Economist Odhiambo Ramogi gives update on the Kenya-US trade talks

Kenya and the United States are currently in the process of negotiating a new bilateral trade pact as the Africa Growth and Opportunity Act (AGOA) approaches its expiration date. Some Kenyan firms have expressed apprehensions about the potential impact of goods produced by advanced US factories flooding the market and potentially edging them out of business. Economist Odhiambo Ramogi sheds light on the progress of the trade talks and addresses key concerns surrounding the negotiations. Ramogi notes that while trade deal negotiations between Kenya and the US have been ongoing, there was a temporary pause due to legal questions that needed to be addressed. Significant developments are pending a court ruling, which will determine the way forward in the negotiations. The eventual outcome of the trade deal will play a crucial role in shaping the trade landscape between the two nations. One of the major points of discussion is the potential impact of the US-Kenya trade deal on the implementation of the African Continental Free Trade Agreement (AfCFTA). Ramogi highlights that the specific clauses agreed upon in the bilateral trade pact will determine whether there are conflicts with existing trade agreements within Africa. The Ministry of Foreign Affairs and Trade will play a key role in mitigating any clashes that may arise from the overlapping trade deals. The United States Chamber of Commerce has been advocating for the swift conclusion of a new trade deal with Kenya. Ramogi emphasizes the influence of lobbying in expediting the process, noting that American businesses see Kenya as a strategic entry point to the region for US-manufactured goods. The pressure from the business community adds momentum to the negotiations, with a potential timeline for the deal to be sealed before the US presidential election in 2022. In terms of negotiation dynamics, Ramogi acknowledges the disparity in power between the US and Kenya but emphasizes that smaller players can still assert leverage during negotiations. The importance of Kenya to the US as a trade partner provides some bargaining power to the Kenyan side. The final outcome of the deal will reveal the extent of concessions made by both parties and highlight who held the upper hand in the negotiations. Addressing concerns about the potential impact of US goods on Kenyan firms, particularly in terms of competitiveness and market access, Ramogi points out that globalization has already posed challenges to local businesses. The influx of manufactured goods from the US could further intensify competition and potentially lead to the demise of inefficient local enterprises. The Kenyan government's options for mitigating these challenges are limited, with subsidies being one possible but unlikely solution. Furthermore, the recent implementation of the digital service tax in Kenya, targeting tech giants and online platforms, could also be a point of contention in the trade negotiations. While the taxation aims to increase revenue in the digital economy, it may raise concerns for US businesses looking to access the Kenyan market. Discussions around the implications of the tax on trade relations are likely to arise during the negotiations, with both sides seeking a balanced solution. As the trade talks between Kenya and the US progress, the potential impacts on local businesses, the alignment with regional trade agreements, and the resolution of contentious issues such as digital taxation remain key areas of focus. The finalization of the new bilateral trade pact will have far-reaching implications for the economic landscape of both nations and sets the stage for future trade relations.