Kenya, US start talks on trade agreement

The United States Trade Department has commenced negotiations on a comprehensive trade agreement with Kenya, aiming to extend Kenya's preferential access as the current trade arrangement under the African Growth and Opportunity Act (AGOA) is set to close in five years. If successful, this would mark the first bilateral trade accord between the United States and a sub-Saharan African country. Grant Harris, CEO of Harris Partners LLC, shared insights on the significance of this potential agreement and the key considerations at play. Kenya's stature as a critical partner for the United States stems from its regional leadership and robust economic growth trajectory. With its strategic positioning as a gateway to East Africa and beyond, Kenya offers a valuable partnership for the US. The timing of the trade negotiations is crucial as AGOA, the longstanding foundation of US-Africa trade relations, is slated to expire in 2025. AGOA has provided unilateral preferences enabling duty-free exports for qualifying African countries like Kenya to the US. However, the current aim is to establish a more balanced, reciprocal trade relationship to enhance commerce between the two nations. Addressing concerns raised by some African countries, particularly in the East African Community, regarding the proposed trade deal, Harris emphasized the importance of fostering regional integration. While there are apprehensions that a bilateral agreement with Kenya could potentially undermine broader integration efforts, Harris stressed the need for a model that supports regional cohesion. He underscored the significance of aligning trade policies and rules of origin to bolster regional integration while advancing US-Africa trade relations in collaboration with willing and capable states. Reflecting on AGOA's impact since its inception in 2000, Harris acknowledged its partial successes but highlighted the need for greater utilization and diversification. While AGOA has facilitated significant exports, particularly in the apparel sector, Harris emphasized the importance of economic governance, market access, policy consistency, and capacity building to maximize the benefits of trade agreements. Merely accessing the US market falls short unless exporters meet requisite standards and regulations, calling for sustained efforts to elevate trade volumes and product diversity. As negotiations unfold, the transition from one-sided bilateral deals favored by the previous administration towards a balanced template poses a critical consideration. While the Trump administration leaned towards bilateral agreements, Harris expressed hope for continued support for regional integration in Africa. Given the inherent benefits of a larger market size through regional integration, advocating for intra-African trade advancement aligns with the mutual interests of the US and African nations. Looking ahead, the journey towards a comprehensive trade agreement entails navigating complexities encompassing goods, services, intellectual property, labor, and environmental standards. With Morocco being the sole African country that has an existing free trade agreement with the US, crafting a high-standard, inclusive accord demands meticulous deliberation on both sides. The upcoming weeks and months will shed light on the contours of this agreement, delineating its scope and provisions to shape future trade dynamics. To harness the full potential of the prospective trade deal, Kenya must address key constraints inhibiting private sector growth and investment readiness. Prioritizing anti-corruption measures, transparency, favorable regulatory frameworks, and robust economic governance are imperative steps to enhance the investment climate. By fostering an environment conducive to trade facilitation, labor protection, and capital competitiveness, Kenya can position itself strategically to leverage the opportunities presented by the evolving trade landscape.