Kenya, US Begin Talks on Free Trade Agreement

Kenya, US Begin Talks on Free Trade Agreement

Trade and Enterprise Development Cabinet Secretary Betty Maina

Kenya on Wednesday begun initial talks on the free trade agreement with the United States that will end in two weeks.

In a joint statement, trade ministers for the two countries, Betty Maina and Robert Lighthizer said, “We believe this agreement with Kenya will complement Africa’s regional integration efforts, including in the East African Community and the landmark African Continental Free Trade Area.”

Maina said the FTA was crucial to “secure trade and investment relations” ahead of the expiry of the African Growth and Opportunity Act (AGOA) in 2025.

****

On Tuesday, Betty said Kenya will continue to push ahead with the trade deal with the United States saying it has “capability and is willing to be the guinea pig” for Africa in the negotiations.

“In our view, as we pursue this trade agreement, we believe, Kenya has the capability and is willing to be the guinea pig to try off the negotiations with the US so that other African countries can do the same,” said Ministry of Industrialization, Trade and Enterprise Development Cabinet Secretary Betty Maina.

Speaking to NTV Kenya, Betty said the trade agreement once concluded, it would assist the continent by creating a reference upon which other African nations will negotiate bilateral arrangements within the African Continental Free Trade Agreement (AfCFTA) framework in future.

“Because we would be the first Sub-Saharan Africa country to have negotiated a trade agreement with the US, and others can learn from us if we make mistakes, they will be able to learn and if we make gains, it will be inspirational for them,” she added.

In response to countries in opposition to the proposed trade deal, the CS said their concerns were not valid. Betts emphasises that the country is committed to upholding all its trade commitments at a multilateral, continental, and regional level.

“One of the major principles is that we will pay fidelity to our commitments and obligations at the regional level. The US has also assured us they are also committed to promoting regional integration,” she says.

“The discussion on a post-AGOA future needs to be collectively done by African countries and not a single country rushing to conclude an agreement with such far-reaching consequences,” read a letter addressed to the Kenyan government, the African Union and 27 NGOs and trade and rights groups on Tuesday.

The Ministry says the Kenya-US FTA will replace the Africa Growth and Opportunities Act (Agoa) which is set to expire in 2025. 

According to its Proposed Kenya – United States of America Free Trade Area Agreement Negotiation Principles, Objectives, And Scope, its specific objective is to ensure that there is no disruption of Kenya’s market access into the USA after AGOA expires on September 30, 2025.

Under AGOA, Kenya exported to the USA goods valued at USD 661 million in 2018, up from USD 588 million in 2017. This ranks the USA among the top three export destinations in the world.

“We are actually committed to increasing our presence in the US market…our own studies show us that if we were even to increase our market share to 5 percent…we would be earning nearly Ksh 2 trillion shillings in exports,” says CS Betty.

“It is really our interest to pursue this agreement for benefits as Kenya and also for the US for its own benefits and interests because it desires to increase its foothold in Africa and Kenya becomes a significant gateway for that entry.”

In Africa, 39 Sub-Saharan African countries have duty free access to the US for about 6500 products through the Africa Growth Opportunity Act (AGOA). 

AGOA was signed into law in 2000 with the Obama administration extending it for 10 years in 2015.

Kenya Eyes Increasing up to 5pct Share of US Market in Free Trade Deal
President Uhuru Kenyatta when he met US President Donald Trump at the White House in Washington DC in August 2018

Kenya and the US, in February 2020 jointly announced their intent to initiate negotiations on a Free Trade Agreement (FTA) between themselves.

President Uhuru Kenyatta in a webinar hosted by the Atlantic Council under the theme “Strengthening US-Africa ties through trade,” said a Free Trade Agreement (FTA) with the US would reposition Kenya as a gateway for American investments in Africa.

“The essence of an FTA is investment. Ultimately, I believe, Americans themselves will be able to say: Why can’t we invest in Kenya and not only take advantage of Kenya but the region?” he said.

In terms of market access, through the FTA negotiations, Kenya aims to progressively eliminate tariff and non-tariff barriers on substantially all trade in goods in order to establish a free trade area among the parties.

“The scheduling of tariff commitments should seek to maximize the benefits of regional economic integration” reads part of the proposals from the ministry.

READ