By Faridah N Kulumba
Africa-Press – Kenya. The Administration of the United State’s President Joe Biden intends to seek views from Kenyan and American firms on the proposed new trade window as it lays grounds for a new agreement.
The intent
The call follows the fresh talks the U.S opened with Kenya in July 2022. The public views on the fresh trade deal from interested parties will help the United States Trade Representative Office (USTR) as it develops negotiating objectives and positions for the agreement, according to the USTR which has been spearheading the talks.
The deadline
The USTR set 16 September 2022, as the deadline for the submission of the written views. This will help the office to develop objectives and positions for enhanced engagement and subsequent negotiations under US-Kenya Strategic Trade and Investment Partnership.
Views expected
The interested firms were tasked to submit their written comments about general negotiating objectives on agriculture, anti-corruption, digital economy, environment and climate change, transparency and good regulatory practices, micro, small and medium-sized enterprises, work rights and protections, and participation of women, youth and others in the trade.
Among other issues that will be debated include standards of collaboration, customs and trade facilitation, and other measures or practices that undermine fair market opportunities for U.S workers, farmers, ranchers, and businesses. Kenya and the U.S planned to begin developing within three months a detailed roadmap for engagement in these areas.
The spark
The bilateral talks – which will form the benchmark for the rest of Africa – reignited following a review of the Trump-era document. Washington consequently launched the “rejigged” strategic trade and investment partnership with Kenya on July 14 after multiple interactions with trade officials in Kenya. The move followed last year’s statement by President Biden’s administration that it would review the Trump-era bilateral trade negotiations with Kenya in 2020 over a potential deal.
In February 2022, former U.S President Donald Trump and Kenya’s President Uhuru Kenyatta announced that they were intending to start formal trade talks, triggering activities that were expected to culminate in a deal within two years and ahead of Kenya’s August 9th General Election.
Beginning of negotiations
The negotiation terms are to regroup in mid-October under a new administration, which will succeed President Uhuru. Kenyans voted for their new president on 9th August 2022. Deputy President William Ruto was announced as the president-elect, and he will be sworn in after two weeks if nothing changes.
10 pillars engagements
The meeting which will take place in October 2022, is expected to come with a roadmap for engagement on 10 pillars, including agriculture, digital trade, action on climate change, and trade facilitation and customs procedures.
What Kenya want
Kenya’s Industrialisation and Trade Cabinet secretary Betty Maina revealed that in the new agreement Kenya wants to become the manufacturing hub for American companies seeking to relocate or diversify out of China.
The July trade launch
On 14 July 2022, the U.S and Kenya launched non-tariff trade and investment partnership talk. The strategic trade and investment partnership were to pursue commitments to boost economic growth, support African regional economic integration and deepen trade cooperation.
The government of Kenya has been seeking a full free trade agreement with the U.S, with the aim of lowering bilateral tariffs which were launched by the Trump administration with the east African country in 2020. But President Biden’s administration, which has shunned traditional trade agreements, did not resume those talks.
The July launch launched by the U.S and Kenya made no mention of reducing tariffs or enhancing market access, online with other recently launched U.S trade dialogues with Britain, the European Union, and Indo-Pacific nations.
The U.S and Kenya’s economic tie
The economic relationship between Kenya and the United States is currently stable. This concentrated on trade in goods. The U.S. Bureau of Economic Analysis does not provide official statistics on the U.S and Kenya services trade due to its low value. Almost all bilateral investment activity is comprised of U.S foreign direct investment (FDI) in Kenya, valued at $339 million in 2020. Majority-owned foreign affiliates of U.S. multinational firms employed 4,600 people in Kenya in 2019 (latest data available), with total sales of $1.1 billion.
Several top U.S. exports, such as machinery and aircraft, however, face low or zero tariffs. Kenya’s agriculture sector presents the highest barriers to U.S. exports, with an average tariff of 20.3%, and relatively high tariffs on dairy (51.7%), animal products (23.1%), and cereals (22.2%).
Duty-free- Kenya enjoys substantial duty-free access to the U.S market through the Africa Growth Opportunity Act (AGOA) a trade preference program for sub-Saharan African countries that will expire in September 2025.
Exports- Kenya exported USD685.1 million worth of goods to the U.S in 2021, of which more than 75 percent entered duty-free under AGOA, according to the Congressional Research Service – chiefly apparel, macadamia nuts, coffee, tea, and titanium ores. The U.S exported USD561.6 million in goods to Kenya in 2021, with aircraft plastic, machinery, and wheat among the biggest categories.
The Free Trade Agreement (FTA) will enable the U.S to fulfill the shared goal of Congress (as stipulated in AGOA) and successive U.S administration to strengthen and expand ties with trading partners in Africa and transition to a more reciprocal trading framework. The trade agreement will also help in promoting economic growth between the two nations, and encourage Kenya’s efforts to continue to improve its business environment and domestic economic reforms.
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