Kenya’s trade and investment deal with the United States, which was scheduled to be concluded next month, has been thrown into limbo after the election of Donald Trump as US president, capping a remarkable comeback four years after he was voted out.
Both Nairobi and Washington, through US envoy Meg Whitman, had indicated earlier this year a desire to conclude the long-term negotiations by the end of the year.
But Trump’s return will return Kenya to familiar territory that saw negotiations that began in 2018 derailed by a new occupant in the White House.
Trump, 78, triumphantly regained the White House on Wednesday after two attempts on his life and a late decision by Democrats to confront Kamala Harris when President Joe Biden withdrew from the race in July.
For Kenya, this signals the beginning of new negotiations given that Trump and outgoing President Biden have pushed for trade deals that have been contradictory.
The 2017-2021 Trump administration proposed a full free trade agreement with Kenya, seeking to reduce tariffs between the two countries, in 2018 before formal negotiations began in 2020.
But the Biden administration, which has avoided traditional trade deals, has not resumed those talks.
Instead, it chose to hold talks on a non-tariff partnership focused on enhancing labor and production standards in Kenyan economic sectors such as agriculture and digital services in ways that facilitate American trade and investment.
It remains to be seen whether the new Trump team will restore full trade talks with Biden’s deal scrapped amid the end of the African Growth and Opportunity Act (AGOA), a preferential trade program that will expire in 2025.
The Trump administration began trade negotiations in earnest during his first term in the White House under the comprehensive Free Trade Agreement (FTA), but they were halted by the current Biden White House in favor of the US-Kenya Strategic Trade and Investment Partnership (STIP). ).
STIP talks under Biden have made progress since July 2022, with eight rounds of negotiations taking place in September.
But it will likely be revised again to align with Trump’s protectionist trade policies, including cutting tariffs on US companies.
Although the Biden-era negotiations cover most of the areas proposed in the Trump-era FTA, they do not address tariff barriers for US companies doing business in Kenya.
“STIP does not address tariff barriers, as does a comprehensive free trade agreement. The Biden administration has not indicated whether or not it will seek congressional approval for STIP,” the Congressional Research Service (CRS), an agency that advises U.S. lawmakers, wrote in May. Before President William Ruto’s state visit to Washington.
Kenya had hoped that the deal under Biden would not address tariffs but would complement AGOA and soften the blow to Kenya if the program was not extended.
America was keen to sign a bilateral agreement with Kenya, perhaps as a reward for its role as a strategic partner in Africa.
As a strategic partner, Kenya serves as a hub for US security initiatives in the region, is a major beneficiary of US security and foreign aid and hosts the largest US embassy in sub-Saharan Africa.
Total trade between the two countries grew to Sh177.03 billion in 2023 from Sh114.19 billion in 2019.
While Kenya’s exports to the US during that period grew by 23.77 per cent to Sh64.26 billion from Sh51.92 billion, imports rose by more than half (55.02 per cent) to Sh112.76 billion.
However, doubts have been raised about the plan to raise Nairobi’s profile in trade with the United States by becoming the first country in sub-Saharan Africa to sign a bilateral agreement.
Morocco remains the only African country that has concluded a free trade agreement with the United States. Talks to sign a bilateral trade agreement between the United States and South Africa collapsed in 2006 after the two parties failed to agree on its scope.
“The broader picture (is that) both President Uhuru Kenyatta and William Ruto were duped into believing that Kenya could do bilateral preferential market access to the United States outside the AGOA area,” said Dr. Mukhisa Kituyi, former Secretary-General of the World Trade Organization. United Nations Conference on Trade and Development (UNCTAD) and former Kenyan Trade Minister.
“Some of us raised a red flag that it was an illusion, because there was no way Kenya could negotiate on an individual basis a better deal than it could negotiate as part of a package of more than 40 countries.”
Analysts say that while it is difficult to predict which direction negotiations between the US and Kenya are likely to take as America prepares for Trump’s return to the White House, the Biden administration’s document differs little from the previous comprehensive free trade agreement document.
“They (the Biden Step and the Trump FTA) are fundamentally different. “However, if you look at the chapters covered by the STI agreement, they largely mirror the chapters that were in the FTA,” said Maxwell Okello, CEO of the American Chamber of Commerce in Kenya.
“However, we are independent as a business body and work with the current government.”
The Stip negotiations, which began in late 2022, focused largely on non-tariff trade issues such as agricultural liberalization, anti-corruption, digital trade, labor rights, environmental issues, facilitating cross-border trade and promoting the growth of small and medium enterprises. Companies.
Discussions on the proposed bilateral deal began in earnest in August 2018 when then-President Kenyatta paid a visit to the White House.
At the time, the two countries’ previous presidents – Kenyatta and Trump – identified economic development and trade as the pillar of the “strategic relationship” between Kenya and the United States.
Kenyatta’s visit came seven months after Trump’s disastrous speech on Africa when he infamously referred to countries in Africa as “despicable”.
The two countries did not begin formal negotiations on a free trade agreement until two years later, in July 2020. However, talks had slowed under Trump due to coronavirus restrictions before being temporarily suspended when the Biden administration took office in January 2021.
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