Kenya China Trade Agreement: Unlocking Duty-Free Access for Exports

There’s been a lot of discussion in Kenya over the weekend about how the country can best take advantage of a preliminary trade agreement signed late last week that grants 98.2% of Kenyan exports duty-free access to the Chinese market. The new pact would “unlock vast economic potential for Kenyan exporters, allowing for diversification of our export basket especially in the agricultural sector, which is the mainstay of our economy,” Lee Kinyanjui, Kenya’s trade minister, said in a statement. The problem is that tea, coffee, flowers, avocados, and other Kenyan agricultural products are not sufficiently valuable to close the country’s gaping $9.3 billion trade deficit, nearly half of which is due to a surge of Chinese imports. Kinyanjui also didn’t address the issue of non-tariff barriers that have proven to be formidable obstacles in boosting Kenyan agricultural exports to China. China’s strict phytosanitary requirements, in particular, have proven difficult for some Kenyan farmers who need expensive new equipment and testing in order for their produce to qualify for entry into the Chinese market. Finally, there’s the issue of just how much agriculture China actually wants to buy. Four years ago, China established so-called “green channels” to expedite agricultural imports from African countries and presumably boost African sales to Chinese buyers. Overall, that hasn’t happened as African exports to China edged up slightly by 2.3% last year, while imports to the continent surged. Ultimately, duty-free access to the Chinese market will no doubt be helpful for Kenyan exports, but it’s not going to be a quick fix to resolve the country’s trade imbalance with China.