TRALAC - Trade Law Centre

'Kenya won't lose AGOA status, but its EAC partners are subject to review'

Wednesday, 21 June 2017

Source: Business Daily (Kenya)

Kenya no longer faces possible loss of Agoa trade benefits, US officials announced on Tuesday.

However, three other East African Community member states — Rwanda, Tanzania and Uganda — must undergo an assessment of their Agoa eligibility status, Washington's top trade agency affirmed.

The assessment could result in their ejection from the preferential trade programme.

A review of Kenya's inclusion in the African Growth and Opportunity Act “is not warranted at this time,” the Office of the US Trade Representative said in a notice published in a federal government gazette.

It cited “recent actions Kenya has taken, including reversing tariff increases, effective July 1, 2017, and committing not to ban imports of used clothing through policy measures that are more trade-restrictive than necessary to protect human health.”

Continue monitoring

The US trade office added that it “will continue to monitor Kenya's actions to ensure that Kenya follows through on its commitments.”

The US decision to spare Kenya from a process that would have jeopardised the country's 66,000 Agoa-related jobs “is, no doubt, a victory for Kenya's trade diplomacy,” said Abdirizak Musa, an official in Nairobi's embassy in Washington.

Rwanda, Tanzania and Uganda still risk loss of their Agoa benefits due to their ongoing commitment to a March 2016 EAC decision to phase in a ban on imports of used clothing and footwear from the US.

The EAC countries, including Kenya, were named in a petition filed three months ago by a US-based recycled textiles association alleging that the joint move to bar imports of used clothing violates Agoa eligibility criteria.

Thousands of jobs in East Africa and the US would be lost if the clothing ban is implemented, the association argued.

Eliminating barriers

Among the standards African countries must meet for participation in Agoa is a demonstration of progress toward eliminating barriers to US trade and investment.

US trade officials will now assess the recycled materials association's claims against Rwanda, Tanzania and Uganda.

A public hearing on the issue is scheduled to take place in Washington on July 13.

Combined imports from Rwanda, Tanzania, and Uganda under Agoa's duty-free provisions amounted to $43 million last year — up from $33 million in 2015.

Agoa is a far more valuable instrument for Kenya, which exported $394 million worth of textiles and apparel to the US in 2016.

The Trump administration intends to rigorously enforce Agoa eligibility requirements, US Commerce Secretary Wilbur Ross said last week at a US-Africa Business Summit.

He warned that “countries currently benefiting from trade preferences granted by the African Growth and Opportunity Act [must] continue complying with eligibility requirements established in US law.”

Lobbying firm

Prior to Tuesday's announcement that its status is not in jeopardy, Kenya had responded to the threatened loss of Agoa benefits by hiring a Washington lobbying firm with ties to the Trump administration.

The Kenyan embassy in Washington pointed to the Agoa issue as a key reason for retaining the Sonoran Policy Group at a rate of $100,000-a-month for the next three months.

US trade law gives the president the option of suspending or limiting duty-free treatment of imports from an African country found to be out of compliance with Agoa standards.

President Trump could thus stop short of expelling Rwanda, Tanzania and Uganda from Agoa if the recycled materials association prevails in its case against the three EAC states.

 

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