Kenya, US deal ‘more symbolic than economic’
What you need to know:
Globally, Kenya ranks as the US 98th most important partner in two-way trade, with the current sum of imports and exports amounting to $1 billion a year.
Trade with Kenya is also not especially important to the US even within the Africa context.
Among sub-Saharan countries, Kenya does not rank among the top five in either exports to or imports from the US.
As Kenya and the United States initiate negotiations on a bilateral free-trade agreement, Washington-based experts are highlighting the concessions as well as the gains such a deal could entail.
Kenya could be required to remove protective barriers on its insurance and telecommunications sectors while also having to accept genetically modified food imports from the US, suggests an analysis by the Peterson Institute for International Economics.
High tariffs on corn and dairy imports might have to be lowered as well, the research institute adds. Piracy of US intellectual property would also be targeted.
Kenya will likewise need to address US concerns on both child labour and environmental protection, says Jack Caporalan, an international business fellow at the Centre for Strategic and International Studies (CSIS).
The prevalence of child workers helps depress wage rates in Kenya, which is seen by the US as a problem due to attendant cost-savings incentives for US manufacturers looking to move operations overseas.
Wildlife trafficking, illegal logging and marine pollution are among the environmental issues the US is likely to raise, Mr Caporalan says. Kenya’s subsidies to its fisheries could also be put on the table for the trade talks.
In general, the Trump administration will press for an agreement that benefits US businesses. Any new deal will eschew the one-sided advantages Kenya enjoyed under the preferential trade arrangement known as Agoa that is set to expire in 2025.
On its part, Kenya sees a bilateral trade deal as offering both political and economic gains. Kenya has already enhanced its prestige within Africa — while also sparking envy and criticisms — for having been the first sub-Saharan country tapped to negotiate a post-Agoa trade arrangement with the US.
Nairobi also believes it can spur the manufacturing, services and agricultural sectors through improved access to markets in the US. Kenya is further seeking to reduce its heavy reliance on imports from China, which totalled $3.6 billion last year.
Globally, Kenya ranks as the US 98th most important partner in two-way trade, with the current sum of imports and exports amounting to $1 billion a year. Trade with Kenya is also not especially important to the US even within the Africa context. Among sub-Saharan countries, Kenya does not rank among the top five in either exports to or imports from the US. For these reasons, “the motivations for the United States seem more symbolic than economic,” observes Mr Caporalan at the CSIS think tank.
The talks set to begin soon will be closely monitored by African states worried about the potential impact on regional trade blocs.
Kenya’s obligations as an EAC member require it to submit to the EAC secretary-general the terms of any bilateral trade deal with the US, Mr Caporalan points out.
If Kenya moves forward with an agreement with the US despite EAC objections, that could “discourage intraregional trade in Africa and lead to a gradual disintegration of these multilateral bodies,” Mr Caporalan writes in an analysis posted by CSIS.