Kenya Flower Council (KFC) supports the immediate ratification of the Kenya Kenya-UK trade deal.
Kenya’s exports of cut-flowers ornamentals to the United Kingdom could be subject to additional tariffs by the end of this year if the Economic Partnership Agreement (EPA) is not ratified. The Kenya-UK trade deal, signed on December 8, provides Kenyan businesses duty-free access to the UK market, while Kenya will start phasing out duty and quota barriers on a set number of UK products 12 years after the EPA has come into force.
The trade agreement ensures that all cut-flower and ornamentals companies in Kenya, can continue to benefit from quota and duty-free access to the UK market. Cut flowers are now Kenya’s second largest export after tea, contributing around 1.06 percent of the country’s GDP. The industry is also one of the country’s leading employers with over 200,000 people working directly in the flower industry and an estimated two million indirectly.
This agreement therefore supports jobs and economic development in Kenya, as well as avoid possible disruption to UK businesses such as florists and retailers who will be able to maintain tariff-free supply routes for Kenya’s high-quality flowers. Kenya flowers will benefit from enhanced privileges for agricultural goods that confers originating status to East Africa Community (EAC) exports, even if they transit through EU’s 27 countries. If the EPA is not brought into effect, tariffs on imports from Kenya would revert to MFN rates. This would lead to the imposition of duties on some of our imports from Kenya and more particularly at a rate of 8 percent on cut flowers.
For 2021, the amount of duty that would be on Kenya’s agricultural exports to the UK is estimated to be KShs2.6 billion if the EPA is not ratified in time.
The Kenya flower industry is a provider of flowers with a reputation for quality. It is a highly competitive international industry. Kenya’s main competitors are Ethiopia, which is an LDC and trades duty and quota free under EBA, and Colombia, who already have a bilateral free trade agreement with the UK. If the Kenya UK EPA is not concluded, and duties at a level of 8 percent are applied, then Kenya’s prices will be uncompetitive and will lose market share. Coupled with increased freight rates because of the worldwide COVID pandemic, Kenya’s floriculture industry will find it hard to survive.
Under this EPA, KFC believes Kenya’s cut-flower exports will remain competitive and certainty in terms of trade will encourage investment, leading to more production and more jobs. It also, in our opinion sets up the framework for further trade negotiations going forward.
KFC has been a key player within the KEPSA private sector team that provided input into the Kenya-UK EPA. KFC’s Director Richard Fox chaired the Ken-Brexit Private Sector Team. Union Fleurs and KFC’s great support to the government contributed to the import duty exemption currently in place for Kenya’s fresh produce exported to the European Union since 1 October 2016. This followed an uncertain period of 3 months for the industry when duties amounting to KShs1 billion were incurred.
KFC in the county’s representative body for growers, exporters and relevant cut-flower and ornamentals value chain actors whose members account for approximately 75 percent of Kenya’s floricultural exports worldwide. The Kenya Flower Council standard to which all members must comply, is one of only two internationally benchmarked standards to demonstrate sustainable social, environmental and good agricultural business practices. The UK is a critical development partner to Kenya, as well as the largest foreign investor in Kenya.
The UK is Kenya's second most important export destination. Trade between the two countries reached KShs44 billion in 2019. Presently, Kenya-UK balance of trade is tilted in favor of the latter with exports in 2020 standing at Ksh.49.5 billion against imports of Ksh.29.3 billion in 2019. Top goods imports to the UK from Kenya in 2019 were in coffee, tea and spices (KShs13 billion), vegetables (KShs24 billion) and live trees and plants, mostly flowers (KShs11 billion).
The UK market accounts for 43 percent of total exports of vegetables from Kenya as well as at least 9 percent of cut flowers. As a result of Brexit, trade between Kenya and the UK could not be regulated through the EU Market Access Regulation mechanism and a new agreement was necessary to come into effect on 1 January 2021 at the end of the UK-EU transition period. On 8 December 2020, the UK signed an Economic Partnership Agreement with Kenya. Last week, United Kingdom legislators endorsed the trade deal with Kenya after completing scrutiny of the document, paving the way for its enforcement once the Kenyan counterparts approve it
For more information:
Kenya Flower Council
[email protected]
kenyaflowercouncil.org