powers to take
decisions and adopt recommendations. It will be assisted by a Committee of Senior Officials
in supervising the implementation and application of the EPA and assessing its impact on the
parties.

At technical level, the Committee of Senior Officials may set up any specialised committees,
working sessions, task forces or bodies to deal with matters arising under the agreement. The
provisions of the agreement further set up on entry into force a Special Committee on

# EN 5 EN

Customs and Trade Facilitation which will monitor the implementation and administration of
the Customs Cooperation and Trade Facilitation and Rules of origin (RoO) provisions.
Besides, a Comprehensive Dialogue on Agriculture and Rural Development Policy will be
established with the task of monitoring progress made in implementing the Agricultural
chapter and providing a forum for exchange and cooperation on the Parties' respective
domestic agricultural policies. On Trade and Sustainable Development, a Special Committee
on Trade and Sustainable Development will be set up upon entry into force and tasked to
facilitate, monitor and review the implementation of the respective annex.

The Agreement will give civil society representatives (private sector, business associations,
trade unions, non-governmental organisations) a role in its implementation, including on the
provisions on trade and sustainable development. Domestic Advisory Groups (DAGs) will be
established, comprising a balanced representation of independent civil society organisations
including non-governmental organisations, business, and employers' organisations as well as
trade unions active on economic, sustainable development, social, human rights,
environmental and other matters. They will meet regularly and advise the respective party on
the implementation of the Agreement. A Consultative Committee - a _joint_ civil society
advisory body in which the DAGs shall participate - will furthermore be set up and will assist
the Committee of Senior Officials with a view to promoting dialogue and cooperation
between representatives of civil society, the private sector and social and economic partners
on matters arising under the Agreement.

Finally, the Commission’s Annual Implementation and Enforcement Report will cover the
EU-Kenya EPA as of its entry into force.

**•** **Explanatory documents (for directives)**

Not applicable

**•** **Detailed explanation of the specific provisions of the proposal**

This Agreement aims _de-facto_ at the implementation of the provisions of the former
agreement negotiated with the EAC members in 2014. It introduces the necessary adjustments
for the implementation of the regional EPA by an individual EAC member and is open to any
other EAC country to join in the future. It has also been updated to align it with current
challenges, such as promoting sustainability by including an ambitious Trade and Sustainable
Development annex and updating the Economic Cooperation and Development chapter.

The EU-Kenya EPA contains provisions on trade in goods, customs and trade facilitation,
technical barriers to trade, sanitary and phytosanitary measures (SPS), agriculture and
fisheries, development cooperation, dispute avoidance and settlement, and a trade and
sustainable development (TSD) annex. The Agreement also includes two Joint Statements
concerning the applicability respectively of the TSD and RoO provisions.

In particular, the Agreement foresees:

–
Asymmetric removal of tariffs: whereas the EU grants free access to its market by
removing tariffs and quotas (except arms), Kenya will open its market gradually,
benefitting from transitional periods and exclusion of sensitive products from
liberalisation.

–
Temporary application to both parties’ trade of RoO of the Market Access
Regulation (already applying to Kenya) until a new RoO Protocol will be negotiated

# EN 6 EN

upon entry into force of the Agreement and within five years of the implementation
of the EPA. This new RoO Protocol will be based on EU-EAC EPA RoO, as
foreseen by the Joint Statement on RoO.

–
Provisions that consider Kenya’s development needs such as special safeguards on
agriculture, measures on food security and infant industry protection.

–
Customs-related provisions aiming at facilitating trade, promoting better customs
legislation and procedures, providing support to the Kenyan customs administration
and enhancing cooperation between customs institutions.

–
Provisions on SPS to promote the harmonisation of intra-regional standards and to
enhance Kenya’s technical capacity.

–
An Economic and Development Cooperation chapter with provisions aiming to
enhance the competitiveness of the Kenyan economy by building supply capacity
and assisting Kenya in implementing the EPA smoothly. The original chapter of the
EAC EPA has been largely preserved, with the necessary updates. An Annex specific
to Kenya and the EU has been added and captures the changes to the regional
agreement text.

–
A dedicated TSD annex covering labour, gender equality, as well as environmental
and climate matters with binding and enforceable (through a specific dispute
settlement mechanism) commitments. The possibility to temporarily suspend
obligations under the TSD annex (i.e. impose ‘sanctions’) is not included in the
Agreement. However, in the Joint Statement on TSD the EU and Kenya explicitly
committed to continue negotiations on this aspect in the context of the ‘rendez-vous
clause’.

This Agreement will be reviewed after every five years from the date of its entry into force.
The text of the EPA includes an undertaking to negotiate new areas to be included in the EPA
(‘rendez-vous clause’), including provisions on trade in services, and trade-related rules
addressing sustainable development, competition policy, investment and private sector
development, intellectual property rights, transparency in public procurement. The results of
the negotiations of these areas shall be envisaged to be added within five years following the
entry into force of the Agreement.

# EN 7 EN

2023/0337 (NLE)

Proposal for a

**COUNCIL DECISION**

**on the signing, on behalf of the European Union, of the Economic Partnership**
**Agreement between the Republic of Kenya, Member of the East African Community of**

**the one part, and the European Union of the other Part**

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 207(4), first subparagraph, in conjunction with Article 218(5) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) On 12 June 2002 the Council authorised the Commission to open negotiations for
Economic Partnership Agreements (EPAs) with the African, Caribbean and Pacific
Group of States.

(2) The negotiations between the European Union (EU) and the East African Community
(‘EAC’) Partner States (Republic of Burundi, Republic of Kenya, Republic of
Rwanda, the United Republic of Tanzania, and the Republic of Uganda) for an
Economic Partnership Agreement (EPA) were concluded on 14 October 2014 and the
EAC EPA was initialled on 16 October 2014.

(3) Kenya ratified and signed the EU-EAC EPA in September 2016. For the regional EPA
to enter into force, all EAC members need to sign and ratify the agreement. To this
date, signatures and ratification of three EAC members are still missing, preventing
the regional agreement from entering into force.

(4) On 19 December 2019, the Council updated 2002 Commission’s negotiating directives
by including the conclusion of a Trade and Sustainable Development chapter in EPAs.

(5) On 27 February 2021 the EAC Summit allowed individual EAC countries to proceed
with the bilateral implementation of the EAC EPA under the principle of ‘variable
geometry’. On 4 May 2021 Kenya notified the Commission requesting to move
forward in this sense.

(6) On 17 February 2022, Executive Vice-President Valdis Dombrovskis, on behalf of the
EU, and Ambassador Raychelld Omamo, on behalf of Kenya, signed a Joint Statement
at the margins of the EU-African Union Summit agreeing to advance negotiations on
the EU-Kenya EPA (‘the Agreement’), which will remain open for other EAC
Partners States.

(7) On 24 May 2023, the negotiations for the Agreement between the European Union and
Kenya were successfully concluded.

(8) Therefore, the Agreement should be signed on behalf of the Union, subject to its
conclusion at a later date,

# EN 8 EN

HAS ADOPTED THIS DECISION:

_Article 1_

The Commission is authorised to sign, on behalf of the Union, the Economic Partnership
Agreement between the Republic of Kenya, Member of the East African Community, of the
one part, and the European Union, of the other part, subject to the conclusion of the said
Agreement at a later stage.

The text of the Agreement is attached to this Decision.

_Article 2_

The Council Secretariat General shall establish the instrument of full powers to sign the
Agreement on behalf of the Union, subject to its conclusion, for the person(s) indicated by the
negotiator of the Agreement.

_Article_ _3_

The Agreement shall not be construed as conferring rights or imposing obligations which can
be directly invoked before Union or Member State courts or tribunals.

_Article_ _4_

This Decision shall enter into force on the date of its adoption.

Done at Brussels,

_For the Council_

_The President_

# EN 9 EN