US opens trade talks with Kenya

Having signed the first phase of a trade pact with China and approved the US-Mexico-Canada agreement, the White House is now turning its attention to trade relationships with other markets, including Africa

Trade talks with Kenya could mark new engagement with sub-Saharan Africa

KENYA'S MOMBASA PORT WOULD BENEFIT FROM MORE TRADE WITH THE USA

THE US has only one free trade agreement in the whole African continent, with Morocco.

As a result of the agreement, which it signed in 2004 and which came into effect at the beginning of 2006, maritime trade between the US and Morocco has been growing at almost 14% compound annual growth rate.

Kenya’s president Uhuru Kenyatta this month met the US president Donald Trump at the White House aiming to initiate a free trade agreement between the two countries.

As a follow-up, the Corporate Council on Africa, in partnership with Kenya Private Sector Alliance, opened talks with US business leaders and government officials to explore whether the private sector would support a bilateral effort and consider any advantages in investment and trade opportunities that could arise from a Kenya-US FTA.

Source: MDS Transmodal, World Cargo Database February 2020

If successful, this FTA would be the first between the US and a sub-Saharan African country and it would potentially be considered a template that the US could use to boost its trade and investment relationship with the rest of the African continent.

This agreement could be an opportunity “for the private sectors of both the US and Kenya to deepen trade and investment ties in key sectors from energy to banking, construction, ICT/digital trade, health, manufacturing and services trade”, said CCA chief executive Florizelle Liser.

This encouraging observation from the CCA has been echoed by Kyle McCarter, the US ambassador to Kenya, who said he was optimistic that an FTA would translate into enlarging choice within the marketplace.

Successful FTAs, allowing consumers to purchase more, and better quality, products at a lower price, can increase prosperity for the citizens of the signatory countries. They can also drive economic growth and improve efficiency by increasing innovation.

In addition to the Morocco FTA, the US and some African countries are signatories to the African Growth and Opportunity Act, which gives 39 sub-Saharan African countries duty-free access to about 6,500 US products.

Kenya is one of the signatories, and is estimated to be the US’ sixth-largest trading partner within the AGOA countries. South Africa is at the top of the list, with something in the region of 124,000 teu moved in 2018.

Whether the potential deal with Kenya will mark the beginning of a gradual replacement of the AGOA would appear improbable.

However, the AGOA is set to expire in 2025 after being extended for further 10 years by the then US president Barack Obama in 2015. With this date in mind, the African countries will follow how the talks between the US and Kenya evolve with interest.