TRALAC - Trade Law Centre

'Proposed trade between Kenya and US might bring more harm'

Sunday, 20 September 2020 Published: | MUTHONI MATU

Source: Standard Media (Kenya)

On February 6, President Uhuru Kenyatta met with US President Donald Trump at the White House. Following the meeting, the two presidents announced their aim to pursue a free trade agreement between the two countries. By March 2020, President Trump had notified Congress of his intention, the key goal being cited as the need to reach an agreement that builds on the objectives of the African Growth and Opportunity Act (AGOA).

The Trump administration and Kenya launched the trade negotiations in early July and both countries have set up a Trade and Investment Working Group to facilitate the negotiations. The talks between the two countries have drawn worldwide attention for several reasons. Firstly, this will be the first agreement between the US and a sub-Saharan African country. This is the second African country to make a trade agreement with the US, following the one made with Morocco in 2006.

The US Trade Representative Ambassador Robert Lighthizer stated that it is hoped the proposed trade deal will be a model for future trade agreements between the US and other African countries. The main objectives of the negotiations have been cited as: maximising AGOA in its remaining years, strengthening commercial cooperation between the two countries, the development of short term solutions to address barriers to trade and investment and to pursue talks on the future Kenya-US relations on trade and investment.

Moreover, with the Covid-19 pandemic, it is a precarious time for Kenya to be negotiating a trade deal with the US. The pandemic will have long-term adverse effects on African economies and many worry about the timing. While President Kenyatta promises this will be a step in the right direction, observers caution that this bilateral approach could be a blunder for Kenya.

For instance, some trade lobbyists hypothesize that the success of the Kenya-US trade agreement could have devastating effects on Kenyan industries. They predict that it could lead to the decline of key sectors such as agriculture as the US seeks to increase its market access of products developed using agricultural technology. Kenyan farmers may be limited by the stiff competition from subsidised American imports.

The trade deal is also projected to affect the manufacturing industry.  This could be due to the fact that while Kenya’s exports to the US form a large percentage of its exports, they are largely made of raw materials and unprocessed goods. On the other hand, US’ exports to Kenya are largely value-added products. This is likely to undermine Kenya’s efforts to develop its manufacturing industries as the US will continue to export manufactured goods to the country.

This is of concern as the manufacturing sectors remains of top importance for the economic growth of Kenya and developing African countries. If Kenya is to accomplish its development goals in its Vison 2030, it is crucial that it boosts its manufacturing industry. The proposed deal may further compromise Kenya’s domestic policy and impose costly administrative and implementation burdens.

For instance, in the trade deal, the US strives to acquire market access in Kenya for American goods. This will require greater regulatory compliance with American policies. As the US seeks to increase its exports of products developed using agricultural technology, it may hinder the Kenyan government’s efforts to regulate risky pesticides and agricultural production methods.

Currently, Kenya is opposed to importation of genetically modified organisms (GMOs) and such goods are not permitted. However, the US boasts food and agriculture industries that produce GMOs. Further, trade agreements by the US usually require that standards on sanitation be based on science and evidence. This is likely to clash with Kenya’s position on GMOs.

Observers further note that Kenya may lose the goodwill of other African countries as its actions demonstrate a lack of good faith by negotiating bilaterally instead of under the umbrella of a regional bloc. The fallout of this is that the country may lose the vote of East African Community states and other African countries when it comes to elective positions for key positions in international organisations.

Kenya is already on thin ice with other African countries, signified by the failure of the then foreign affairs minister Amina Mohammed in her bid for the position of chairperson of the AU commission in 2017.

Moreover, Kenya recently lost the chance to host the headquarters of the AfCFTA to Ghana. Ms Mohammed is currently vying for the post of Director-General of the WTO. For her to be successful, Kenya needs the support of the other African nations, which make up 35 per cent of WTO’s Developing Country membership. In light of this, Kenya needs to tread carefully and avoid antagonising its neighbours on the continent. Finally, it is feared that the proposed trade agreement could undermine attempts to increase trade within the continent. Kenya is presently a member of a number of regional trade agreements.

  • Muthoni Matu is a student at the Kenya School of law.

 

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