Kenya-US trade deal faces fresh hurdles

Negotiations for a free trade deal between Kenya and the United States are encountering new obstacles after a key legislative tool expired, dimming the prospects for the agreement's conclusion. Currently, the United States ranks as Kenya's third largest export market and seventh overall trading partner. Kenya's Chief Economist at Mentoria Economics, Ken Gichinga, expressed concerns about the future of the trade deal during a CNBC Africa interview. Gichinga highlighted the significance of the Trade Promotion Authority, an instrument that facilitates the quick approval of bilateral deals. However, the expiration of this authority on July 1st under the Biden administration suggests a potential shift in U.S. economic policy towards a focus on multilateral trade agreements rather than bilateral ones. This change in approach raises doubts about the progress of the trade negotiations between Kenya and the United States. Kenya, once a favored partner for both China and the U.S., now faces uncertainty as recent events indicate changing fortunes. With China freezing loans to Kenya and the U.S. showing reluctance towards bilateral agreements, Kenya is left in a challenging position. The possibility of turning towards the United Kingdom for trade opportunities arises, as the UK's Conservative Party remains open to bilateral trade agreements post-Brexit. One of the primary concerns for the U.S. in the trade negotiations with Kenya is the elimination of duties on American agricultural exports to the Kenyan market. This demand has been a point of contention due to fears that it could harm Kenya's dairy sector and jeopardize local livelihoods. The sensitive nature of agricultural matters emphasizes the need for separate negotiations on these issues to safeguard the interests of Kenyan farmers. Despite benefiting from the African Growth and Opportunity Act (AGOA), which allows Kenya to export certain products to the U.S. tariff-free, the country has primarily focused on textile and apparel exports. Gichinga suggests that Kenya has untapped potential in livestock products, which could be lucrative in the American market. However, challenges persist due to strong lobbying efforts in Washington D.C., particularly concerning agricultural products. With uncertainties surrounding the future of the Kenya-U.S. trade deal and the expiration of the Trade Promotion Authority, Kenya faces a crucial decision in navigating its trade relations. The potential shift towards bilateral agreements with the UK presents new opportunities for Kenya's trade diversification in the aftermath of stalled negotiations with the United States.