US-Kenya Free Trade Agreement
US-Kenya Free Trade Agreement
President Trump has announced his intent to negotiate a trade agreement with the Republic of Kenya. On March 17, 2020, following the procedures laid out in the Trade Promotion Authority (TPA), the Trump administration sent a letter to Congress to notify them of the intent to enter into negotiations of a trade agreement with Kenya. Following the TPA, the U.S. Trade Representative is required to announce negotiating objectives at least 30 days before formal negotiations begin. These objectives were announced in May of 2020.
On July 8, 2020, the United States and Kenya on Wednesday formally began talks on a free trade agreement. However, in mid-July, the U.S. and Kenya paused trade talks due to the coronavirus. Unless there is Congress action, the FTA will need to be completed by April 1, 2021, to qualify for expedited approval procedures under the 2015 trade promotion authority law.
A trade agreement between the U.S. and Kenya would be the first agreement between the U.S. and a sub-Saharan African country. A U.S.-Kenya trade agreement would also complement Africa’s regional integration efforts, which include the landmark African Continental Free Trade Area (AfCFTA) that went into force in May 2019. Kenya is located on the eastern coast of Africa and serves as a gateway to the region and a major commercial hub that can provide opportunities for U.S. consumers, businesses, farmers, ranchers, and workers (U.S. Trade Representative).
The U.S.-Kenya Trade and Investment Working Group, established in August 2018 by President Trump and Kenyan President Kenyatta, held its third meeting in Washington in February. During the same month, the U.S. Chamber launched its U.S.-Kenya Trade Task Force to bring business executive together to “exchange ideas, build mutual trust, and seek common ground on key trade priorities with U.S. and Kenyan trade officials” (U.S. Chamber).
Kenya currently receives benefits under the Africa Growth Opportunity Act (AGOA), which was signed in May 2000 by President Bill Clinton with the objective of expanding U.S. trade and investment with sub-Saharan Africa, to stimulate economic growth, to encourage economic integration, and to facilitate sub-Saharan Africa’s integration into the global economy. However, AGOA is currently set to expire in 2025.
The U.S. and Kenya Launch Negotiations on a Free Trade Agreement: Will They Succeed?
US Chamber, July 29, 2020
Joint Statement Between the United States and Kenya on the Launch of Negotiations Towards a Free Trade Agreement
U.S. Trade Representative, July 8, 2020
United States – Kenya Negotiations: Summary of Specific Negotiating Objectives
U.S. Trade Representative, May 2020
U.S. Takes Next Step in Pursuit of Free Trade Agreement with Kenya
CalChamber, March 24, 2020
Trump Administration Notifies Congress of Intent to Negotiate Trade Agreement with Kenya
U.S. Trade Representative, March 17, 2020
President Trump Announces Intent to Negotiate Trade Agreement with Kenya
U.S. Trade Representative, February 6, 2020
U.S. Chamber: ‘Fully Supports Pursuit of a Comprehensive, High-standard Trade Agreement with Kenya’
U.S. Chamber, February 6, 2020
The population of Kenya totals 52.57 million people as of 2019 with the official languages of the country being English and Swahili; while many ethnic groups speak their mother tongues within their communities. Kenya is classified as a lower-middle-income economy and is the largest economy in eastern and central Africa with a GDP of $95.5 billion in 2019.
Nairobi, Kenya’s capital, serves as the major commercial hub. There is an increasing number of American companies that have chosen Nairobi to establish their regional African-wide headquarters. Kenya recently moved up 5 spots on the World Bank’s Doing Business Index, ranking 56th out of 190.
Total U.S.-Kenya two way trade currently reaches over $900 million annually. In 2020, the U.S. exported $370.7 million worth of goods to Kenya. Transportation equipment made up the largest percentage of the total at 16.7% and $62 million. This was followed by chemicals at 14.9% and oil and gas and non-electrical machinery at 14.8% and 9.3%, respectively. Imports from Kenya into the U.S. totaled $568.9 million in 2020. Apparel manufacturing products made up the largest percentage at 67.7% and $385.2 million of the total. The next largest imports were agricultural products, food manufactures, and minerals and ores totaling 16.1%, 4.4%,and 3.1%, respectively. (International Trade Administration)
California is the second largest exporting state to Kenya after Texas. In 2020, California exported $36.6 million worth of goods to Kenya. Chemicals made up the largest portion at 31.4% of the total and $11.5 million. This was followed by Special classification provisions with 18.7% and transportation equipment at 14.3%. Computer and electronic products also made up 11.5% of total goods exported.
In 2020, California imported $107.8 million worth of goods from Kenya, 63.2% and $68.19 million of which was made up apparel manufacturing products. This was followed by agricultural products at 26.3%, food manufactures at 5.6%, and reimports at 2.7%. In 2020, California was also the largest state importing Kenyan goods. (International Trade Administration)
The California Chamber of Commerce, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.