By ELIJAH N. MUNYI

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The United States and Kenya launched negotiations for a free trade agreement on July 8 this year. With the US gearing up for presidential elections in a few months, these talks may not draw much global attention.

The US is the third most important destination for Kenyan exports after Uganda and Pakistan, accounting for eight percent of its total exports. Kenya exported goods worth $527 million in 2018, primarily apparels, coffee and nuts. Its imports were mainly commercial airplanes and other spacecraft, polymers and medicaments. Kenya has a slim trade surplus that the US will probably be keen to balance.

Washington has a penchant for using free trade agreements to signal the status of partner states as regional strategic allies. Such agreements with Morocco, South Korea, Colombia and Bahrain were all intended to signal much deeper strategic alliances beyond trade.

For the European Union and China, the Kenyan agreement further signals America’s intent for commercial expansion and competition in Africa.

US trade officials have described the Kenyan deal as a model for other African free trade deals. Terming Kenya a “strategic partner, regional leader and commercial hub” statements from both the US Trade Representative Robert Lighthizer and the US ambassador to Kenya Kyle McCarter highlight the seriousness with which Washington wants this deal done.

This vigour affirms President Donald Trump’s strategy outlined by the 2018 US-Africa policy. But since the Kenyan deal is an initiative of President Trump, the palpable pressure to conclude agreement could be detrimental to Kenya’s interests. The pressure hampers Kenya more given the asymmetry of capacity between the two states.

Additionally, there’s no guarantee that Trump will be in office come January 2021. For this reason, Kenya’s team in Washington should consider informally engaging the democrats in case the deal has to be concluded under Joe Biden.

It is my view that Kenya’s negotiations should be guided by four principal questions and objectives as follows:

• Does the proximity of the November election in the US unduly compromise the quality of negotiations?
• What are the prospects for renewal of the African Growth and Opportunity Act (Agoa) in 2025? If extended, would Kenyan exports not covered benefit from US tariff removal?
• Can Kenyan negotiators defend against US pressure to liberalise industrial goods under the East African Community Sensitive List, and, can the US extend to Kenya the “qualified industrial zones” model to bolster US foreign direct investment in Kenya?

From a political perspective, a trade agreement makes sense. It shields Kenya from the uncertainties over the extension of the African deal and the vicissitudes of political party changes in Washington. As a trade tool, the merits of a free trade agreement depend a lot on the extension (or not) of Agoa after 2025 under President Trump or Biden.

More principally, whether democrats or Republicans win in November, the extension of the Africa market access law will depend on the extent to which sub-Saharan Africa states will be regarded as important flashpoints for US-China commercial competition in Africa.

Trump is certainly more combative in wanting to nullify China’s huge commercial advantage in Africa. But a Biden presidency would be more receptive to the appeals of the US Congress Black Caucus which champions the unilateral extension of Agoa. Because of the uncertainty about the whims of the US presidency, it is in Kenya’s interest to concurrently lobby US democrats on the importance of this deal in case of a Biden presidency.

If Agoa is not extended without a free trade agreement, Kenya’s three biggest exports to the US – apparels, macadamia nuts and cut flowers – would face duty increases of five percent, 0.5 percent and four percent respectively. This would undoubtedly negatively affect exports.

Constraints to Kenyan exports to the US are not primarily tariff based. From Kenya’s standpoint, therefore, these trade talks are less about tariff and trade, than they are about attracting foreign investment into Kenya. The most useful potential outcome will be the extent to which Kenya draws manufacturing foreign direct investment into its economic processing zones.

To achieve this, Kenya should negotiate for liberal rules of origin requirements. Such rules should not unduly constrain investors to use only US or Kenyan inputs for Kenyan exports to qualify for the duty-free entry into the US.

The US will no doubt be keen on Kenya’s liberalisation of agriculture and services as part of its ambition to compete with the EU as pre-eminent agricultural exporters. Every country keeps a shortlist of goods that it is allowed to protect either for infant industry protection or security reasons.

My view here is that Kenya should grant the US the same agricultural exports conditions as those granted to the EU under the Economic Partnership Agreement. But at the same time, it should defend the continued protection of the “industrial” goods in the sensitive list such as cement, natural gas and most importantly worn clothing.

If properly negotiated the agreement has the potential to rapidly enhance Kenya’s foreign industrial investment and overall export volumes. To do so, Kenya must pay more attention to the role of this agreement as an investment attraction vehicle and not just a simple tariff-centred ‘traditional’ pact.

Elijah N. Munyi is an assistant professor of International Political Economy at United States International University