US, Kenya Free Trade Agreement will hurt EAC

East African countries stand to lose should Kenya sign a Free Trade Agreement with the United States, experts argue.

The agreement which is expected to be signed in November will see Kenya become the first Sub-Saharan country to sign such an agreement, which the US hopes to use as a model to sign other agreements on the continent.

So far, US only has an agreement with Morocco, on the continent.

Faith Lumonya from SEATINI Uganda argues that FTA risks jeopardizing all the gains we have made in the EAC integration. “Most FTAs contain Most Favored Nation Treatment provisions, which would mean, the same treatment Kenya is giving to the EAC states, it would have to extent to the United States. This means, partner states would have to compete with the United States for the Kenya market. Judging from the US’ capacity, they would definitely out compete the other partner states, hence break the EAC”, she said.

One of the sectors likely to be most hit is the agricultural sector. The US heavily subsidizes the sector which Kenya and the regional economies do not.

Speaking under the umbrella of East Africa Trade Network, an organization that monitors trade and development on the continent, Edgar Odari said the network is opposed to the agreement because it poses a challenge to farmers in the region who will suffer irreparable damage if heavily subsidized agricultural goods are allowed to be imported from the US.

“It will impair efforts of regional integration in East Africa. Already, implementation of the EAC Customs Union is experiencing problems. Add another layer of the Continental Free Trade Agreement and then the proposed US Kenya FTA and you have a recipe for disaster”, Edgar added.

East African Trade Network (EATN) is a membership network comprising civil society organizations, trade unions and farmer groups. In a statement, they said they are strongly opposed to the proposed Free Trade Agreement (FTA) between Kenya and the United States. “We believe the timing and reasoning for the Kenyan government to take up this critical step into a trade pact with the U.S. are wrong.”

They added that Kenya and the region at large, will have possible exposure to trade and investment disputes. “Experience shows that trade and investment disputes have real financial implications for countries in Africa in terms of monetary awards, legal costs, and accrued interests.”

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