U.S.–Kenya FTA negotiations underway
The U.S. and Kenya formally launched negotiations on the US–Kenya FTA on July 8, 2020. If concluded, the agreement would be the first bilateral trade agreement between the U.S. and a sub-Saharan African state. The FTA is being framed by the parties as a “model” agreement for the region, fulfilling a goal of the Trump administration articulated by USTR Lighthizer in 2018.
The Trump administration notified Congress of its intention to begin negotiations with Kenya under the Trade Promotion Authority (TPA) in March 2020. The current TPA—which sets specific negotiating priorities and allows for the fast-tracking of negotiations while requiring regular consultation with Congress—expires in July 2021. This gives negotiators a relatively short timeline to conclude an agreement under the current TPA.
Following a public consultation, the USTR released negotiating objectives in May 2020. While the section on investment does not mention ISDS, in a recent confirmation hearing, incoming Deputy USTR Michael Nemelka did not rule out the possibility of its inclusion in an eventual FTA with Kenya.
Beyond the timeline imposed by the TPA, negotiations will likely be influenced by other current agreements of which Kenya is a part. One of these is the African Growth and Opportunity Act (AGOA) which sets preferential tariff rates for Kenyan imports to the U.S. With AGOA set to expire in 2025, Kenya may wish to use the FTA to secure this preferential treatment going forward.
Additionally, negotiators will have to take into consideration Kenya’s commitments under the AfCFTA, which will likely take effect in January 2021. African Union officials have expressed discontent with Kenya’s decision to enter into bilateral negotiations with the U.S., arguing that this may jeopardize the AfCFTA.
While Kenya is not, in global terms, a major trading partner for the U.S., it is Kenya’s second largest export market, importing apparel, agricultural, and mining products, and trade volume has been increasing annually since the AGOA tariff regime went into effect.