U.S.-Kenya Negotiations Toward a Free Trade Agreement
Kenya and the U.S. started bilateral free trade agreement negotiations virtually in July 2020. After two rounds completed in 2020, the negotiations are on hold as the Biden administration reviews the previous administration’s policies to inform its strategies moving forward. An anticipated timeline for any decisions with regard to a potential trade agreement with Kenya has not been indicated. Given the slow movement of negotiations, it may be unlikely that a potential agreement, which would need to be approved by Congress under the Trade Promotion Authority (TPA), will be settled before the expiration of TPA on July 1, 2021. Therefore, if an agreement with Kenya is concluded, its implementation would likely be extended.
It is expected that a potential U.S-Kenya trade agreement will serve as a basis for future trade agreements with other countries in Africa. USTR’s primary agricultural objectives for negotiations with Kenya involve commitments for products developed through biotechnology and terms that provide the U.S. is not disadvantaged due to SPS and GI regulations.
Kenya looks to secure more permanent access for Kenyan exports to the U.S. market. In 2019 nearly 80% of U.S. imports from Kenya entered duty-free under either African Growth and Opportunity Act (AGOA) or the Generalized System of Preferences (GSP). The AGOA offers duty-free access to the U.S. market for 6,400 products until 2025. The GSP provides duty-free imports for developing countries meeting eligibility. However, the current authorization of GSP expired at the end of 2020 and must be renewed by Congress.
Prior to economic fallout from Covid-19, Kenya had sustained economic growth over the past decade regardless of development challenges. In 2019 Kenya was one of the fastest growing economies in Sub-Saharan Africa with economic growth averaging 5.7 percent according to the World Bank.
Kenya’s imports of consumer-oriented food products grew at an average annual rate of 11 percent between 2015 and 2019 as reported by the USDA. This trend results from Kenya’s growing middle class as well as increasing urbanization and changing consumer preferences.
Emerging and developing economies will be rising markets for premium and value-added foods as consumers with increasing purchasing power seek premium products that provide specialized or enhanced benefits. A U.S.-Kenya FTA may be considered a key step in providing a strong foundation for increased market access opportunity for premium U.S. products in the region for the long term.
