Kenya is negotiating the Strategic Trade and Investment Partnership, which is expected to be concluded later this year.
US says it may consider proposing to its lawmakers an extension of duty and quota-free access to its market for sub-Saharan countries when the current deal expires in May 2025.
Kenya Association of Manufacturers had said the uncertainty on whether the deal will be renewed or not has prompted investors to hold back billions of shillings in potential investments.
The Trade and Investment Framework Agreement (Tifa) between the US and the East African Community has begun taking shape, with a section of the bloc’s members keen on it and others still biding their time.
This week, US officials were in Nairobi to conduct part of the negotiations on the US-Kenya Strategic Trade and Investment Partnership and to meet Trade ministers from the region.
On July 18, Trade ministers from Tanzania, Uganda, Rwanda, DR Congo, Burundi and South Sudan met with US Trade Representative Katherine Tai. Kenya was represented by the Cabinet Secretary in charge of EAC Affairs Rebecca Miano while EAC Secretary-General Dr Peter Mathuki represented the bloc.
Washington has Tifas with countries at different levels of development and trade interests, and it signed one with the EAC back in 2008, but it stayed moribund.
Within the EAC, the US signed a Tifa with Rwanda in 2006.
Tai, who was in Kenya for three days from July 17, used the meeting to push for a regional deal, projecting the US as an equal partner.
“The EAC members have their own very important dynamics in terms of engaging as a region on economic matters. This is really important for the US to show up as a partner that wants to strengthen regional integration, and our partnership with the region and other specific engagements,” she said.
Focus areas
The meeting addressed market access issues, labour, environment, protection and enforcement of intellectual property rights and capacity building.
Dr Mathuki told The EastAfrican that the forum was important to the US because the EAC “is becoming attractive to others because of market size and improved business environment.”
They also used the forum to discuss the future of the African Growth and Opportunity Act (Agoa), which expires in 2025.
“We wanted to know what would become of it. As a community, we expressed interest in continuing regular dialogue for the implementation of the US-EAC Tifa Council,” Mathuki said.
Tifa councils meet at least once a year at senior levels of government.
Also discussed was the formation of an expert team on technical issues to help the EAC meet US market requirements.
“We are looking at capacities such as production, up-scaling our production capacities in textile, horticulture and standards. There is willingness from the US to work with the EAC. Now we are putting into place technical teams to thrash out some of the issues that may become a barrier,” the EAC boss said.
Kenya is negotiating the Strategic Trade and Investment Partnership, which is expected to be concluded later this year.
The Americans came hot on the heels of the Europeans, who recently concluded an Economic Partnership Agreement (Epa) with Nairobi, affording Kenyan producers free access to the European Union market.
But a section of the region’s civil society continued to criticise the deal, saying it would affect intra-EAC trade and the industrialisation drive.
In a letter to Kenya’s Trade Principal Secretary Alfred K’ombundo, the East Africa Trade Network said Kenya may have misinterpreted the spirit of the mandate given by the EAC Summit on February 27, 2021.
“Paragraph 9 of the final communique was specific as the Summit recognised that not all partner states are in a position to implement the Epa and it was important for some partner states to move forward… The mandate, therefore, extended to implementation of the negotiated agreement and not opening up of new negotiations. The principle of variable geometry sets in after negotiations have been concluded,” the network argued.
“Kenya’s decision to open up negotiations under Article 37 of the Epa under the rendezvous clause offends EAC law under Article 37.d of the Customs Union Protocol, which also applies to the Common Market Protocol.”
But EAC minister Miano assured the partner states that Kenya would adhere to Article 37. She said Nairobi would keep the EAC apprised of any deals signed with other blocs or states.
Speaking to The EastAfrican after the Tifa Council meeting, Miano said they all agreed to go as a community “as much as possible, but recognising that Article 37 also allows bilateral deals.”
The minister said the US-EAC Tifa meeting discussed advancement of the African Continental Free Trade Area implementation.
At the same time, the US says it may consider proposing to its lawmakers an extension of duty and quota-free access to its market for sub-Saharan countries when the current deal expires in May 2025.
Tai said another renewal of the preferential trade programme depends on the US Congress, but her office could facilitate it.
“We are working on facilitating pathways to having the conversations and consultations …to enable the considerations of an Agoa renewal process,” she told reporters in Nairobi.
“Without getting into the danger of trying to predict what the Congress will do, let me say we are committed to our partnership with our members of the Congress … to engage in the work that needs to be done.”
The Agoa treaty was initially intended to last for 15 years from 2000 but was extended for a further 10 years in June 2015.
The agreement allows sub-Saharan African countries to export thousands of products to the expansive US market tariff-free.
Ahead of the expiry, the Biden administration has opened fresh talks over a long-term bilateral strategic trade and investment partnership with Kenya.
Agoa extension
Kenyan manufacturers in February asked the Investment and Trade Ministry to request Washington to extend the temporary preferential trade deal for another 15 years to create certainty over continued access of products to the US under current terms.
Kenya Association of Manufacturers, the sector lobby, had said the uncertainty on whether the deal will be renewed or not has prompted investors to hold back billions of shillings in potential investments.
“Kenya should seek an Agoa extension of at least 15 years with enhancements that will enhance and diversify exports. The need for a renewal … by the end of 2023 is critical to provide for market certainty as investment and trade in Agoa sectors slows down two years to the renewal date,” the lobby wrote in the 2023 Manufacturing Priority Agenda.
Additional reporting by Constant Munda, Business Daily
