US Free Trade Agreement is Easier Said than Done but Kenya Stands Great Chance

In 2020 former US president Donald Trump announced intentions to start trade agreement negotiations with Kenya after a White House meeting with Kenyan counterpart Uhuru Kenyatta, and many Kenyans are keen to see how fast this deal happens and how they benefit.

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US Free Trade Agreement is Easier Said than Done but Kenya Stands Great Chance
Participants of the Study Tour for Trade Professionals World Order and Globalization Hub held in Washington, DC and Baltimore in October. Photo: FNF.
Source: UGC

This was during the third US-Kenya Trade and Investment Working Group meeting, two similar meetings having been established earlier in 2018 when Trump and Uhuru laid foundation for bilateral.

On July 8, 2020 US Trade Representative Robert Lighthizer and Kenya Industrialization, Trade, and Enterprise Development Cabinet Secretary Betty Maina formally launched trade agreement negotiations between the two States.

On October 14, 2021 Uhuru met current US President Joe Biden at White House for bilateral talks and of course a follow-up on the trade agreement.

However, during an October 2021 Washington DC trade tour facilitated by Friedrich Naumann Foundation for Freedom, US trade experts, policy makers and political analysts explained to TUKO.co.ke current affairs editor Michael Ollinga that signing of such a deal is not as easy as is usually announced in joint press addresses by the presidents.

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Doug Palmer, Senior Trade Reporter Politico, who boasts of two decades of experience in covering trade negotiations and disputes said Biden’s priority was not on negotiating trade deals during his first term.

Palmer opined that many first time US president immediately delve on domestic agendas, not external issues and Biden is not an exception.

“Biden is not focused on trade deals now. His focus is on domestic agenda and infrastructure development first. It is a priority for many presidents during their first terms,” Palmer explained.

According to the trade enthusiast, Biden was largely dealing with the Trump administration’s administration that prioritised America first and had reduced regard for international trade policies that did not put US first.

Trump endorsed imposing of tariffs to make it hard for countries engaging in “perceived” unfair trade practices like China, a matter that Biden has to delicately attend to.

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“Biden’s headache is to negotiate with China and the EU. There is no trade negotiation agreement between Biden and UK’s Borris Johnson. There is no much negotiation of deals even for other countries but this would happen in Biden’s second term if he gets reelected,” Palmer observed.

If recent trends are anything to go by, then Palmer is on point as the US has not negotiated any Free Trade Agreement (FTA) since 2010 when Barack Obama was president. Only tariffs have been dropped.

US Free Trade Agreement is Easier Said than Done but Kenya Stands Great Chance
Participants of Study Tour for Trade Professionals World Order and Globalization Hub in Washington, DC and Baltimore, MD. Photo: FNF
Source: UGC

Kenya is already benefitting from the African Growth and Opportunity Act (AGOA) which offers duty-free treatment to goods of designated sub-Saharan African countries.

AGOA was approved by the U.S. Congress in May 2000 in bid to help grow Sub-Saharan Africa and to improve economic relations between the US and the region.

According to Palmer, Congress, an equivalent of the National Assembly in Kenya, directed the administration to find trade partners in Africa which was actualised through AGOA.

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AGOA’s major benefit was duty free exportation for Sub-Saharan countries.

“Congress wasn’t happy with the one-way duty free trade agreement extended to AGOA which includes Kenya. There has been growing demand for more reciprocity where US wants to also get duty free access as this is the only way to get the value back,” he explained.

This stalemate, despite AGOA being in existence until 2025, highlights the reluctance of the US of getting to another trade deal with Kenya.

Kenya has however, been lauded for being bold enough to stand up to seek a free trade negotiation deal backed by its commitment to advance human rights climate change, and improve labour rights which remain to be tough topics for Africa.

During a chat with William Reinsch, Senior Advisor and Scholl Chair in International Business Centre for Strategic International Studies (CSIS) in Washington DC, he observed that labour rights are key in Free Trade Agreement (FTA) negotiations.

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“Partners must be committed to ensure workers are treated better. Another major impediment against attaining deals is that partners mostly negotiate and then forget,” he said.

Brian Reily Director of Free Trade Initiative National Taxpayers Union said America’s leadership was at the moment focused on tightening “Buy America, Build America” and building local infrastructure.

“Kenya, UK trade deals are in the back banner at the moment as focus is on domestic policy,” he said.

It is here that Palmer’s question of what could be the barrier against easy FTAs between USA and African countries comes into perspective.

“Are African countries able to conform to the demands for a trade deal, do they even have the capacity to do so?” he posed.

He cited these tough rules among reasons that could make it tougher for signing of trade deal between Kenya and US soon but lauded Kenya’s boldness to seize the opportunity that even South Africa and its neighbours backed out during George Bush’s tenure.

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“Kenya lifted its hand and committed to try, despite the toughness of conforming to the ground rules that many countries see as a barrier putting itself in a pole position to get a deal before others,” Palmer opined.

Trade deals also have lots of details on specific proposals that are not easy to breakdown which makes negotiations complex and take longer.

“Expectations from US are sometimes difficult for Kenya and other African countries to swallow. These deals also take longer to be negotiated due to their technical aspects which are not achievable instantaneous,” added Palmer.

Julia Friedlander, Deputy Director Geonomics Centre Atlantic Council explained that no country negotiates trade deals without prioritizing particular interests for itself which must be achieved for progress to be made.

“Compliance to human rights, clean energy and climate change, investment securities, logical decision making, democracy and businessmen connections play key role in determining if deals can be reached or not,” Friedlander.

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Kenya has stood out above many African States by committing to champion for enhanced democracy, advocate for climate change and promote peace in the region.

Just recently US Secretary of State Antony Blinken visited Kenya, to among other things look into brokering peace in Ethiopia and in the same breath lauded Uhuru for showing leadership by declaring Kenya would fully transition to clean energy by 2030.

Uhuru made this declaration to the international community during the 21st United Nations Climate Change Conference popularly referred to as COP26 held in Glasgow, Scotland from October 31.

“President Kenyatta has shown leadership on climate change by announcing Kenya is looking to fully transition to clean energy by 2030. US and Kenya believe in same values; we want to bring down emissions.

“We’ll continue to partner in investments in areas of green industries, renewable energy and ensure we unlock climate financing gap to contribute to climate conservation and attain resilience against global warming,” Blinken said.

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Blinken said Biden is double committed to adopt green energy and support resilience which is the same tune Uhuru is singing which lays ground for cooperation even as a trade agreement proposal continues to be discussed.

Reily said Kenya like other countries interested in trade deals should prioritise full utilisation of AGOA free tariffs to get the best from the American market and improve on conforming to standards that will allow its goods be accepted abroad.

Dan Ikenson, Director of Policy Research at NDP Analytics ignited hope by saying US like many other countries cannot overlook international trade through outsourcing since it multiplies, maximizes output and creates jobs thus trade deals will still happen.

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Source: Tuko

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