The new US-Kenya trade deal threatens and undermines the existing continent-wide commerce pact. President Uhuru visited Washington at the end of January in a bid to cement an agreement between the two countries.
The Financial Post reports that if the US-Kenya deal sails through, it will limit Africa’s power to negotiate with the US.
Currently, 39 sub-saharan African countries have duty free access to the US for about 6500 products through the Africa Growth Opportunity Act (AGOA). AGOA was signed into law in 2000 with the Obama adminstration extending it for 10 years in 2015.
However, with the expiration date nearing, the Trump adminstration is not keen on renewing the pact but rather preferring to deal with individual nations.
Kenya is the first nation to negotiate a new deal with the US saying it will use Kenya’s pact as a model for future deals that the US signs with other Sub-Saharan Africa nations.
Dr. Mukhisa Kituyi, UNDP Secretary-General, opines that a free-trade deal would hamper Kenya’s efforts to be a manufacturing and farming hub. This is because the deal enables US products to reach Kenyan markets more easily with the US pressuring Kenya to reform labor and intellectual property laws.
Threat to AfCTA
Furthermore, Kituyi urges Kenya to follow the tested route of collective negotiations where whenever a phase of the AGOA nears expiration, benefitting countries lobby lawmakers to make an extension.
Kituyi faults the unilateral FTA saying that it goes against the AfCTA agreement. The African Continental Free Trade Area (AfCTA) will be the biggest bloc by membership and will spur intra-Africa trade.
African heads of state agreed in 2018 that no country should negotiate a bilateral free-trade agreement with a third party once the continental bloc comes into force. Furthermore, Kenya being a member of the East African Community, shares common custome territory with other members thus making the the unilateral negotiations almost impossible.
Statistics show that the US is an important source of Kenya’s foreign direct investments (FDI), with the country holding an FDI stock of over $405 million in 2018.
Trade between the two countries stands at about $1 billion a year. Over 70% of Kenya’s exports to the United States in 2018 was entered under AGOA.