Introduction

The United States and Kenya Strategic Trade and Investment Partnership (STIP) agreement is a potential trade agreement that is held to be a successor of the United States and Kenya Free Trade Agreement. ¹The partnership is one that is in alignment with the United States Prosper Africa Initiative, which has a specific focus on the increase of trade between the US and Africa in matters that touch on infrastructure, energy, climate solution and technology.² Currently, a round of negotiations are taking place.³ The objective of negotiations is to ensure that there is enhanced engagement between the two states that would result in high standard commitments in a wide a range of areas, with the overarching goal of : “increasing investment, promoting sustainable and inclusive economic growth as well as safeguarding the welfare of consumers and businesses”. ⁴ In addition, the agreement aims to “compliment” Africa’s regional integration efforts including; the “landmark” African Continental Free Trade Agreement( AfCFTA).⁵

Good regulatory practises have been identified as a crucial chapter of the agreement. The chapter will be centred around negotiating high level commitments on factors such as “ensuring adequate time for public consultations in proposed regulations for review by relevant stakeholders as well as undertaking risk analysis and regulatory impact assessment as appropriate”.⁶ The two sides will negotiate on services domestic regulation.⁷

It is against this background that this article assesses the factors that may contribute to how the good regulatory practises (GRP) section could be drafted under the US-Kenya STIP. The starting point will be assessing what good regulatory practise are. The article will then move on to discuss common trends by looking at the United States, Mexico and Canada Free Trade Agreement (UMSCA) and its good regulatory practice chapter.⁸ Justifications of solely focusing on the USMCA is on the basis that, relevant stakeholders have utilised the agreement as means of guidance when providing comments. The article will analyse comments from relevant stakeholders in relation to the good regulatory practises section.

Good Regulatory Practises

Good regulatory practises (GRPs) are the “processes, systems and methods that assist with improving the quality of regulations as well as ensure that regulatory outcomes are effective, transparent and inclusive.”⁹ The practises have been indicated to include; administrative procedures that assist with governing intergovernmental coordination of rulemaking activity, regulatory impact assessments, regulatory transparency, participation and accountability mechanisms.¹⁰ Internal coordination of rulemaking activity involves the state’s ability to organise regulatory reform and coordinate with relevant stakeholders such as trade and competition officials.¹¹ Regulatory impact assessments assess the effectiveness and favourability of regulations with the aim of ensuring better policy options are selected. ¹²This is done through a cost benefit analysis of calculating costs and benefits that would arise with the enacting the regulations. Lastly, there are public consultation mechanisms in place that assist with upholding regulatory transparency, accountability and participation. ¹³The role of the mechanisms here are to ensure that there is publications for comments of various stakeholders.¹⁴

GRPs are held to be a basic condition for well-functioning markets and societies, as they assist with protection of the welfare of the populace and environment as well as promotion of economic growth. ¹⁵Hence, the underlying rationale of GPRs is, with the ever-changing nature of global affairs ( financial crisis , social changes and environmental challenges) GRPs are held to be sound regulatory frameworks that would provide stability and constancy.¹⁶

Assessing the practises against modern day realities, GRPs provide policy flexibility for multinational corporations to influence national rulemaking.¹⁷ The practises aim to “institutionalise voluntary or mandatory agreements” that lead to the practise of sacrificing, reducing and eliminating domestic laws, policies, standards, regulations and testing procedures (including health, environmental and consumer protections) to create a more hospitable environment for trade and investment. ¹⁸ This is held to “impede trade.”¹⁹ Such trade bias is held to find its roots within US law.²⁰ However, it has evolved and been embedded into the approach of various international bodies such as the Organisation for Economic Cooperation and Development (OECD) and at the World Trade Organisation.²¹ Evidence of this is found within the emergence of the OECD guidelines for GRPs , that borrowed best practises from US norms and law. ²²

GRPs are often pitched to states and the public sector as a beneficial practise that would assist with creating regulatory cooperation within the trading states. ²³However, the inclusion of such provisions is also described as a ‘disguise’ for “further entrenchment of corporate bias” in the global order.²⁴ As a result , they “delay or distract the public and regulators from formulating more “democratic and sustainable policy that would be reflective of each trading state’s capability and national interests.²⁵

United States-Mexico-Canada Agreement (USMCA)

Free Trade Agreements negotiated in the recent past contain provisions on GRPs. For instance, the USMCA has a GRPs Chapter. ²⁶ The Chapter is centred around the objective of ‘supporting the development of compatible regulatory approaches and the reduction of any potential burdensome, duplicative or divergent regulatory requirements.’ ²⁷The expectation of this is that, GRPs can assist with formulating a basis for effective regulatory cooperation between the parties.²⁸ The Chapter includes several provisions to promote regulatory cooperation among the trading parties. Regulatory cooperation is defined under USMCA as “efforts between two or more parties to prevent, reduce, or eliminate unnecessary regulatory differences to facilitate trade and promote economic growth, while maintaining or enhancing standards of public health and safety and environmental protection.”²⁹ Unlike the GRPs provisions, the scope under regulatory cooperation is relatively narrower, in the sense that, regulatory cooperation activities must prioritise trade facilitation.³⁰

USMCA looks towards the exchange of information when implementing GRPs chapter. ³¹Exchange involves the information transfer on how regulations have been formulated. What is assessed here, is whether the regulations have been formulated with the transparency requirements. ³²The requirements involve the need for all parties to publish annually a list of regulations they plan on implementing or introducing, as well as with the need to justify the need for new regulations.³³ The justification should take into account the evidence of scientific reasoning and other data included.³⁴ Regulators ought to take into account the comments received by the parties and amend the regulations in accordance with the comments. The theoretical advantage of this approach looks towards open accountability by relevant stakeholders such as environmental organisations, food safety advocates and consumer groups.³⁵ However, the practical aspect of this brings about bureaucratic process of states adhering to the cumbersome process of justifying new policies each time they would want to add, amend or remove a public protection.³⁶

Stakeholder Comments on STIP

The following section analyses the comments made by relevant stakeholders regarding what should be included within the GRPs chapter of the US and Kenya STIP Agreement. It is important to note that, comments here are derived from US stakeholders as Kenya stakeholders are yet to publish comments regarding GRPs. The US stakeholders include a mixture of ‘ advocacy groups ( Public Citizen and Re think Trade ) business councils ( United States Council for International Business ) and foreign councils ( National Foreign Trade Council).

1. Advocacy Groups

The main arguments of these groups look towards the notion of mutual reciprocity , where the US and Kenya can both benefit from GRPs. This is reflective of the goals of the advocacy groups to ensure there is implementation of policies that harness benefits of trade and promote healthy economies without the need to undermine necessary rights and obligations that would safeguard welfare of the populace . ³⁷The comments include ;

1. 1. Public Citizen ³⁸

The group argues that there is no need to include the USMCA’S GRPs provision. ³⁹They argue that, the provision inherently allows US Multinationals to influence policy in a manner that they can pick and choose not only after regulations take effect but even prior to formulation.⁴⁰ They agree that GRPs provisions slow, weaken and/or prevent public interest regulations, due to the bureaucratic processes in place of review and justification. ⁴¹Therefore, adoption of USMCA’s approach may be detrimental to the Kenyan State. ⁴²

1. 2. Rethink Trade ⁴³

The organisation strongly discourages the incorporation of USMCA GRPs provision, as there is awareness that the provisions provide large corporations ability to influence the regulatory policy making process in a manner that caters to their interests.⁴⁴ The provisions are held to push Kenya towards interests of the US. Therefore , there is need for formulation of all-inclusive approach to GRPs that is accommodative to the interests of both parties.⁴⁵

2. Business Councils

Under this group, there is only one association; the United States Council for International Business. The council aims to “influence international regulatory regimes with the goal of ensuring they appreciate the essential role business plays in creating a prosperous global economy” ⁴⁶as well as “applying American business ideas to major world challenges”.⁴⁷

Their agenda is reflected within the stance they advocate for. ⁴⁸The council is in in favour of the USMCA GRPs provision. This could be reflective of personal interest for the council, where emphasis is placed on the need for policy space for corporations. ⁴⁹This is evident with the need to include justifications for new regulations that would emerge. ⁵⁰Essentially this is to assist with reducing the burden for corporations, by creating a business-friendly regulatory environment.⁵¹ However, there is potential for corporations to abuse this process of review and justification process, as it allows for multinationals such as global producers of pharmaceuticals and pesticides to continue with producing products that have potential risks to human health. ⁵²Thus, with the bureaucratic process of change in regulations in place , there can be a delay in the formulation of regulations that would assist with consumer protection and well-being.

3. Foreign Councils

The National Foreign Trade Council is the representative under this group. The Council agenda is centred around ensuring trade policies foster “ fair access to the opportunities of the global economy and advance global commerce for good.”⁵³

Regarding the comments submitted, the council adopts a multi-stakeholder approach to the formulation of the GRPs, this will assist with eliminating regulatory uncertainty for both states.⁵⁴ In addition, there is use of evidence-based approaches to the development of policy and legal frameworks.⁵⁵ This goes beyond providing justifications of formulating policy to a more nuanced and informed approach to policy formulation that would aid both Kenya and the US in creating policy that is reflective of their capabilities, national interests and developmental agendas.⁵⁶

 

Conclusion

It is evident, that there is a risk that, should the USKESTIP include a chapter on GRPs that is heavily influenced by US common practise, Kenya’s policy space may be fettered under the disguise of promoting and incorporating good regulatory practises from the West. Kenyan negotiators ought to approach the provisions of such a chapter with an informed view which should include knowledge on the risks such a chapter entails. Negotiators should pose questions on the breadth of GRPs and consider the advantages of moving towards more transparent regulatory systems. Assessment should be focused on the overall benefit and potential costs that Kenya may incur if they accept without interrogation of the common practise of countries such as the US, when it comes to good regulatory practises.

This article was authored by:

1. Natasha Karanja.
2. Dr Melissa Omino.
3. Nelly Rotich.

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