A possible U.S.-Kenya free-trade agreement could undermine an existing continent-wide commerce pact and limit Africa’s power to negotiate with the U.S.
Washington announced on Feb. 7 that it intended to start trade negotiations with Kenya. President Donald Trump’s administration doesn’t favor renewing the Africa Growth Opportunity Act, a trade deal under which 39 sub-Saharan African countries have duty-free access to the U.S. for about 6,500 products including textiles and manufactured items.
“Kenya should not provide cracks in the armor of those who have pushed for further collective engagement,” according to Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development, and Erastus Mwencha, former head of the Common Market for Eastern and Southern Africa. “There is strength in numbers,” they said in a joint statement.
Kenyan President Uhuru Kenyatta said on Feb. 5 in Washington that he is still committed to regional blocs. However, he said Kenya can also be a “pacesetter” for a bilateral deal with the U.S. that would replace the multilateral arrangement due to expire in 2025.
A free-trade accord would enable products from the world’s biggest economy to enter Kenya more easily and could hamper the East African nation’s efforts to boost its own manufacturing and farming, Kituyi and Mwencha said. The U.S. would also pressure Kenya to show more zeal in reforming its labor laws and enforcing rules on intellectual property, they said.
Former U.S. President Bill Clinton first signed the AGOA into law in 2000, and former President Barack Obama extended it for 10 years in 2015. Kituyi and Mwencha said that whenever a phase of the AGOA program was about to expire over the past two decades, benefiting countries successfully lobbied U.S. administrations and lawmakers to extend it.
“Kenya should follow the tested route of collective negotiation,” they said.
The African Continental Free Trade Area is set to be the world’s biggest bloc by membership, and Kenya was among the earliest nations to ratify it. Growth of intra-Africa trade is in line with Kenya’s aspiration to become a regional business hub.
“To negotiate a unilateral FTA flies in the face of this perception,” Kituyi and Mwencha said.
African heads of state agreed in July 2018 that no country should negotiate a bilateral free-trade agreement with a third party once the continental bloc comes into force. In the sub-regional bloc of the East African Community, Kenya shares a common customs territory with other members, making negotiating unilateral FTAs almost impossible.
With the AGOA, the U.S. become Kenya’s third-largest export market after the European Union and neighboring Uganda, accounting for about $400 million or 10% of the country’s total exports, according to Kituyi and Mwencha. President Kenyatta said his administration is ready to act to secure a deal before the AGOA expires.
Trump has scrutinized trade relationships with the European Union, the U.K. and Africa after making progress on China and securing Senate approval of his U.S.-Mexico-Canada agreement.
The U.S. has a free-trade agreement in Africa with Morocco and has been seeking a sub-Saharan country with which to develop a trade deal that could be the model for others in the region.
Kenya should “ask why others are not taking the bait,” Kituyi and Mwencha said.
– Bloomberg