The Biden administration has pledged to improve Kenya’s investment climate to levels that will act as a model for other African countries under the ongoing bilateral trade negotiations.
Constance Hamilton, the Assistant US Trade Representative for Africa and the lead negotiator in the talks, said the negotiations will make Nairobi a magnet for multinational companies which will create decent jobs for millions of Kenya’s skilled jobless youth.
The two countries are locked in negotiations under the US-Kenya Strategic Trade and Investment Partnership (STIP) whose terms they started stitching together in July 2022 before the end of former President Uhuru Kenyatta’s term in office.
“The STIP is actually a way Kenya will undertake, and we, together we’ll undertake additional commitments that we believe will improve Kenya’s investment climate and environment, and that at the end of the day, Kenya will be in a better place to attract the kind of investment for the kind of job growth that they’re looking for,” Ms Hamilton told a digital press conference ahead of the African Growth and Opportunity Act Forum in Johannesburg later this week.
“When we launched this [STIP] under the previous administration and under the current administration, the guidance we got is that it has to work.”
Kenya has long sought a full free trade agreement with the US to replace the two-decade-old Agoa deal, but progress has been dragged by regime change in both countries.
The Agoa pact, first enacted in 2000 before renewal for 10 years in June 2015, allows duty- and quota-free access to the US for thousands of products such as food and beverages, wood, plastics and rubber from sub-Saharan Africa, but Kenya has largely tapped the apparel line.
Ms Hamilton maintained that the STIP will not graduate Kenya out of Agoa that the US Trade Representative was keen to renew upon expiry mid-2025 subject to approval by lawmakers – the Congress.
“The lessons learned from 25 years of Agoa is that we have to do better,” she said, citing the findings of the US International Trade Commission earlier in the year.
“We do believe that not addressing and not trying to change the programme and make it better is a wasted opportunity. So at USTR, we do support renewal of Agoa, but we do think that there are things that can be done to make the programme more impactful, and we hope that Congress will take a look at those things.”
This has come at a time when US manufacturers operating in China are escalating decade-long plans to relocate production lines after being rattled by recent supply chain disruptions due to the Covid-19 curbs amid elevated trade tensions between the two world’s largest economies.
The rising cost of wages and on-and-off trade tiffs between Washington and Beijing have seen US manufacturers in labour-intensive sectors such as textiles and furniture migrate production to other countries such as Indonesia and Bangladesh over the last decade.
“What we do has to work for Kenya before we say that this is something that we will replicate someplace else. We have to make sure we get it right,” the top US trade envoy for Africa said. “But I’m very excited about the progress that we’re making.”
During the first negotiating round of the proposed trade deal in Nairobi between April 17 and 20, the US negotiators asked Kenya to improve transparency and fairness of processes for licensing American service suppliers such as accountants, lawyers, engineers, and architects.
The US proposal to Kenya is in line with the World Trade Organisation’s Joint Statement Initiative on Services Domestic Regulation which was signed by 70 countries in December 2021.
The outcome on WTO’s initiative on trade in services whose development started in 2017 was largely supported by developed economies, with Nigeria the notable sub-Sahara country to have endorsed it.
The WTO initiative applies to licensing requirements and procedures, qualification requirements and procedures, as well as technical standards affecting trade in services.
US Ambassador Meg Whitman has in the past said Kenya— a gateway into the East African region— is increasingly positioning Nairobi as “the premier destination” for technology and innovation investments on the continent.
“It’s an exciting time to be doing business in the region, creating more jobs and promoting US-Kenya shared prosperity,” Ms Whitman told the two-day American Chamber of Commerce (AmCham) Business Summit in March.
“We feel Kenya is ready for export liftoff as it diversifies.”