The EU-Kenya free trade deal shows a waning 'Brussels effect'

Aiming to shape the world in its image, the EU's trade policy towards African, Caribbean, and Pacific countries sets out to collaborate in support of regional and continental integration. For that reason, the EU aims to sign trade agreements with groups of states, called European Partnership Agreements (EPAs).

The EPA with the East African Community, which is one of those groups, was already dead and gone in 2016, with EAC member states recognising that local industries would not be able to withstand competitive pressures from EU firms, locking the region even further in its role of provider of low-value-added primary commodities. It was calculated that the welfare in the EAC would decrease while the EU would register a welfare gain of $212m [€202m].

This posed a problem for Kenya as the only non-Least Developed Country (LDC) in the region.

While its neighbouring countries would remain in preferential trade arrangements as LDCs, the EU threatened to withdraw the remaining preferential market access to Kenya if it did not enter into an EPA.

With other EAC countries not willing to sign the EPA, Kenya decided to make use of the variable geometry principle of the bloc, which allows a member state to move forward without other EAC members.

However, this again created a problem for the EAC.

Considering Kenya is part of the customs union of the EAC which ensures free flow of goods between the countries, the enforcement of the agreement would lead to a free flow of European goods to all EAC countries through Kenya, given the difficulty to enforce rules of origin. Intra-EAC imports could decline by $42m.

For this reason, the EU would never allow its member states to sign bilateral trade agreements.

Indeed, Kenya's move is in breach of the Customs Union Protocol and the Common Market Protocol of the EAC. On top of that, its interpretation of the variable geometry principle might be flawed on two levels.

Firstly, the principle is intended to be evoked only between members of the EAC and not with third parties like the EU.

Secondly, EAC heads of state decided in February 2021 that Kenya was allowed to invoke the principle to implement the standing EPA, but not necessarily to open new negotiations.

The Kenya-EU FTA effectively undermines the efforts of EAC states towards regional integration. The EU is to blame for undermining the region's successful integration efforts.

Brussels effect or boomerang effect?

One may suspect the EU is applying a cunning divide-and-rule strategy. Certainly, the bloc is known for being able to export its legislative framework towards other parts of the world, dubbed the 'Brussels' effect'.

If the deal with Kenya gets ratified, it is likely that rules enshrined in the agreement would be taken over de facto or de jure by other EAC states and ultimately find their way in the African Continental Free Trade Area, which is currently being developed.

This becomes apparent in the chapter on trade and sustainable development of the trade agreement with Kenya, which contains binding provisions on the environment and climate.

While binding environmental provisions should be welcomed, the fact that the agreement does not recognise the differentiated responsibility of countries to combat climate change is unbalanced to say the least. Binding environmental provisions should be supplemented with effective financial support, given the difference in both partners' resources.

While the Brussels effect is certainly at play, the truth is that Europe's influence is waning.

The EU remains unsuccessful in finalising different EPAs. Its postcolonial attempts to close unbalanced trade deals are challenged more and more by its trade partners. As long as the EU misuses trade to further its own interests at the detriment of the interests of other countries, the Brussels effect might well become a boomerang effect.