US careful on Kenya trade deal as AfCFTA takes shape

Push to extend AGOA and EAC's concerns on Kenya going solo also seems to be playing out.

In Summary

•Kenya and the US held another in-person negotiating round under the Kenya-US Strategic Trade and Investment Partnership (STIP) in Washington last week.

•US Trade Rep Katherine Tai has since noted new shifts in Africa's trade environment including the AfCFTA,which has come into place since AGOA was renewed in 2015.

US Trade Representative, Ambassador Katherine Tai with President William Ruto at State House Nairobi on July 19, 2023/
US Trade Representative, Ambassador Katherine Tai with President William Ruto at State House Nairobi on July 19, 2023/
Image: PCS

The US now appears keener on the African Continental Free Trade Area and the AGOA pact even as it continues talks on trade and investment with Kenya, officials have indicated.

Kenya and the US held another in-person negotiating round under the Kenya-US Strategic Trade and Investment Partnership (STIP) in Washington last week (October 4-7).

In the just concluded negotiation round, the two sides exchanged views on proposed texts covering agriculture, anti-corruption, and services domestic regulation.

“They also continued their conceptual discussions on the subject of inclusivity in trade, specifically women, youth and diaspora,” said a statement dated October 12 from the Investments, Trade and Industry Ministry

Trade PS Alfred K’Ombudo led the delegation that included officials from his ministry, State Law Office, Kenya Agricultural and Livestock Research Organisation, Kenya Plant Health Inspectorate Service, State Department of Investment Promotion, National Biosafety Authority, Kenya Dairy Board and Kenya Industrial Property Institute.

The US delegation was led by Assistant Trade Rep Constance Hamilton and included officials from the departments of State, Treasury, Commerce, Agriculture, the Food and Drug Administration, the US Agency for International Development and the Environmental Protection Agency.

It is however emerging that the US is putting a lot of consideration on the African Continental Free Trade Area (AfCFTA) currently being piloted, and the African Growth and Opportunity Act, which is being fronted for a 20-year extension.

The emerging concerns adds to the East African Community peers’ worry of Kenya going solo on trade deals including the Economic Partnership Agreement with the European Union.

During her July visit to Nairobi, US Trade Representative Ambassador Katherine Tai met East African Community leadership, besides being hosted in a round of consultations by Kenyan officials led by CS Miano and Presidential Advisor Adan Mohammed.

During a forum at the Center for American Progress (CAP), highlighting how the US is taking a new approach to trade, Tai seemed to be pointing to strong consideration of existing trade agreements that Kenya has, likely to influence the outcome of the STIP.

She noted that since AGOA was renewed in 2015, the Africa Continental Free Trade Area has come into being; hence the US programme to support African economic development should reflect “this important milestone.”

“ We recognise that a successful new trade paradigm must reimagine trade and development as a partnership and a more equitable two-way street,” Tai said during a fireside chat with CAP President and CEO Patrick Gaspard, in the US.

This was a time when the Kenyan delegation was in the country.

“When I travelled to Nairobi in July, I was reminded again how Africa’s vibrancy and potential are extraordinary and undeniable. The continent’s success is inextricably linked to ours and we need to row together, for our people, for our future,” she added.

Kenya is among six countries picked last year to pilot the AfCFTA alongside Ghana, Cameroon, Egypt, Rwanda and Tanzania.

Kenya and the US launched the STIP on July 14, 2022, with the goal of increasing investment, promoting sustainable and inclusive economic growth, benefiting workers, consumers, and businesses and supporting African regional economic integration.

The two countries are working towards a 2024 deadline for sealing a deal, with other EAC member states, led by Tanzania, watching closely if it will factor in regional integration. 

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.

Kenya is among the biggest beneficiaries of AGOA with more than 70 per cent of exports to the US enjoying duty-free access, where the US is also a key import source for the country.

It is the largest export destination of Kenya’s apparel, accounting for over 90 per cent of garment exports every year.

Last year, the value of Kenya's exports to the US grew 34 per cent to Sh79.9 billion up from Sh59.6 billion, the Economic Survey 2023 by the Kenya National Bureau of Statistics indicates.

“The growth was mainly due to increased domestic exports of titanium ores and concentrates; articles of apparel and clothing accessories and; coffee,” KNBS notes in its report.


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