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Kenya-US far from trade deal as year ends

Kenya-US far from trade deal as year ends
Published date:
Thursday, 21 December 2023

Kenya’s hopes of concluding a trade deal with the US by end of this year seem unlikely pushing the long draw talks into next year.

The Kenyan government had in March this year expressed optimism of sealing a deal before the year ends, in its quest to secure preferential trade terms way before the expiry of the African Growth and Opportunity Act (AGOA), in September 2025. 

Kenya and the US have held three rounds of in-person negotiations so far this year under the Kenya-US Strategic Trade and Investment Partnership (STIP).

“The chief negotiators are committed to a swift conclusion of the agreement,” a statement from Kenya’s trade ministry reads in part.

The most recent talks were held in Washington between October 4-7, with the two sides exchanging views on proposed texts covering agriculture, anti-corruption, and services domestic regulation.

This was after US Trade Representative Ambassador Katherine Tai visited Kenya in July, where she also met East African Community leadership, besides being hosted in a round of consultations by Kenyan officials led by CS Trade Cabinet Secretary Rebecca Miano and Presidential Advisor Adan Mohammed.

Kenya and the US launched the STIP on July 14, 2022, intending to increase investment, promoting sustainable and inclusive economic growth, benefiting workers, consumers, and businesses and supporting African regional economic integration.

“The December target was too ambitious…negotiations and conclusion of a substantial trade pact takes at least between two to three years so we are not yet there,” a Kenyan trade expert at the ministry told the Star.

She said the earliest a trade pact could be arrived at , if the two teams remain committed, is towards the end of next year.

During her July visit, Tai said trade policies must benefit all people, in line with President Joe Biden’s pledge to build the economy from the bottom up and the middle out.

She noted the importance of continuing momentum on the initiative and for the United States and Kenya negotiating teams “to intensify their engagement.”

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.

More than half of Kenyan exports to the US are comprised of clothing, macadamia, coffee, titanium ores and concentrates, and black tea.

With this, the agricultural sector, manufacturing, textile, and mining will be among the biggest winners if a deal is struck, with Kenya also keen to rope in SMEs and build up Special Economic Zones and Export Processing Zones for increased exports, as it cuts its import bill 

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.

The US is the largest export destination for Kenya's apparel, accounting for over 90 percent of garment exports every year.

In the ongoing talks, Kenya is on the other hand keen to protect its local industries and sectors even as it pushes for favourable terms to grow its exports.

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 measures among other interests.

The change in administrations in both countries has however had a significant impact on the process which was mooted in 2020, with the Covid-19 pandemic equally having its fair share of stalling the process.

Negotiations began back in July 2020 during former Presidents Donald Trump and Uhuru Kenyatta's tenures.

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 then went into an election in August last year, which saw then Deputy President William Ruto ascend to power, with his administration taking over the negotiations as the two administrations agreed on seek a Strategic Trade and Investment Partnership.

The fresh talks that kicked off this year focused on instruments of expanding bilateral trade, inclusion of women and youth, and supporting Micro, Small and Medium Enterprises.

The US has also been concerned over corruption in Kenya.

During his Jamhuri Day speech in Nairobi, on December 12, President Ruto affirmed his commitment to fighting corruption.

He urged justice, law and order institutions, led by the judiciary and the anti-corruption agencies, to discharge their mandate "without fear, favour, ill-will, or prejudice."

“I also give my personal undertaking to support the prosecution of all those involved in corruption, without regard to their social, economic or political status or connections, ethnicity or any other consideration whatsoever,” the President said.

Kenya is keen to secure a deal even as Africa pushes for an extension of the AGOA programme, which 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.

During the October talks in Washington DC, the Kenyan trade team held discussions with staff from the US Congress and Senate, seeking approval from both Houses should the deal be finalised.

Meanwhile, the US appears cautious in a trade deal with Kenya as the African Continental Free Trade Area (AfCFTA) takes shape and the push by the continent to renew the AGOA pact by another 20 years.

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

There has also been a concern from the East African Community peers over Kenya going solo on trade deals including the Economic Partnership Agreement with the European Union and now the talks with the US.

Tai in a recent conversation with the Center for American Progress (CAP) President and CEO Patrick Gaspard, highlighting how the US is taking a new approach to trade, pointed to strong consideration of existing trade agreements that Kenya has, likely to influence the outcome of the STIP.

 “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.

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