Economic Partnership Agreement: Kenya

Motion to Take Note

Moved by

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.

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.

My Lords, it is a pleasure to follow the noble and learned Lord, Lord Goldsmith. I have the privilege of being a member of the International Agreements Committee, which he chairs so adeptly. I also look forward to hearing the maiden speech of the noble Lord, Lord McDonald of Salford. Although I have not met him before today, I have a strong connection to him because my nephew James worked for him and my father married him—I should stress that my father is a clergyman.

I join the noble and learned Lord, Lord Goldsmith, in welcoming some of the movement by the Government on the issues of scrutiny, in particular on what I believe has already been dubbed the “Grimstone rule”, by which the Government have agreed that where the IAC has requested a debate on a treaty, the Government will not ratify it before time has been provided for that debate. Some would say that that is the absolute basic minimum requirement that any self-respecting Parliament could accept, but it is welcome none the less.

In the short time I have available, I will focus briefly on two things. The first is the impact on regional integration in east Africa of the decision by our Government to embark on a bilateral agreement with the Government of Kenya rather than pursuing an agreement with the East African Community as a whole. I understand, of course, as set out in our report, that Kenya had a particular issue, being the only country that was not classified as a least developed country. However, as paragraph 13 of the IAC report highlights, the Government have failed to explain adequately what other options they considered for ensuring continuity of trade with Kenya other than by concluding a bilateral EPA, which inevitably has caused huge concern to other EAC members. I hope that the Minister will take the opportunity to explain this in his response.

The agreement causes serious difficulties in the region and appears to place Kenya in breach of its treaty obligations to the EAC. We know, of course, that the UK Government briefly toyed with the idea of breaching our own treaty obligations with the EU, but at least they had the sense to draw back from such action. It is regrettable that, by pursuing the approach they have, the Government have placed Kenya and the EAC in such a difficult position.

My Lords, I welcome the EPA’s focus on development and the commitment to continue to provide duty-free and quota-free access to the UK market for Kenyan goods. This will assist Kenya in seeing the growth benefits from international trade, aided by the appointment of Theo Clarke MP as trade envoy to Kenya and programmes such as TradeMark East Africa, which help promote trade between our two countries.

I appreciate the difficulties that there were in negotiating an EAC-wide agreement before Brexit. However, I share the concerns of the International Agreements Committee and civil society groups that the signing of individual EPAs could risk disruptive economic and political impacts and undermine some of the development objectives, particularly regional integration in east Africa. I would be grateful for my noble friend the Minister’s comments on that.

I am speaking before the maiden speech of the noble Lord, Lord McDonald of Salford, whom I had the pleasure of working with at the FCDO towards the end of his lengthy and loyal service. I agree wholeheartedly with his remarks yesterday that the cutting of our international development budget—moving in the opposite direction to the rest of the G7—is a strategic and regrettable mistake. I look forward to his experienced contributions to this place on that and other international issues.

This economic partnership and our broader relationship with Kenya—indeed, with the continent of Africa—is at risk due to the planned cut in international development. There are reports of our bilateral programmes in Kenya being cut by between 50% and 70%. Can my noble friend the Minister tell me what conversations his department has had with the FCDO about the impact of these cuts? Will the important trade programmes to which the Prime Minister recommitted last year at the UK-Africa Investment Summit—such as the successful TradeMark East Africa programme, which has a budget of $155 million up to 2023 in Kenya alone and has already allocated this funding to 36 projects—be fully protected? These projects are delivered in close partnership with the Government of Kenya, the EU, Ireland, Denmark, Finland and the United States. Will we uphold our commitment to them? Has an impact assessment been made of how the cuts in Kenya will affect our trade relationship?

I welcome and call the next speaker, the noble Lord, Lord McDonald of Salford.

I rise to address your Lordships’ House for the first time. I feel I should introduce myself. Noble Lords know my name and can guess that Salford is important to me. I was born and brought up there. Family is the centre of my life. Every day, I remember family members who are no longer here—today, my dad and my brother, Dominic, in particular.

After completing school in Salford, I studied history at Cambridge. After graduation, I joined the Foreign and Commonwealth Office, where I worked for 38 years. For five years, I was the Permanent Under-Secretary, which explains why international relations will be one of my main interests in your Lordships’ House.

No matter what any of us thought about leaving the European Union, our shared objective now is to protect and promote the interests of the United Kingdom outside the EU. Part of that task is to replace trade agreements from which the UK benefited as an EU member. Time has been short. In future, it will be better when Parliament is consulted by the Government when framing objectives for trade negotiations.

The economic partnership agreement with Kenya is one of the first wave of trade agreements. As a lower middle-income country in a customs union with least-developed countries, Kenya finds itself in a bind. All its neighbours enjoy duty- and quota-free access to the UK. For now, its neighbours are not interested in signing a trade agreement. Kenya’s horticultural exports are vital to its economy and the UK is one of its largest markets. To help our key partner, I believe we should not impose tariffs on Kenya’s flowers, fruits and vegetables. To achieve that in a way that is compatible with World Trade Organization rules, the agreement we are debating today is the best option available.

To support the work of the UK overseas will be my main objective in your Lordships’ House, but I shall not confine myself to foreign affairs. My other interests are the environment and the governance of the UK—the union, the regions and the Civil Service. It is my honour to be the latest Foreign Office PUS to join your Lordships’ House; three of my distinguished predecessors are already noble Lords. My only regret in joining now is that I shall not be able to work with a fourth predecessor, the late Lord Wright of Richmond, but I think of him today and honour his memory, as his successor and son-in-law.

What a pleasure it was to hear the noble Lord, Lord McDonald, and what a good foretaste of what he will bring to our debates. It is obviously a great pleasure to follow him. We have heard how well he manages suaviter in modo; I can assure the House that he is also pretty good at fortiter in re. He is quite tough: after all, he endured a couple of years working for me in Washington. He went on to hold very senior jobs across Whitehall, not just in the Foreign Office, and to be a distinguished ambassador in Israel and Germany. He may well have got the suaviter bit from Patrick, Lord Wright of Richmond, his father-in-law, who was so liked and is so much missed here in this House. Like Patrick, and like me, he served five years as Permanent Under-Secretary. His were more challenging times than mine. He brings us considerable wisdom and experience, and I welcome him very warmly to this House.

I am very glad that we are having this little debate on the agreement with Kenya before it is ratified. Like the noble Lord, Lord Oates, I thank the noble Lord, Lord Grimstone, for his assurance on 23 February on the Floor of the House that it would be inconceivable in future that we should not have a pre-ratification debate if such a debate were recommended by the committee of the noble and learned Lord, Lord Goldsmith. I have long envied American negotiators their ability to argue, during a negotiation, that however admirable a suggestion from our side was, “It will never fly on the Hill.” Our negotiators now have a comparable weapon in their armoury.

In the time allowed to me, I can make only two very brief points about the agreement itself. First, of course the cohesion of the East African Community matters and, as the noble and learned Lord, Lord Goldsmith, said, the compatibility of this new agreement with Article 7 of its common market protocol is not at all clear, but I do not believe that in practice the agreement threatens the cohesion of the EAC. Under the agreement, tariff reductions by the Kenyan Government, which might create a perceived need for customs checks inside the EAC, will start only seven years ahead. By then, I would hope that all five other members of the EAC would have acceded to this agreement or a comparable, improved version of it. I very much hope that the Minister will be able to confirm that that is indeed the Government’s aim.

My Lords, it is a pleasure to speak in the maiden debate of the noble Lord, Lord McDonald. I had the honour of serving with him as a Minister and then as a colleague. He may be young compared to many of us, but he was never naive—at least not in my experience.

I welcome the opportunity to have this debate and commend the work of my noble and learned friend Lord Goldsmith and his committee in giving this agreement much-needed scrutiny. I particularly support the call, and concerns expressed within it, for the implications of this agreement for economic regional integration. Successive Governments of all political hues have long supported regional economic integration in Africa as one of the best means of lifting people out of poverty. It would be a tragedy if these agreements—this is the first of a number—were to undermine the real progress that has been made in the development and economic integration of the regions of Africa, not least as this is the first year of the African Continental Free Trade Agreement. This free trade agreement creates the largest global free trade area in the world by country number, aims to be a model of cross-border co-operation—something that DfID, as it was, and the current department have long championed—and, importantly, offers a real prospect for a continent currently facing a pandemic that has caused it up to $79 billion in output losses in 2020 alone. Africa has never needed economic integration more than now. The World Bank estimates that the African Continental Free Trade Agreement will boost regional income by 7%, or $450 billion, speed up wage growth for women and lift 30 million people out of extreme poverty by 2035.

If regional integration does not come to pass on the continent, we face the real prospect of holding it back and increasing still further the number of people who will fall into poverty as a result of Covid. I therefore urge the Minister to respond positively to the request in the report that the Government should provide an assessment of the risks posed by the agreement to the East African Community Customs Union, as well as an assessment of the implications of any bilateral agreement for regional integration in East Africa. This is important today, since Ghana has signed—in the Locarno room—a post-Brexit trade agreement with the UK. I commend the hard work of Ministers on both sides for all they have done in that regard. If that hard work is to be turned into benefits for farmers, young entrepreneurs and small and medium-sized businesses, it requires that this report and its implications are taken seriously by the Government so that, when we come to consider Ghana’s free trade agreement with the UK, it will enhance rather than damage regional integration.

My Lords, there are times when debates in this House make one feel very old. Between 1974 and 1979 I was a special adviser to Jim Callaghan, working closely with the much-missed Lord Wright of Richmond, the father-in-law of our new Peer. It is also worth remembering that at the time the bright, young Private Secretary to the Permanent Under-Secretary, Sir Tommy Brimelow, was the noble Lord, Lord Kerr. There is one last thought on which the noble Lord, Lord McDonald, might ponder: when Tommy Brimelow came into the House, he joined the Labour Benches. The noble Lord does have a choice.

Kenya is important, not only as a trading partner, as has already been pointed out, but as a country in its own right. It is a member of the UN Security Council and a senior member of the African Union. We have already heard about its membership of the East African Community and, of course, it is a key member of the Commonwealth. It is important that the relationship is endorsed and supported by this House.

Some real worries have already been expressed in this debate. In seeking the new bilateral treaties, the UK must not become a disruptor of existing partnerships, as the noble Lord, Lord Boateng, warned us, which are so important to development in Africa. Although, like my noble friend Lord Oates, I accept that the concessions about parliamentary scrutiny are the basic, minimum requirement, if the Government are sincere in their pledge about bringing sovereignty back not to the Executive but to Parliament, they should look at radical reform of the Constitutional Reform and Governance Act 2010. That would show their real intention to give Parliament the kind of scrutiny that trade and other international relations treaties deserve. We must make sure that they are seen in the wider context of regional stability, our ambitions for climate change targets, development goals and support for human rights, as well as squeezing bribery and corruption out of trade altogether. That is what we want to hear from the Government.

My Lords, I thank the noble and learned Lord, Lord Goldsmith, for introducing this debate. Along with other noble Lords, I most heartily congratulate the noble Lord, Lord McDonald of Salford, on his entertaining maiden speech. Your Lordships’ House will gain a great deal from his experience and perspectives as the global Britain programme accelerates.

During the last few weeks of the implementation—or transition—period, all eyes were on the discussions with the EU, led by my noble friend Lord Frost. I trust that we are likely to see rather more of him in your Lordships’ House in future. He successfully concluded the trade and co-operation agreement with the EU on Christmas Eve, a wonderful Christmas present for the British people.

Little attention has been given to the impressive performance of my right honourable friend the Secretary of State for International Trade and her team in sorting out a large number of continuity free trade agreements during December. As of now, the UK has secured continuity or enhanced continuity trade agreements with almost all the 70 countries with which we had previously signed up to free trade agreements as members of the EU. Last month it was announced that we have applied to join the CPTPP, a free trading area with a combined GDP of £9 trillion. This is very exciting and enormously significant for global Britain.

It is also to be celebrated that we have now signed up to seven free trade agreements covering 14 African countries. Important among those agreements to which we signed up in December was that with Kenya. In terms of volume of traded goods, it was perhaps not the most important, but in terms of geostrategic significance I submit that it was rather more important. Some observers have said that the agreement may have a negative effect on economic integration among the members of the East African Community. However, under Article 143 of the agreement, the other members of the EAC are entitled to make an accession request to the UK-Kenya EPA Council.