Kenya must rethink a Free Trade Agreement with the United States

By Edgar Odari

On March 2020, at the direction of President Donald Trump, the United States Trade Representative (USTR) Robert Lighthizer notified Congress that the Trump Administration will negotiate a free trade agreement (FTA) with Kenya. The proposed US-Kenya accord, an FTA between the world’s largest economy and one of the developing countries in Africa, seeks “a mutually beneficial trade agreement that can serve as a model for additional agreements across Africa” and “support regional integration, where appropriate,” the US negotiating objectives has stated.

While this may seem plausible, Kenya must exercise an abundance of caution in this situation. First, although the talks are envisaged to commence in July, Kenya has not even published its negotiating objectives. Such a document would have to be exposed to wider stakeholder consultations as has happened in the US where powerful lobbies have submitted their interests to the USTR.

Furthermore, Kenya must be cognizant of its development strategy and how it fits into the overall picture. Reciprocal trade between Kenya and the US essentially puts two extremely unequal countries on a path of enhanced harmonization of rules and policies. This is a complete mismatch. For example, California alone is the fifth largest economy in the world. Kenya on the other hand is currently ranked 98th on the US trading partners list with exports of $365 million and imports worth $644 million.

The agreement portends the danger of crippling sectors such as agriculture and manufacturing and disintegration of its economy. In agriculture, for example, the US seeks to secure comprehensive market access for US agricultural goods,  promote greater regulatory compatibility with US rules and establish specific commitments for trade in products developed through agricultural biotechnology.

The likely impact is that the agreement will likely impact food security as the ability of local farmers to produce will be limited by stiff competition from subsidized products from the US market. Further, it may limit the ability of the Kenyan government to regulate risky pesticides or agricultural technologies or even shelter local production from volatile prices or supplies.

It is important to note that concluding an FTA with the US will have a negative knock-on effect on the integration efforts under the East African Community (EAC) and the Continental Free Trade Agreement (CFTA). Kenya’s commitments under these frameworks will be meaningless if an external FTA like the one proposed comes into effect.

Finally, African Growth and Opportunity Act (AGOA) under which African countries have been exporting goods to the US expires in 2025. The discussion on a post-AGOA future needs to be collectively done by African countries and not a single country rushing to conclude an agreement with such far-reaching consequences. Such a move will set a counterproductive floor for all other African countries in their future trade relations with the US since it will give the US a pole position.

The writer is the Executive Director at Econews Africa


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