Development Digest: The US-Kenya Trade Deal
Traditionally, the US has adopted a multilateral approach to trade with Africa via the African Growth and Opportunity Act (AGOA), which was passed by Congress in 2000. Now, Trump wants to start dealing with African countries bilaterally and Kenya is his first choice. ⠀ ⠀ It would be America’s first free trade agreement (FTA) with a sub-Saharan African country and a model for future trade agreements in the continent.⠀ ⠀ What would the deal mean for U.S.-Kenya trade?⠀ ⠀ In 2018, US-Kenya trade was valued at $1.1 billion, placing Kenya as the 98th trading partner of the US. Likewise, the US was Kenya’s third-largest export destination at the time.This huge disparity in trade has triggered controversial views that the FTA is a strategic attempt by the US aimed at nullifying Chinese influence in Africa.⠀
The agreement could catalyse Kenya’s foreign industrial investment and export capacity. However, it could also impede efforts to grow Kenya's manufacturing and farming industry.⠀
To reap the full benefits of the agreement, Kenya needs to view this as an investment attraction opportunity and not just a passive tariff-centred commercial treaty.⠀
Unsurprisingly, Kenya's decision to pursue a FTA with the US has not been well received by members of the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA).⠀
A major concern is that the EAC and the AfCFTA agreements deter members from pursuing bilateral trade deals with third parties.⠀
Kenya's deal could also undermine attempts to implement the AfCFTA, which is meant to boost intra-African trade and strengthen the continent's global position. There are also fears of dumping American products on the continent. ⠀ Trade agreements often take years to negotiate and implement due to the thorny details involved. ⠀
In a few weeks, Americans would be heading to the polls to elect a President. As we saw in the transition from the Obama to the Trump administration, trade negotiations can be greatly delayed when a new president comes into power.
The question now is, what will be the fate of the US-Kenya FTA if Biden wins in November?
Thank you for reading,