Economic Partnership Agreement: Kenya

Lord Goldsmith Excerpts

Tuesday 2nd March 2021 Lords Chamber

Moved by

[Lord Goldsmith]

That this House takes note of the Economic Partnership Agreement between the United Kingdom of Great Britain and Northern Ireland, of the one part, and the Republic of Kenya, a Member of the East African Community, of the other part, laid before the House on 17 December 2020.

Special attention drawn by the International Agreements Committee, 2nd Report.

[Lord Goldsmith (Lab) [V]]

My Lords, I am grateful for the opportunity to debate the International Agreements Committee’s second report, which covers the economic partnership agreement between the United Kingdom and Kenya. As the committee’s chair I extend my thanks to the members of the committee for their important contribution to this report, as well as to the staff. I also thank the noble Lord the Minister for his constructive engagement with the committee, both publicly and in private, and for facilitating this debate.

Before I turn to the contents of the report I will take a few moments to make some general comments on the scrutiny by Parliament of international agreements. The House will have heard me say before that international agreements—treaties—affect us all. They can affect important aspects of our lives: the economy, goods and services, our security and our rights. Scrutiny by Parliament must therefore be not an afterthought but an integral part of the overall treaty-making process. As we all know, at the moment Parliament’s role is limited and focused on the end of the process, when a treaty has already been signed.

I have said before that I believe Parliament should have a role at an earlier stage: when the objectives for negotiations are set. This is particularly relevant for trade agreements, and it happens in other countries such as the United States, and in the European Union. So I welcome the two commitments that the Minister made in this House during last week’s debate on the Trade Bill. They were made in response to a Motion put forward by a member of the committee, the noble Lord, Lord Lansley, whom I thank for his efforts in this regard.

I am pleased that the Government have agreed to facilitate a debate on draft negotiating objectives for trade agreements, subject to parliamentary time, if it is requested by the International Agreements Committee, and that the Government will not ratify a trade agreement until a debate has been held, provided it has been requested by a relevant committee in good time.

The subject matter of the report is the UK-Kenya Economic Partnership Agreement—EPA for short. It is, on the one hand, a standard rollover trade agreement that seeks to ensure continuity of trade relations after the Brexit transition period. It replicates the treaty arrangements between the EU and Kenya.

On the other hand, however, it is not a straightforward rollover agreement. First, the underlying agreement—the EU agreement with the East African Community partner states, of which Kenya is a member—is not actually in effect. Instead, Kenya enjoys duty-free access to the EU through something called the EU’s market access regulation.

Secondly, and most crucially, the underlying multilateral EU agreement has been turned into a bilateral one, even if states belonging to the East African Community can apply to join it later. In signing a bilateral agreement with the UK, Kenya has effectively followed a go-it-alone approach. There were clear incentives for the Kenyan Government to do so. As the only country within the EAC not classed as a least developed country, it does not qualify for zero import duties under the general scheme of preferences for least developed countries. As Kenya is a lower-middle income country, it can expect reduced rates of import duty on only some goods. Considering that the UK is among Kenya’s top five export markets, one can see why it could be considered to be in Kenya’s immediate interest to sign a bilateral trade agreement with the UK to avoid import tariffs.

There are, however, issues and questions about what this agreement does to regional coherence. There are concerns that it could have disruptive political and economic consequences for the wider East African Community. For example, the EAC partner states have agreed to a common market protocol which commits them to co-ordinate trade relations among themselves and between the bloc and third parties. The UK EPA appears to undermine this obligation. Also, the EAC has been a customs union since 2005, applying zero customs duties on goods and services within the bloc and applying a common external tariff to imports from countries outside the EAC. The UK-Kenya agreement could undermine this arrangement, as Kenya would be applying a separate and more generous tariff regime for UK imports. While the committee acknowledges in its report that the UK-Kenya EPA could indeed have been the most efficient option for maintaining Kenya’s preferential access to the UK market, we would welcome an assessment from the Minister of the potential disruptive consequences for the EAC.

We would also like to ask the Minister that, were similar concerns to emerge in future agreements, they would be more clearly spelled out in the explanatory materials. The Written Ministerial Statement made by the Minister in response to our report helpfully explains that the UK’s overall objective remains to secure a regional deal with the whole of the East African Community. It also acknowledges that some EAC members

“were not ready to enter into negotiations with the United Kingdom”

at the time. The Statement concludes by saying that it is the Government’s intention that the EPA be a “stepping stone” to stronger regional integration. So I would welcome it if the Minister could specify what steps the Government are taking to make sure that regional integration remains a priority for the UK Government and is not undermined through the bilateral agreement with Kenya.

Conscious of time, I will leave it here for now, having set out the two broad themes of parliamentary scrutiny on the one hand and the impact of the UK-Kenya agreement on regional cohesion on the other. I know that colleagues on the International Agreements Committee speaking this afternoon will reflect on other points of detail raised in the debate. I look forward to what I hope will be a constructive debate. In particular, I look forward to the maiden speech of the noble Lord, Lord McDonald. I thank him for choosing this debate in which to make his maiden speech. I welcome him to the House. I worked with him in government and I remember being hosted by him when he was the ambassador to Israel a few years ago, and I am therefore very keen to hear what he has to say now. However, I am also keen to see the huge contribution that I am sure he will make to the House, given his considerable experience and expertise. I beg to move.

--- Later in debate ---

[Lord Goldsmith (Lab) [V]]

My Lords, I thank all noble Lords who have taken part in this debate. It has been very valuable, and although noble Lords had only a short time for their contributions, those have all been significant. I too congratulate the noble Lord, Lord McDonald of Salford, on his maiden speech, which was, as anticipated, eloquent and impressive.

I welcome the Minister’s assurances that this was not intended in any way to disrupt the arrangements for the rest of Africa. I thank him for his explanation. We will watch what is said: we will watch closely to see if other countries accede, as he has explained is now possible, and we will look at that closely.

The other issue raised by noble Lords is parliamentary scrutiny. That is important to the International Agreements Committee, as I have said. Whether it is the Purvis protocol, the Grimstone rule or even Lansley’s law, we are pleased with the changes that are taking place: we are edging towards greater parliamentary scrutiny, which is important because we should not be just paying lip-service to it. We will continue to watch that.

I thank the Minister for what he said about not ratifying. The department could perhaps have said that it would extend the time, but I suppose the effect has been the same. With that, I beg to move.

Motion agreed.