Talks poised to begin for landmark US-Kenyan free trade deal.

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July will hopefully see the opening up of discussions for a trade agreement between Kenya and the US.

Talks are set to begin soon on a new free trade agreement between the US and Kenya, the world's number one and number 67 economies respectively.

This would be the first such deal between the US and a sub-Saharan African nation and could represent an important precedent on similar agreements going forward.

Discussions were set to begin on July 6th 2020, which would have been after the African Continental Free Trade Agreement (AfCFTA) took effect on July 1st.

Although it was announced on June 18th that this deadline is likely to be pushed back due to the effects of the coronavirus pandemic, both sides are hopeful the delay will not be for too long and that both sides can soon meet virtually to lay their cards on the table.

High hopes

Washington has already said that it is hoping for a "comprehensive, high-standard agreement" with Kenya, while the African nation is reportedly full of confidence that both can "engage in a partnership of equals".

It was announced back in February that US president Donald Trump and his Kenyan counterpart Uhuru Kenyatta were keen to negotiate a bilateral FTA, with the US Congress officially notified in March. 

Speaking at a webinar hosted by the Atlantic Council this month, president Kenyetta said a successful trade deal will help the whole of Africa by acting as a reference point for future arrangements with other countries on the continent.

However, the decision had already attracted criticism from members of the AfCFTA and the East African Community, who are disappointed Kenya is acting alone and concerned any such deal with the US will undermine the work of the AfCFTA before it has even properly begun.

They are also worried about Kenya being used as a guinea pig by the US in a model that does not reflect the needs of Africa, the Center for Strategic and International Studies (CSIS) reports.

Despite this criticism, president Kenyetta remains optimistic that negotiating an FTA with the US could reposition Kenya as a gateway for American investment in Africa.

"We are going to be trailblazers in this and we hope that others will also follow through," he added in the webinar. "We believe that all trade negotiations are based on a win-win. We believe that's the intention of the US just as much as it is our intention."

Benefits for both sides

For Kenya, there would be a number of benefits of joining an FTA with the US. Firstly, it is currently part of a US preferential trade scheme called the African Growth and Opportunity Act (AGOA), which means more than 70 per cent of its American exports are duty-free.

However, this is set to expire in 2025 and Kenya is keen to be able to retain this duty-free access to the American market where it sends so many products.

Another advantage would be the potential progress towards the goals laid out in Vision 2030, which the CSIS points out it is currently lagging behind on. 

For the US, meanwhile, Kenya does offer a potential model for future deals, but it is perhaps primarily its geography that singled it out as a first.

Kenya's location on the eastern coast means it can act as a gateway for the entire eastern region, making US products easier to send to Africa and opening up opportunities for farmers and consumers.

Of course, there is also the point that China has been unsuccessfully working towards an FTA with Africa for some time, which means Mr Trump would not only be able to ensure one-upmanship over his Asian rivals, but also more closely align a large part of Africa with American economic ambitions.

Set for inclusion

As part of the negotiations, the US is looking to replace the AGOA with a new deal that ensures zero tariffs on goods, no restrictions on foreign direct investment and no discriminatory non-tariff barriers.

However, the objectives would also cover a raft of other issues, such as intellectual property, services and digital trade. Importantly, Kenya would also need to address sticking points like wildlife trafficking, marine pollution and child labor, which has led many to suggest a deal is unlikely to be concluded this year.

Nevertheless, both sides seem optimistic that preliminary talks should be fruitful. It will be interesting to see, once the coronavirus delays are overcome, what happens next.