• The US-Kenya FTA is the proposed free trade agreement (FTA) between the United States and Kenya. If completed, it would be the first free trade agreement of its kind between the US and a Sub-Saharan Country and would serve as a template for such future agreements.

• An FTA is a treaty between states that seeks to facilitate trade in goods, services, and even investment. These treaties set out to determine the tariffs and duties that countries impose on imports and exports with the goal of reducing or eliminating trade barriers, which include tariff and non-tariff barriers.

• In this specific FTA, The US is determined to expand access for their industrial goods, agricultural goods, and services, including telecommunications and financial services, and to secure US investment in Kenya. Kenya, on the other hand, looks forward to a deal that will increase the inflow of US Foreign Direct Investment (FDI) into Kenya; ensures market access into the US for certain Kenyan goods and services; expands existing value chains; and ensures that the outcome of negotiations contains provisions for technical assistance and capacity building among other objectives.

• More information on the same can be found in the first US-Kenya FTA Impact Series and the first the Friendly Troll Episode.

• In February 2020, U.S. President Donald Trump and Kenyan President, Uhuru Kenyatta announced their intention to pursue an FTA. In March, President Trump formally notified Congress of his administration’s intention to begin negotiating the US-Kenyan FTA. By 27th March, the administration released a summary of the negotiating objectives.

• More information on the timeline can be found in the US-Kenya FTA Insights Website (insert hyperlink) under the US-Kenya FTA Timeline of events.

• The 2 states gave an estimation of 3 years as the timeline for completion. So far, a year has passed. However, due to the Covid-19 pandemic, negotiations have slowed down, and the time of completion cannot be certainly ascertained at this point.

• More information on the timeline can be found in the US-Kenya FTA Insights Website (insert hyperlink) under the US-Kenya FTA Timeline of events.

• Covid-19 has been a challenge affecting the negotiations seeing as it leads to further postponing of negotiations.

• Presidential Elections, already concluded in the US and anticipated Presidential Elections in Kenya, 2022. For the US, Biden’s administration won the Presidential Election which thus led to revisiting of the negotiations and brought some uncertainty as to the continuance and completion of the FTA. For Kenya, set to have her elections in August of 2022, the elections’ results may cause a further delay or change in tact regarding the content of the negotiation objectives.

Uncertainty as to the state of the FTA will set in because the new administration may either decide to continue or discontinue the negotiations.

Yes, it did. The negotiations could no longer be physical but were held virtually. The launching of the agreement’s negotiations began in early July as opposed to when they were estimated, slightly earlier. Therefore, the Coronavirus has prolonged the negotiations.

Citizens can get involved through public participation in and during the treaty-making process. The Constitution of Kenya 2010 guarantees public participation as a part of the democratic process and requires the same to be undertaken at all levels of government before government officials and bodies make official decisions. However, public participation for agreements in Kenya, is usually limited to parliamentary ratification (insert hyperlink to the public participation podcast episode) of the agreement after it has already been drafted. This includes parliamentary consideration as well as the involvement of private sector actors to champion various interests of the said actors.

Negotiations were put on hold in November 2020 pending the outcome of the US Presidential elections. On 10 December 2020, the then President Elect, Biden, picked the House Ways and Committee trade lawyer, Katherine Tai, as the next United States Trade Representative (USTR). They conducted reviews on agreements negotiated during Trump’s administration before furthering talks. These further talks were mainly to discuss the interests of the US citizens.

The Kenyan Ministry of Industrialisation, Trade and Enterprise Development has identified 22 chapters on which it wishes to negotiate with the US. The Ministry shows its commitment to achieving a deal that will increase the inflow of US Foreign Direct Investment (FDI) into Kenya; ensures market access into the US for certain Kenyan goods and services; expands existing value chains; and ensures that the outcome of negotiations contains provisions for technical assistance and capacity building among other objectives. However, some of Kenya’s objectives could do with more specificity. For example, Kenya hopes that the FTA will enable it to promote its position as a transit hub for goods and services; take advantage of opportunities arising from foreseen commercial consequences associated with global health, economic and social dynamics; and ensure that the negotiations will be conducted in an agreed sequence to ensure a “balanced outcome”. The chapters could be clearer and more incisive, following the lead of the USTR. Listen to our podcast episode with Lori Wallach here.

As can be deduced from the summary of negotiating objectives, the US’ interests are clear. The United States Office of Trade Representative (USTR) has identified 24 chapters which it plans to negotiate on with Kenya. The US is determined to expand access for their industrial goods, agricultural goods, and services, including telecommunications and financial services, and to secure US investment in Kenya. In order to do so, it seeks to: promote intellectual property rights; secure market access for their pharmaceuticals and medical devices; streamline competition policy between the two countries; ensure that labour standards meet International Labour Organisation (ILO) recommendations; increase opportunities for U.S. firms to sell U.S. products in Kenya (“Buy America”); and ensure unrestricted cross-border data flows among others.

Advantages

• The US is looking forward to expansion of access for their goods and services; to secure US investment in Kenya; the FTA would serve as a template for the other agreements that the US would have with other African and specifically, Sub-Saharan African countries; there are also talks of the FTA acting as a counterweight to the growing Chinese influence or investment on the continent because US-Africa trade has declined since the financial crisis in 2008.

• For Kenya, the motivating factor comes about from them having more than 70% of Kenya’s exports duty-free under the AGOA. They are low-value goods like coffee, fruits, clothing, and nuts. The USA consistently ranks as one of Kenya’s top export market and therefore Kenya considers it very important to secure duty-free access before the expiration of AGOA. Also, among the 5 East African countries, Kenya is the only country without the ‘least developed countries’ (hereafter ‘LDC’) status. The other countries will still have access to duty-free exports because of the generalised system of preferences for LDCs even after expiry date of AGOA. The FTA will also aid in growing her GDP.

Disadvantages

• It has been stated that the US is using this FTA as a proxy-war between China-US.

• The FTA seems to be in contradiction to the African Continental Free Trade Agreement (the AfCFTA) seeing as it prohibits negotiations with 3^rd parties for bilateral free trade negotiations. For more information on the AfCFTA, kindly check here.

• The US-KE FTA may be in contradiction to Section 37 of the East African Community (hereafter EAC) Customs Protocol which states that members should inform partner states of their intention before entering into such agreements. Member states should inform the other states of their intention to give preferential market access to other states because of the shared customs territory within the EAC.

• There is also a risk that the US would be gaining more from Kenya than Kenya would from the USA.

Exports from Kenya are relatively low-value products. Some of them include:

• Apparel

• Macadamia nuts

• Titanium ores

• Coffee/tea

Imports to Kenya, on the other hand, are relatively high value-added products. Some of them include:

• Plastics

• Machinery

• Electrical machinery

• Aircraft

• Wheat

There are several chapters that have a wide bearing on Intellectual Property and Information Technology. For more information on the same, kindly check out our podcast episodes on US-KE FTA and US-KE FTA Impact Series.

Morocco. This Agreement was finalised in 2006. However, this will be the first Agreement between the US and a Sub-Saharan African country.

This is an area of contention within the US-Ke FTA as it is argued that the FTA may be in contradiction with the AfCFTA. The AfCFTA prohibits bilateral free trade negotiations with third parties and the FTA is thus setting up a block for the AfCFTA.

Kenya ratified the AfCFTA along with 23 other African countries in 2019. It came to force in on 30 September 2019. Before Covid-19, it was set to begin on 1 July 2020, but the same was halted by the pandemic and thus has only been put in force but is yet to be operationalised. The AfCFTA prohibits bilateral free trade negotiations with third parties and this US-KE FTA is setting a block on the region-wide economic block.

• The original announcement of the US-KE FTA negotiation triggered several criticisms from members of the AfCFTA and the EAC, who feel frustrated by Kenya’s decision to negotiate alone. Kenya has downplayed these regional risks and aims to permanently secure the benefits of the African Growth and Opportunity Act (AGOA), further its economic ambitions in Vision 2030, and solidify security cooperation between the two countries. More information on the same can be accessed here.

The African Union (AU) countries are worried that the US attempt to use Kenya as a template will not reflect the needs of other AU members and could upset regional integration. Shortly after Kenya begun negotiations with the United States, the first secretary-general of the Common Market for Eastern and Southern Africa Erastus Mwencha remarked and the former deputy chairman of the AU Commission stated that, ‘Under the AU, the African heads of state have discouraged member States from entering into bilateral free trade negotiations with third parties because they jeopardize the AfCFTA.’ Mwencha also argued that Kenya could negotiate a far better deal if it coordinated with other members. Kenya disagrees with this and thus sets up a major test for the AfCFTA prior to it taking effect. More information on the same can be accessed here.

It is speculated that other African states may frustrate the trading relationship between Kenya and the US, regardless of which comes before the other through placements of non-tariff barriers (NTBs). Also, if Kenya completes this agreement, she risks losing the goodwill between herself and other member states for both the AfCFTA and the EAC. More information on the same can be found here.

Kenya would have successfully entered into an FTA with the US which would serve as a model for other trade agreements and negotiations with other sub-Saharan African countries and the US. The outcome of the negotiations of the US-KE FTA will have significant consequences for intra-African trade, as well as Kenya’s influence across the continent.

The US-KE FTA may be in contradiction to Section 37 of the EAC Customs Protocol which states that members should inform partner states of their intention before entering into such agreements. Member states should inform the other states of their intention to give preferential market access to other states because of the shared customs territory within the EAC. This therefore may be seen as watering down the regional coherence between the member states.

African Growth and Opportunity Act (AGOA) which is set to expire in 2025 is a United States Trade Act, enacted on 18 May 2000 as Public Law 106 of the 200^th Congress. The legislation is meant to significantly enhance market access to the US for qualifying Sub-Saharan African (SSA) countries. It therefore allows Sub-Saharan African countries to export goods to the USA without tariffs and quotas up until 2025, for now. Its main goal is to foster development for its members.

The agreement was not meant to be permanent but a stepping-stone to better trade relations between the US and Africa. The agreement was renewed by Obama’s administration in 2015 and is set to expire in 2025. However, its renewal is at the Congress’ discretion and the legislation’s extension is presently not guaranteed.

There are talks of the FTA being used as a counterweight to the growing Chinese influence or investment on the continent because US-Africa trade has declined since the financial crisis in 2008. From these, there are speculations that the US may be using the FTA as a proxy war between themselves and China.

• This can be found on the US-Kenya FTA Insights Website (insert hyperlink of the website, once ready, at the words)

• Through the US-Kenya FTA Impact Series.

• Through US-Kenya related episodes in the Friendly Troll Podcast which  is also available on Google Podcasts, TuneIn, Castbox, Stitcher, Spotify, and Apple Podcasts. 

• A quick google search on ‘US-Kenya Free Trade Agreement’ will also provide information on the subject matter.