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From Strength to Strength: Kenya-U.S. Partnership From AGOA to FTA

COMMENTARY
By Kyle McCarter | October 30th 2020

 

The 56-year-old United States-Kenya relationship flourishes because we trust and respect each other, and our nations share common values. The US and Kenya believe in a strong economy through an open, free marketplace allowing entrepreneurs, businesses, and the private sector to thrive and create jobs.

The African Growth and Opportunity Act (AGOA) enhanced markets, allowing Kenyan businesses to grow. AGOA will expire in 2025 and, while it has been helpful, it has not been transformative in driving the broad-based economic growth Kenya seeks.

Kenya is ready for the next step, a US-Kenya Free Trade Agreement (FTA) that will bring our relationship from a reliance on tariff preferences that erodes over time and can be unilaterally withdrawn, to an agreement that drives more efficient uses of resources and expands trade.

While Kenyans hear a lot about the ongoing FTA negotiations, not all of it reflects reality. Many thoughtful Kenyans and Americans are engaged in these negotiations and recognise the FTA’s importance. Unfortunately, the negotiators are not the ones speaking publicly about the talks’ progress, leading to some unfruitful conversations.

Let’s start at the beginning: Kenya is the powerhouse economy in East Africa and it makes sense that the US would turn to Kenya as a partner for the first modern FTA in the region. To do that, we must look beyond AGOA to negotiate an agreement that will spur economic growth throughout East Africa. The first round of negotiations began on July 8 and the second round began this month.

For full transparency, the US published its FTA negotiating position online for all to see. This is our starting point; one, we know from decades of experience benefits both the US and our FTA partners. Agreeing on a comprehensive, modern FTA is a negotiation, not an ultimatum, as our experience negotiating 14 FTAs covering 20 countries has shown. This is a win-win agreement.

Some have asked why an FTA is needed when AGOA has worked so well. Under AGOA, Kenya’s exports to the United States increased six-fold from $110 million in 2000 to $667 million in 2019. But AGOA was never intended to be permanent, and that uncertainty alone is enough to stifle investor interest.

A high-standard FTA covering topics like goods and services, agriculture, digital trade, foreign investment, and anti-corruption will unlock greater trade, commercial, and investment opportunities beyond those provided under AGOA. Our shared, ambitious goal is to complete an FTA well before AGOA expires.

A US-Kenya FTA would help support Kenya’s Big Four agenda and drive the investment it seeks. It would also help support Kenya’s small-and-medium-sized businesses that form the backbone of Kenya’s economy.

It would allow Kenyan and American businesses to benefit from increased access to each other’s markets and our consumers to enjoy expanded choice, lower prices, and higher quality – all while preserving access to US markets.

We have also heard concerns about environmental issues. Our published position makes it clear that America recognises the sovereign right of Kenya to establish its levels of domestic environmental protection. Furthermore, the US would seek FTA provisions that provide for and encourage high levels of environmental protection. This applies equally to plastic bags, marine litter, and recycling.

To take its seat as the rightful economic leader in the region, Kenya faces challenges. A free trade agreement is exactly that – free trade, not protectionism. Free trade will make Kenya more competitive and stronger economically. Closed markets, corruption, and other restrictions stifle and weaken Kenya’s economy, limiting innovation and progress.

By partnering with US companies and the US economy – the largest in the world – Kenyan companies will become more competitive across Africa and globally. It will also encourage transparency. This, in turn, will provide Kenya with access to markets currently out of reach; increase consumer choice; improve efficiencies; and regain market share in the EAC lost to Asian competitors.

A US-Kenya FTA will raise governance standards; upgrade consumer and product testing and standards; and enhance product quality. Combining investments in innovation with Kenya’s trained youth will launch Kenya’s economy to new heights.

As we sit down at the table, we must place on the scales not what we see now but what we can envision creating together in the future. President Uhuru Kenyatta is leading this effort by paving the way.

 

Mr McCarter is US Ambassador to Kenya

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