Will Kenya Benefit From The U.S Free Trade?

Kenya Negotiates For Free Trade Agreement (FTA) With The U.S

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Kenya is currently negotiating a free trade agreement (FTA) with the United States of America. This is in line with the Fourth Schedule of the Constitution, which vests functions on foreign affairs, foreign policy, and international trade with the national government.

The timing of the negotiations could not have been more opportune given the expected expiry of the African Growth Opportunity Act (Agoa) in September 2025. If Agoa expires without a tangible preferential trade agreement in place, the only way Kenya, as a developing country, can continue trading with the US is through the Generalized System of Preference (GSP).

Over 90 percent of the tariff lines under GSP qualify for duty-free preferences under Agoa’s eligibility provisions. However, if Kenya’s trade with the US was to be governed by GSP, the country would be unlikely to sustain or improve her export volume into the US since GSP only promises preferential market access for 4,800 product lines, which is not necessarily duty-free.

Indices on revealed comparative advantage by World Bank and United Nations Conference on Trade and Development (UNCTAD) indicate Kenya enjoys bilateral comparative advantage with the US in agricultural products like tea and mate, fruits and vegetables, livestock and livestock products, coffee and coffee substitutes, sugar confectionery, cereals, spices, tobacco, hides and skins, margarine, jute and textile fiber, and concentrates of base metals. Thirty percent of these products are Kenya’s frontier products, offering the opportunity for product diversification and export promotion.

The Kenya-US FTA negotiations are aimed at creating a liberal, facilitative, and competitive investment environment. Investment negotiations are focused on four pillars covering promotion, protection, facilitation, and liberalization. Under the FTA, it is expected that investment restrictions will be lessened, creating incentives to US firms to target Kenyan sectors with the highest total productivity factor for foreign direct investment.

Kenya stands to benefit from technology, knowledge, and intellectual property transfers in sectors like services, agriculture, and manufacturing. Negotiators need to promote access to the US market for Kenya’s frontier products through more flexible rules of origin than it is currently under Agoa. To safeguard the EAC market while expanding the US market share, Kenya needs to inform the EAC Council of Ministers of the intention to have a free trade agreement with the US for consent.

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