TRALAC - Trade Law Centre

US-Kenyan trade relations in the spotlight

Thursday, 28 May 2009

Source: The Washington Informer

The skies will soon become a lot friendlier towards an East African country, as a major U.S. airline prepares to shave 18-hours off of commercial flights to the economic hub bolstering not only the country’s tourism but its trade with the United States.

Next month, Delta Air Lines Inc. will offer direct flights to Nairobi, the capital of Kenya, from Hartsfield-Jackson International Airport in Atlanta, Ga. The new service will cut the 30-hour flight down to 12-hours. Reuters reported earlier this month that Kenya’s Prime Minister Raila Odinga, who is currently touring the United States, said the shorter flight time should boost Kenya’s trade with the U.S.

Isaac Kariuki, the moderator for Diaspora Messenger, a resource center for Kenyans who live abroad, said Kenyan businesses are forced to send their goods through Europe to get products into the United States. For some businesses, the process has been a deterrent for trade.

“The value of bilateral trade will grow with [the] opening of the skies,” Kariuki said.

Kenya’s tourism industry is also expected to get a jolt. Tourism Minister, Najib Balala, said the direct flight service coupled with the election of President Barack Obama, who is half-Kenyan, is “the best opportunity we have ever had to reach the huge potential of the American tourism market.”

While the launch of Delta’s direct flight service appears promising, concerns remain over trade relations between the U.S. and Kenya. Some of them will be addressed at the Eighth Annual African Growth and Opportunity Act Forum in Nairobi on Aug. 4-6.

The African Growth and Opportunity Act expires in 2015 and was enacted by Congress to boost trade and investment between the United States and countries in sub-Saharan Africa that meet “eligibility criteria” related to good governance, economic openness, and democracy.

Nefeterius Akeli McPherson, a U.S. Trade Representative spokesperson said, while many African countries are making the most of the AGOA, “much work is needed to maximize AGOA benefits and trade.” This year’s AGOA Forum theme, “Realizing the Full Potential of AGOA through Expansion of Trade and Investment,” reflects the current sentiment.

The AGOA has been successful in increasing the number of goods Kenya exports to the United States. However, introducing more diverse products to the U.S. market has been a challenge, said James Kiiru, Kenya’s commercial attaché to the U.S. While the AGOA has helped Kenya’s textile industry, the exportation of Kenya’s horticulture products has been daunting due to the long approval process mandated by the United States Department of Agriculture’s Plant Protection and Quarantine program (PPQ), Kiiru said. The P.P.Q. maintains strict import guidelines to safeguard U.S. agriculture and natural resources from the risk of contamination by plant insects and harmful weeds.

From the standpoint of the United States, corruption and political instability have hindered trade relations with Kenya. McPherson said corruption is frequently cited by U.S. businesses as the No. 1 obstacle to conducting business with Kenya. The U.S. government remains wary about the political situation in the country.

Widespread violence erupted in Kenya after a 2007 election dispute between Prime Minister Raila Odinga and President Mwai Kibaki. Some fear that a gridlock within Kenya's coalition government will undermine Kenya’s political stability.

“The Kenyan government needs to move the reform process forward and work towards preventing a resurgence of political violence which would threaten Kenya’s economy and trade,” McPherson said.

Good trade relations are not only important for Kenya, they are equally important for the U.S. Trade between the United States and Kenya was valued at $818 million in 2008. McPherson said the reason Kenya is an important trading partner for the United States is because it’s the “economic, commercial and logistical hub of East Africa.”