TRADE TIES

Hope for Kenya–US trade deal as ministers hold talks

Negotiations which started more than a year ago have been on and off.

In Summary

•They were put on hold when the US went into elections in November, that saw President Joe Biden elected.

•Biden's administration later opted to review modules that had been agreed with no substantial progress made to date.

Trade CS Betty Maina. Image: COURTESY
Trade CS Betty Maina. Image: COURTESY

Kenya and the US have revisited discussions on trade policies, giving hope to the stalled Free Trade Agreement (FTA) that started more than a year ago.

This, as the Kenya remains keen to secure a free trade pact ahead of the lapse of the African Growth and Opportunity Act (AGOA) in 2025, which eliminates import tariffs on goods from eligible African nations.

Negotiations for a FTA commenced on July 8 last year, during former President Trump's administration, but were put on hold when the US went into elections in November, that saw President Joe Biden elected.

Biden's administration later opted to review modules that had been agreed, Kenyan trade experts note, a move expected to bring in fresh proposals for the trade deal.

“The talks stalled after Trump government exited. Biden took time to put his team in place. They seem to want to change a lot of what was discussed with previous team,” a government official who requested anonymity due to the sensitivity of the matter, told the Star.

Yesterday, Kenya’s Industrialisation, Trade and Enterprise Development CS Betty Maina met virtually with the US Trade Representative Katherine Tai.

During the meeting, both ministers expressed views on how to progress the trade and economic relationship between Kenya and the United States, signaling a resumption of talks on the FTA.

“Trade ministers from the two countries guided their senior teams in the identification of creative approaches to key issues that would align the ongoing relationship to the worker-centered trade policy in the US – Kenya trade and investment relationship,” Kenya's trade ministry said in a statement.

The two ministries are keen to strengthen the US–Kenya economic and trade ties.

Tai and Maina also committed to continue engagements and cooperating on areas of mutual interest between both countries, including climate change, vaccine access and regional integration efforts.

“Both ministers committed to maintaining an open and robust dialogue moving forward,” the Kenyan side said in a brief statement.

Ambassador Tai lauded Kenya’s important leadership role in the African continent and the Biden-Harris Administration’s commitment to deepening the bilateral relationship.

If talks commence early next year, after the festivities, the two countries are likely to seal a deal before the lapse of AGOA.

It takes up to two years to have a complete FTA, according to trade experts at the ministry.

In October, President Uhuru Kenyatta challenged the US government to be “a reliable and predictable trading partner” for key trade initiatives to succeed.

Reliability and predictability in a partner is something that is critical. To our American friends, I would like to say that you know you cannot start and stop a discussion with partners on the basis of one administration after another. Relationships are between countries and people not between administrations,” Uhuru said.

This was during his visit to the US (New York) where he witnessed the signing of a detailed private sector agreement that seeks to expand trade and investments between Kenya and the United States of America.

The agreement, signed between Kenya Private Sector Alliance (KEPSA) and Corporate Council on Africa (CCA), provides a framework for Kenyan and American businesses, especially SMEs to partner through information sharing, training, logistics, and financing.

The Covid-19 pandemic slowed down the talks last year, before the November elections.

According to trade CS Betty Maina, Kenya is keen to tap at least five per cent of the US market, which has the potential to earn the country more than Sh2 trillion in export revenues annually.

More than 70 percent of Kenya's exports to the US are duty-free under AGOA.

The Free Trade Agreement seeks to ensure fair, balanced, and reciprocal trade between the two countries, increase transparency in import and export licensing procedures, and secure comprehensive duty-free market access for each country's products.

The US is keen to secure comprehensive market access for its agricultural goods in Kenya by reducing or eliminating tariffs.

The two countries also seek to develop rules of origin to ensure that the benefits of the agreement go to products from the United States and Kenya.

Last year, the value of Kenyan exports to the US fell to Sh49.4 billion from Sh51.9billion in 2019, the Kenya Economic Survey 2021 indicates.

The decline is partly attributed to the decrease in the value of domestic exports of shelled macadamia nuts, and articles of apparel and clothing accessories,” the survey by the Kenya National Bureau of Statistics 

That of imports from the US equally dropped from Sh62.3 billion to Sh56.3 billion.