From Agoa to FTA: Kenya-US ties growing from strength to strength

President Uhuru Kenyatta witnesses from State House, Nairobi, the virtual launch of the Kenya-US Free Trade Agreement negotiations on July 8, 2020.
 

Photo credit: File | Nation Media Group

What you need to know:

  • The African Growth and Opportunity Act (Agoa) enhanced markets, allowing Kenyan businesses to grow. 
  • Kenya is East Africa’s economic powerhouse; it makes sense that the US would look to such a partner for the first modern FTA in the region.


The 56-year-old United States-Kenya relationship flourishes because we trust each other, respect each other and our nations share common values.

Both believe in a strong economy through an open, free marketplace allowing entrepreneurs, businesses and the private sector to thrive and create jobs. 

The African Growth and Opportunity Act (Agoa) enhanced markets, allowing Kenyan businesses to grow.

Agoa will expire in 2025 and, while helpful, it has not been transformative in driving the broad-based economic growth Kenya seeks.

Hence, a United States-Kenya Free Trade Agreement (FTA) that will bring our relationship from a reliance on tariff preferences that erode over time and can be unilaterally withdrawn to an agreement that drives more efficient uses of resources and expands trade.

While Kenyans hear a lot about the ongoing FTA negotiations, not all of it reflects reality. Many thoughtful Kenyans and Americans are engaged in these negotiations and recognise the FTA’s importance.

Economic powerhouse

Unfortunately, the negotiators are not the ones speaking publicly about the talks’ progress, leading to some unfruitful conversations.

Kenya is East Africa’s economic powerhouse; it makes sense that the US would look to such a partner for the first modern FTA in the region. To do that, we must look beyond Agoa to negotiate an agreement that will spur economic growth throughout East Africa. The first round of negotiations began on July 8 and the second this month.

For full transparency, the US published its FTA negotiating positions online. Agreeing on a comprehensive, modern FTA is a negotiation, not an ultimatum, as our experience negotiating 14 FTAs covering 20 countries of all sizes has shown. This is about America first and Kenya first — a win-win deal.

Some have asked why an FTA is needed when Agoa has worked so well. Under Agoa, Kenya’s exports to the US increased six-fold from $110 million (Sh11 billion) in 2000 to $667 million last year. But Agoa was never intended to be permanent, and that uncertainty alone is enough to stifle investor interest. 

A high-standard FTA covering topics like goods and services, agriculture, digital trade, foreign investment and anti-corruption will unlock greater trade, commercial and investment opportunities beyond Agoa’s. Our goal is to complete one before Agoa expires.

An FTA would support Kenya’s “Big Four Agenda” and drive investment and the small- and medium-sized businesses (SMEs) that form the backbone of its economy.

It would allow Kenyan and American businesses to benefit from increased access to each other’s markets and our consumers to enjoy expanded choice, lower prices, and higher quality – all while preserving access to US markets.

We have also heard concerns about environmental issues. Our published position is that the US recognises the sovereign right of Kenya to establish its own levels of domestic environmental protection.

Furthermore, the US would seek FTA provisions that provide for, and encourage, high levels of environmental protection. This applies equally to plastic bags, marine litter and recycling.

Free trade agreement

The US and Kenya are equals. Nevertheless, to take its seat as the rightful economic leader in the region, Kenya faces challenges.

A free trade agreement is exactly that — free trade, not protectionism. It will make Kenya more competitive and stronger economically. Closed markets, corruption and other restrictions stifle and weaken Kenya’s economy, limiting innovation and progress.

By partnering with US firms and economy — the largest — Kenyan companies will become more competitive across Africa and globally. It will also encourage transparency.

This will provide Kenya with access to new markets , increase consumer choice, improve efficiencies and regain market share in the EAC lost to Asian competitors.

An FTA will raise governance standards; upgrade consumer and product testing and standards; and enhance product quality. Combining investments in innovation with trained youth will launch the economy to new heights.

Welcome!

You're all set to enjoy unlimited Prime content.