Kenya-US trade talks finally resume

Kenya and the US have resumed physical negotiations for a trade deal expected to be in place before 2025.

The Kenyan delegation led by Trade Principal Secretary Alfred K’Ombudo is in Washington DC for a week-long talks which commenced yesterday (February 6-10).

This is the first in-person round of discussions under the Strategic Trade and Investment Partnership (STIP) , which is being pushed by President William Ruto’s administration.

The Kenya-US STIP was launched on July 14 2022 with the two countries committing to pursue enhanced engagement. 

“The goal of the partnership is to increase investment, promote sustainable and inclusive economic growth, benefit workers , consumers and businesses including Micro, Small and Medium-sized Enterprises , and support African regional economic integrations,” CS Moses Kuria’s Investments, Trade and Industry ministry said in a statement yesterday.

Kenya is keen on securing a trade deal with the US before the expiry of the African Growth and Opportunity Act (AGOA) in 2025, even as African nations push for an extension of at least 10 years.

Negotiations began back in July 2020 during the Donald Trump and Uhuru Kenyatta tenures.

Administration changes in both countries following elections and the  Covid-19 pandemic have however stalled the process.

After the US elections in November 2020, Joe Bidens’s administration took time to review part of the pact before initiating a fresh round of talks.

Kenya would then go into an election in August last year, which saw former Deputy President William Ruto ascend to power, with his administration taking over the negotiations on a new scale which throws weight behind MSMEs.

US Trade Representative Katherine Tai  was the lead person in the US Presidential delegation to the inauguration of President William Ruto  on September 13, last year.

Tai later met with CS Kuria virtually on November 3, and in-person on December 12  on the sidelines of the US-Africa Leaders’ Summit in Washington DC, where Kuria confirmed Kenya’s strong interest in continuing to pursue the STIP initiative.

According to Kuria, the countries are looking for a win-win deal in the strategic trade and investment partnership.

It takes up to two years to come up with a working trade agreement meaning Kenya will be keen to fast track the process before the expiry of AGOA.

The talks, according to Tai and Kuria’s offices, have kicked off with instruments of expanding bilateral trade, inclusion of women and youth and supporting Micro, Small and Medium Enterprises.

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

It is also pushing for transparent and competitive procurement processes in the Kenya government tenders, effective protection of intellectual property rights, favourable sanitary and phytosanitary measure among other interests.

Kenya on the other hand seeks to protect its local industries and sectors even as it pushes for favourable terms to grow its exports to the US, the largest destination of its apparel accounting for over 90 percent of garment exports every year.

The AGOA program gives Kenya and 40 other sub-Saharan African countries duty-free access to the US market for over 6,000 products.

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

With a bilateral deal, 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.

In 2021, Kenya's exports to the US grew to Sh59.5 billion, up from Sh49.3 billion the preceding year, with increases recorded in the exports of macadamia nuts and articles of apparel and clothing accessories.

A deal in place is expected to deepen Kenya-US trade which is currently dominated by China, Kenya’s biggest import source.

The Kenyan government targets to increase exports from 10 per cent  of GDP to 30 per cent by December  2025, and increase manufacturing contribution to GDP from seven per cent to 20 per cent by 2030.