What US leadership change means for Kenya on trade, ties

President Uhuru Kenyatta with outgoing US Ambassador to Kenya Kyle McCarter at State House in Nairobi on Tuesday. [PSCU]

As President Joe Biden sets his administration in place, Kenyans anticipate a radical shift in relations with the United States compared to the past four years. 

Kenya’s relationship with the global economic giant will likely improve, as Biden moves to undo the abrasive foreign policy stance adopted by Donald Trump’s administration.  

And while Biden’s tenure will likely see an increase in funding for areas such as counter-terrorism, there are fears that ongoing negotiations to set up a bilateral Kenya-US Free Trade Area could collapse.

Prof Michael Chege, a lecturer of economics at the University of Nairobi, said Biden’s approach to dealing with Kenya would be radically different from that of Trump, with more support to Kenya towards counter-terrorism programmes in the region.

“We should expect a radical departure because the idea of following a single country FTA was intended to counter-balance China and its influence,” Chege said.

“Kenya was expected to become an example, with other African countries expected to follow suit if it succeeded. It was part of a big grand strategy that was long term and assumed he would be re-elected but this will not happen now. The window for negotiations given by Congress expires in July, there is just not enough time,” he said. 

The US and Kenya started the first round of negotiations last July, with the talks held virtually owing to the coronavirus pandemic.

“However, the deal has met stiff opposition in Kenya and regionally, and the Biden administration expected to take a different, more multilateral approach.  

Kenya’s move to enter a bilateral trade pact with the US did not go well with the rest of the East African Community and experts warned that EAC, one of the world’s most progressive economic blocs, appeared headed for disintegration. 

There was also opposition from organisations from EAC as well as other African countries, which argued that the deal would stifle the growth of local industries and lead to dumping of cheap US imports in the region.

These included concern over increased imports of single-use plastic from the US owing to the lobbying interests of manufacturing companies.

“Kenya is a member of AfCTA (African Continental Free Trade Area) and the EAC,” explains Chege. “Within EAC, there is a common external tariff, how will we negotiate a FTA with a country that is not a member of EAC and leave out our partners?” he posed.

“The relations between Kenya and generally Africa with the US will be probably a throwback to the Obama years. If you look at the policy makers and advisors on US-Africa policy, they used to be mid-level executives in Obama’s administration.”

Prof Chege added that the US will now focus heavily on a multilateral approach to negotiations, which will give such institutions as the different United Nations (UN) agencies more relevance relative to Trump’s administration.

“What is going to happen is that Biden is going to go back to multilateral trade negotiations – UN agencies such as the World Trade Organisation will be a significant agency.

“We are going to see elevation of World Bank and IMF in negotiating US position with the developing world. It was a mistake for the former president to leave the Paris Agreement and undermine the UN agencies,” he said. Bilateral negotiations have in the past been criticised as being heavily skewed in favour of the economically strong countries.

Dr Samuel Nyandemo, an economics lecturer at the University of Nairobi, noted that relations between Kenya and the US would be more favourable in the coming years in comparison to Trump’s era.

“Generally, Kenya should expect more favourable relations with the US as opposed to what was there during Trump’s administration. This is considering the previous policy when Biden was vice president. Biden will re-energise relations that Kenya had with US during the Obama administration,” he said.

Nyandemo noted that the Free Trade Agreement talks might suffer because of the regional blocs that Kenya is  member.

He, however, added that Kenyan negotiators should be ready to put a strong case for the country so as not to end with the short end of the stick, as has been the case in many bilateral negotiations.

Betty Maina, Cabinet Secretary for Industry and Trade, on Monday said the Kenya and US teams negotiating the FTA are waiting for Biden’s administration to settle down before resuming talks.

“We started engaging in negotiations with the US with the FTA. We have done two rounds of it and expect to get in to more rounds as the new administration settles,” she said at a press conference.

President Uhuru Kenyatta on Tuesday also said Kenya’s determination to conclude the negotiations with the US.

He noted that the FTA will build on the successes achieved under the African Growth and Opportunity Act (Agoa) by ushering in better and bigger trade opportunities and prospects for Kenya.

Lose focus

“We appreciate what has been achieved through Agoa, but it is time we moved to much closer trade arrangements that are mutually beneficial. We will not lose focus on concluding the FTA,” said the president when he hosted outgoing US Ambassador to Kenya, Kyle McCarter, who had paid him a courtesy call at State House.

Carol Karuga, chief executive of Kenya Private Sector Alliance (Kepsa), expects new US administration to continue with initiatives that that empowered African businesses started during former US President’s term.

“There were some things that African businesses started with former President Obama when Biden was the vice-president that we hope will be revived and we can continue working on.

“These included having regular Africa-US business forums, which helped built and strengthened many businesses on the continent including Kenyan firms,” Karuga said.

“We also expect more predictability in terms of policy. There was a bit of unpredictability with the former president (Trump). Businesses operate best in a predictable environment,” she added, in reference to local firms that trade with the US including those currently exporting under Agoa.

Data from the Kenya National Bureau of Statistics indicates Kenya’s exports to the US in 2019 stood at Sh51.9 billion against Sh62 billion in imports.

This trade difference is significantly narrower compared to China, for example, where Kenya’s imports stand at Sh376 billion against exports of Sh15 billion.