[CTC] U.S.-Kenya trade talks to resume this week

[Arthur Stamoulis]

Sources: U.S.-Kenya trade talks to resume this week
By Isabelle Icso, Inside US Trade 
08/04/2020
Negotiators from the U.S. and Kenya will resume virtual negotiations on a potential trade deal this week, sources told Inside U.S. Trade.
The countries held the first round of talks last month over a two-week period. The negotiations were then tentatively paused due to concerns the Kenyan negotiating team was exposed to COVID-19, according to press reports <https://insidetrade.com/node/169273>.
The Office of the U.S. Trade Representative did not respond to a request for comment about this week’s discussions.
The sides are seeking to strike a comprehensive agreement the U.S. says could be a model for the rest of the region. Another key objective for both countries is to conclude a deal that builds on the African Growth and Opportunity Act, which is set to expire in 2025.
U.S. Trade Representative Robert Lighthizer, in responses <https://insidetrade.com/sites/insidetrade.com/files/documents/2020/aug/wto2020_0354a.pdf> to questions Finance Committee members submitted following a June 17 hearing on the administration's 2020 trade policy agenda. The responses to questions for the record were released this week.
“Regarding a proposal for an early renewal of AGOA, by the time the program expires in 2025 it will have run for 25 years, including a ten-year extension, without having the transformative effect that an FTA can generate,” Lighthizer said. “That’s why the Administration launched an African model FTA initiative. The Kenyan government has stepped up and some other governments in the region have expressed an interest in being considered next. An early renewal of AGOA would undermine this initiative and offer more of the same.” His response was offered to a question from Sen. Bob Menendez (D-NJ).
Lighthizer also said it was unclear how long the negotiations will last, but said Kenyan President Uhuru Kenyatta hoped to complete the negotiations by 2022, when his five-year term expires.
“It is difficult to predict how quickly the negotiations could be completed; President Kenyatta has indicated his hope that we can complete the negotiation during his term. We are working to advance the negotiations as quickly as possible, though ultimately the substance will drive the timing,” USTR stated.
Sen. Mark Warner (D-VA) asked Lighthizer for clarification on why the U.S. chose to negotiate a deal with Kenya over other countries, given “the small size of its economy, and the vulnerable situation under the COVID-19 emergency.”
“As with all countries, it is facing the challenges posed by COVID-19, but President Kenyatta has expressed that he sees an FTA with the United States as important for his country’s economic future,” Lighthizer said in his responses to the panel. “Such an agreement can help create an enabling environment, boost competitiveness, and drive the sort of investment that Kenya seeks. Positive investment spillovers to regional partners will help reinforce the region’s economic integration goals.”
Maxwell Okello, CEO of the American Chamber of Commerce in Kenya, said complications caused by the coronavirus pandemic has created the “impetus” for a bilateral deal with the U.S. “as both countries need to recover.”
“An instrument like the free trade agreement makes it easier for commercial engagement to increase,” he said during an interview with The Kenyan Wallstreet <https://kenyanwallstreet.com/amcham-ceo-on-kenya-us-free-trade-agreement/> this week.
“The COVID situation had a severe impact on trade value chains and supply chain too. Goods could not move in and out of the country as efficiently as they used to before. For example, the U.S. is an essential source market of second-hand clothing, and the suspension of imports has severely affected individuals who rely on mitumba trade,” he added. Mitumba trade is a Swahili term that applies to bundles of used clothing that is often donated from wealthy countries.
“One of the interesting lessons is that you cannot concentrate your sourcing too much in one place,” Okello continued. “China has been for the, a long time, been the world’s manufacturer. When China was locked down, the world almost came to a standstill. The realisation has created an opportunity for countries like Kenya to position themselves as a destination for companies who want to relocate their manufacturing.”
Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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