TRALAC - Trade Law Centre

Kenya: Use AGOA Forum to seek new market openings

Tuesday, 28 July 2009

Source: The Standard (Kenya)

The question on everyone’s lips is what Kenya stands to gain as the 8th African Growth and Opportunity Act forum comes to Nairobi.

The forum is the only annual ministerial event between sub-Saharan Africa and the United States. While it presents the best possible opportunity for exporters in Kenya to step up their presence in the US market, it is also a chance for a Strength, Weakness, Opportunities and Threats (Swot) analysis on Agoa.

This meeting, from August 4-6, is taking place at a time when the global economy is slowly pulling itself out of the worst recession in years. A rebound in the US economy is expected to set the pace of recovery in the rest of the economies, especially those in markets such as Kenya.

The Agoa forum is also taking place at a time when exporters are yet to take full advantage of the opportunities offered under this arrangement.

While there are 6,400 products that are eligible to enter the US market under Agoa, the country does less than 25 products. We hold the position that the forum should be a useful platform upon which exporters can identify various hurdles and how solutions can be found.

For instance, the textile industry is one of the leading players in the Agoa arena, with firms located in the export processing zones having supply contracts with US buyers.

However, lack of adequate cotton, poor infrastructural facilities and high cost of electricity make textiles from Africa less competitive, compared to those from China and India.

While the Government is making efforts to revive the cotton industry, progress has been slow and frustrating. A large bulk of lint used by textile firms within export processing zones is imported from neighbouring countries at great cost.

Plans by the US Delta Airlines to begin direct flights to Nairobi offer a tremendous opportunity for players in the export sector, to tap into the US market. It is, therefore, imperative for the Kenyan delegation to put pressure on the US counterparts to launch Delta Airlines flights.

Presently, flower and horticultural exports to the US market face a comparative disadvantage to the competition as a result of lack of direct flights between Kenya and the US. Apart from lack of direct flights, Kenya exporters will have to step up their game to be able to compete against the Chinese and Indians, who also have an eye on the US market.

Errors in fact

This forum provides a platform to seek more concessions and waivers as exporters seek to access the lucrative but highly protected US market.

It is our hope that the delegations to this forum will be able to network and have a fruitful engagement so that the country can bargain for more from the US government.

For instance, each sector must be able to articulate its position clearly and loudly, from manufacturers, players in the horticulture and flower sector, through lobby groups and associations, such as the Kenya Manufacturers Association.

Turning this Agoa forum as another talk shop where research analysis and papers and presented, only to gather dust later, will be a wasted opportunity when this window of opportunity finally closes. We not only have to demand more from the Americans but also from the Chinese, Indians, Japanese and Europeans, all with commercial interests on the continent. For instance, Agoa remains a unilateral market access offer by the US, which may be amended or withdrawn at the prerogative of US lawmakers.

With all due respect, this arrangement gives little say and bargaining power to Kenya and African exporters.

Although providing unprecedented access to the US market, most African countries face major challenges in utilising the benefits offered under Agoa, including high transportation costs, poor infrastructure, distance to market, supply constraints and a generally challenging business environment.

We must deal with these issue before even thinking of marketing our products, through this forum, to the US market.