TRALAC - Trade Law Centre

Kenya, Ethiopia ahead of region in benefits of AGOA treaty

Tuesday, 26 May 2020

Kenya led the East African Community members in its use of the Africa Growth Opportunity Act (Agoa) treaty, scoring 98 per cent.

However, it came second to Ghana which recorded 99.1 per cent with Madagascar coming third at 93.7 per cent.

According to data contained in the US Trade and Investment with sub-Saharan Africa: Recent Trends and New Developments report, Ethiopia at 81.9 per cent and the Democratic Republic of Congo (DRC) at 68.2 per cent are the other eastern Africa countries that have also taken advantage of the treaty to increase exports to the US mainly of products like textile and apparels, metals, agricultural products and artefacts.

Increase in apparel exports by Madagascar, Ethiopia and Kenya resulted in US imports of apparel from the region under Agoa increasing by 9.9 per cent annually to $1.2 billion from 2016 to 2018.

“The 10-year extension of the Agoa programme and Agoa’s third-country fabric provision allowed countries to expand apparel production and were the primary causes of the increase in apparel imports,” stated the report.

Kenya’s high rate of Agoa utilisation comes when the country has announced intention to negotiate a US-Kenya free trade agreement that would see Kenya open its borders for duty-free imports from the US, while Nairobi would also get to export a range of goods tax-free to the US.

The two countries share around $1 billion in trade annually.

Notably, only 16 of the 39 Agoa beneficiary countries have prepared national utilisation strategies that identify sectors with the potential to increase exports to the US under the treaty that will expire in 2025.

Kenya, Tanzania and Rwanda are the only EAC countries that have complete utilisation strategies in certain industries like agricultural and food processing, textile and apparels, handicrafts, jewel and mining.

According to the report, US exports to sub-Saharan Africa countries rose from $13.5 billion in 2016 to $15.9 billion in 2018, a compound annual growth rate of 8.5 per cent.

Exports of petroleum products represented the largest portion of the increase followed by exports of aircraft, spacecraft and related equipment, certain motor vehicle parts, motor vehicles, natural gas and components and poultry. 

Despite poultry farmers in Kenya companioning of lack of markets, US poultry exports into the region increased by 28.3 per cent to $465 million from $283 million during the 2016–18 period.

In deed in 2018, the US was the third largest global supplier of poultry to sub-Saharan Africa by value after the European Union and Brazil, with the region accounting for 11 per cent of US exports to the world.

“Rising population and incomes have led to increasing demand for meat protein food sources, which has boosted US exports of poultry to sub-Saharan Africa,” noted the report.

View related news articles

'The opportunities are vast in a potential US-Kenya FTA'

'The opportunities are vast in a potential US-Kenya FTA'

Last year, the U.S. and Kenya announced the launch of free trade negotiations, the first of its kind between the U.S. and a sub-Saharan Africa country. If successful, it would be the most significant trade development in the region since the enactment of the African Growth and Opportunity Act (AGOA) trade preference program in 2000. To better understand the key issues...

06 May, 2021
Report: A look at the potential benefits and challenges of a US – Kenya trade agreement

Report: A look at the potential benefits and challenges of a US – Kenya trade agreement

The American Chamber of Commerce (AmCham) Kenya has partnered with the U.S. Africa Business Centre (USAfBC) and Covington to publish a business trade report. The report, titled US-Kenya Trade Negotiations: Implications for the Future of the U.S.-Africa Trade Relationship, examines the challenges and benefits of a potential free trade agreement (FTA) between the...

30 April, 2021
Kenya: 'Uhuru–Blinken talks a breath of life to US trade deal'

Kenya: 'Uhuru–Blinken talks a breath of life to US trade deal'

Trade talks between Kenya and the US could resume soon following Tuesday's virtual meeting between President Uhuru Kenyatta and US Secretary of State Antony Blinken. This is after a five-month break occasioned by change of g-uard in the US as President Joe Biden took over from Donald Trump after last November’s elections. The settling down of the Biden administration put...

29 April, 2021
'Changing jeans sourcing scene has these countries coming up roses'

'Changing jeans sourcing scene has these countries coming up roses'

The sourcing landscape for denim jeans is slowly but certainly shifting, while overall U.S. blue denim apparel imports continue to decline. Imports of jeans fell 7.43 percent in the first two months of the year compared to the same period in 2020 to a value of $460.25 million, expanding on a 5.36 percent year-over-year falloff in January, according to the Commerce...

09 April, 2021
'Biden Administration dampens Kenya's hopes for bilateral trade deal'

'Biden Administration dampens Kenya's hopes for bilateral trade deal'

The Biden administration's plans to review foreign trade policy and refocus it on America's economic recovery have thrown long-running free trade negotiations with Kenya into disarray. In a development that casts doubts on the future of a bilateral free trade agreement (FTA) with Kenya, United States Trade Representative Katherine Tai has informed Kenyan Minister...

05 April, 2021
'Uncertainty around Kenya-US Free trade deal'

'Uncertainty around Kenya-US Free trade deal'

A cloud of uncertainty has engulfed Kenya’s pursuit of a free trade agreement (FTA) with the United States due to the impending change of guard at the White House.  Even before he takes office, President-elect Joe Biden has sent strong indications of plans to annul many of President Donald Trump’s policies, cutting across trade, environment and geopolitics...

18 January, 2021