Inside the on-going US-Kenya FTA negotiations

The ongoing Free Trade Agreement (FTA) negotiations between the United States and Kenya have faced significant challenges and raised concerns among various stakeholders in East Africa. One of the major sticking points in the negotiations is the US's insistence on Kenya openly supporting Israel's political and commercial interests as a condition for the FTA. This requirement has sparked debates and concerns about the implications for Kenya's foreign policy and regional trade agreements. Lena Wanyama, the Coordinator of the East Africa Tax and Governance Network, highlighted some critical issues surrounding the FTA negotiations. She expressed skepticism about Kenya's ability to meet the ambitious target of accessing 5% of the US market, which amounts to $18 billion. Considering Kenya's historical export figures to the US and the challenges with the Africa Growth and Opportunity Act (AGOA), Wanyama raised concerns about the feasibility of such a goal. Furthermore, the inclusion of Israel as a third party in the negotiations has raised eyebrows. Wanyama pointed out that Kenya's existing relationship with Israel could be complicated by this development. She cautioned against jeopardizing Kenya's long-standing foreign policy principles in the Middle East by acceding to US demands regarding Israel's interests. The looming deadline for the UK and East African Community (EAC) trade deal adds another layer of complexity to the situation. Wanyama emphasized the need for a thorough consultation process given emerging challenges like digital taxation. Rushing into agreements could lead to lopsided deals that put Kenya at a disadvantage, as noted by experts like Secretary General Hissakutui of UNCTAD. Taxation policies have emerged as a critical issue in the FTA negotiations. Wanyama highlighted Kenya's track record of facing legal challenges over double taxation agreements. She stressed the importance of conducting a clear cost-benefit analysis and involving parliamentary oversight to protect Kenya's revenue interests. The FTA negotiations also clash with existing regional agreements like the Africa Continental Free Trade Agreement (AfCFTA) and the East African Community trade rules. While these agreements discourage members from pursuing third-party deals, Kenya retains the sovereignty to engage in bilateral agreements. However, concerns remain about the potential implications of the US FTA on regional trade coherence and integration efforts. A report by the Brookings Institute suggested that the US's motivation for the trade deal with Kenya might be more symbolic than economic. Wanyama echoed this sentiment, warning that prioritizing optics over long-term economic stability could disrupt regional integration efforts and future trade environments in Africa. In the event of the FTA not materializing, Wanyama outlined potential disruptions in regional trade flows and the GDP of East African countries. Any hindrance to existing trade agreements like AGOA could lead to new trade wars and instability in the region. Therefore, addressing the challenges and implications of the US-Kenya FTA negotiations is crucial for ensuring sustainable and mutually beneficial trade relations in East Africa.