Kenya eyes 5pc slice of US market as talks start

Thursday, July 9th, 2020 00:00 |
Cabinet secretaries Fred Matiang’i (Interior) and Betty Maina, Industry confer with US Ambassador to Kenya Kyle McCarter after the launch of Free Trade Agreement negotiations between the two countries in Nairobi yesterday. Photo/PD/Philip Kamakya

The much-anticipated trade negotiations between US and Kenya kicks off this morning, with Kenya gunning to capture a 5 per cent share of the US market worth Sh2 trillion in export revenues.

The amount is equivalent to the amount of money Kenya Revenue Authority collected in the last financial year, showing the importance of the talks to the Kenyan economy.

If a deal is wrapped up as expected this month, it will culminate in a historic free trade agreement, allowing duty free access to Kenya products in the US market.

The Kenya’s delegation will be led by Industry and Trade Cabinet Secretary Betty Maina, who said the success of the negotiations was critical because of the need to secure Kenya’s trade and investments relations with the US ahead of the lapse of the African Growth Opportunity Act (Agoa) in November 30, 2025.

Export strategy

She said Kenya concluded and launched an export strategy in 2018, which her ministry has reviewed and singled out products that can be promoted in the US market.

The products, Maina said include textile and apparels, tea, coffee, tree nuts, fish and fish products.

“We estimate that if we can only capture 5 per cent of the US market with these products, we will increase our export revenue by more than Sh2 trillion,” she added.

Maina said Kenya expected that the agreement will increase investment both at the domestic and foreign level, and through it develop programs that will build capacities to address non-tariff barriers and other challenges to grow value chains.

The US has consistently ranked as one of Kenya’s top export markets, maintaining a $1.1 billion two-ways goods trade in 2018, a 4.9 per cent increase from the previous year.

Kenya is also a major recipient of US foreign assistance, a hub for US security initiatives in the region and the second-largest beneficiary of tariff benefits provided by the Agoa.

The discussions comes amidst disquiet expressed by African states that the discussions will discourage intra-regional trade and that it will likely set the rhythm of a process that is meant to serve as a model for future US FTAs in Africa, a notion dispelled by Interior CS Fred Matiang’i, in his capacity as the Chairperson of the National Development Implementation and Communication Cabinet Committee.

Matiangi said Kenya is committed to regional economic blocs, in the belief that they strengthen regional positions. 

He said the FTA is part of President Uluru Kenyatta’s economic transformation agenda, which will spur economic activities especially in the SME, finance and agriculture sectors, bringing “quantity and quality jobs and increasing Kenya’s living standards.

The US is Kenya’s third largest export market and seventh overall trading partner.

The FTA is historic in the sense that it is the first of its kind in sub-Saharan Africa between a developed and developing country.

Kenya is in a similar trade discussion with the UK over a post Brexit trade agreement. 

The negotiations are expected to be finalised ahead of the UK’s exit from the European Union on December 31st 2020 and will be conducted within the Kenya-UK Strategic Partnership Framework established by the two leaders in January 2020 and the East African Community (EAC) parameters in order to enhance regional integration.

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