In the current bilateral trade negotiations, the Biden administration has committed to bringing Kenya’s investment climate up to a level that will serve as an example for other African nations.
The primary negotiator in the negotiations, Constance Hamilton, the Assistant US Trade Representative for Africa, predicted that the negotiations will draw multinational corporations to Nairobi, generating good jobs for millions of young, skilled Kenyans without employment.
Under the framework of the US-Kenya Strategic Trade and Investment Partnership (STIP). Which they began drafting in July 2022, just before former President Uhuru Kenyatta’s term came to an end. The 2 nations are currently engaged in discussions.
“The STIP is actually a way Kenya will undertake, and we, together we’ll undertake additional commitments that we believe will improve Kenya’s investment climate and environment, and that at the end of the day, Kenya will be in a better place to attract the kind of investment for the kind of job growth that they’re looking for,” Ms Hamilton told a digital press conference ahead of the African Growth and Opportunity Act Forum in Johannesburg later this week.
“When we launched this (STIP) under the previous administration and under the current administration, the guidance we got is that it has to work.”
To replace the 2 decade old Agoa accord, Kenya has long sought a comprehensive free trade agreement with the US; however, progress has been hampered by regime change in both Kenya and the US.
The Agoa deal, which was initially implemented in 2000 and then renewed for ten years in June 2015, permits thousands of goods from sub-Saharan Africa, including food and drink, wood, plastics, and rubber, to enter the US duty- and quota-free. However, Kenya has primarily benefited from this agreement when it comes to clothes.
According to Ms. Hamilton, if lawmakers in Congress approve, the US Trade Representative’s plan to extend the Agoa, which is set to expire in mid-2025, will not be fulfilled by Kenya through the STIP.
“The lessons learned from twenty five years of Agoa is that we have to do better,” she said, citing the findings of the US International Trade Commission earlier in the year.
“We do believe that not addressing and not trying to change the programme and make it better is a wasted opportunity. So at USTR, we do support renewal of Agoa, but we do think that there are things that can be done to make the programme more impactful, and we hope that Congress will take a look at those things.”
This has happened at a time when US companies doing business in China are intensifying ten-year plans to move production lines because of recent supply chain delays brought on by the Covid-19 restrictions, as well as increased trade tensions between the two biggest economies in the world.
Over the past ten years, US firms in labor-intensive industries like textiles and furniture have moved manufacturing to other nations like Indonesia and Bangladesh due to growing wage costs and intermittent trade disputes between Washington and Beijing.
“What we do has to work for Kenya before we say that this is something that we will replicate someplace else. We have to make sure we get it right,” the top US trade envoy for Africa said. “But I’m very excited about the progress that we’re making.”
The US negotiators requested that Kenya increase the fairness and openness of the procedures for licensing American service providers, including accountants, attorneys, engineers, and architects, during the first round of negotiations for the proposed trade agreement, which took place in Nairobi from 17 April to 20 April.
The US proposal to Kenya is compliant with the Joint Statement Initiative on Services Domestic Regulation of the World Trade Organization, which was agreed by seventy nations in December 2021.
The WTO’s trade in services project, which got underway in 2017, received overwhelming support from developed economies. Notably, Nigeria was one of the notable sub-Saharan nations to embrace the program.
The WTO project covers technical standards that impact trade in services as well as licensing and qualifying criteria and procedures.
US Ambassador Meg Whitman has in the past said Kenya— a gateway into the East African region— is increasingly positioning Nairobi as “the premier destination” for technology and innovation investments on the continent.
“It’s an exciting time to be doing business in the region, creating more jobs and promoting US-Kenya shared prosperity,” Ms Whitman told the 2 day American Chamber of Commerce (AmCham) Business Summit in March.
“We feel Kenya is ready for export lift off as it diversifies.”