TRALAC - Trade Law Centre

Kenya in AGOA 'hitch'

Monday, 12 August 2013 Published: | HUMPHREY LILOBA

Source: East African Business Week (Uganda_

Kenya continues to benefit from the trade preferences to the US market in the African Growth and Opportunity Act (AGOA), but Americans are raising some concerns about corruption.

"Part of our ongoing conversation with Kenya is addressing a host of issues in the business environment," David Renz, a counselor for Economic Affairs at the US Embassy in Nairobi said recently.

This year's AGOA Forum is set for this week in Addis Ababa, Ethiopia.

"We are closely watching the commitments of the Kenyatta administration for addressing corruption," he said.

AGOA is a US trade policy that allows duty/quota free access for African goods entering the American market.

However, it is up for renewal before the US Congress. The Obama administration is backing an extension for 15 to 20 years. Since its inception, trade has increased from $2.6 billion to $22.6 billion in 2012.

In 2012, Kenya exported $380 million worth of goods under AGOA.

In the Export Processing Zones, where 25,000 people are employed, exports contributed $262 million. There are two main reasons an extension is being sought. First, many African products cannot compete in American markets. This remains a reality in Kenya.

"AGOA has provided incentives for economic growth in the formal sector, where Kenya is trying to create jobs. "But, we still have to have a product that meets market needs in the US and is manufactured at a competitive price," Renz said.

Some roadblocks for Kenyan exporters include transportation and the price of electricity. Kenya is also looking at Africa's fast growing economies and Obama's focus on the region.

"It's no secret that the President (Obama) views Africa as a key place," John Anderson, an Assistant Secretary in the US department of Commerce said. "We want to take advantage of the opportunities during the promising future the continent is poised to have."

AGOA is currently eligible to 39 African countries, under strict compliance rules. Each year, countries are assessed on their governance and human rights records. Numerous African countries, as a result, have been barred from trading.

This year, Kenya's widely reported corruption will be under the microscope. "If there is corruption that is rampant, we will go in and talk to them about it," Florizelle Liser, the assistant US Trade Representative for Africa said.

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