Kenya, US seek to strengthen trade relations

Kenya and the US have recently embarked on discussions to enhance trade and investment opportunities between the two nations, particularly focusing on the substantial potential of the US-Kenya Free Trade Agreement established in 2020 during the Trump administration. In a recent interview on CNBC Africa, Ken Gichinger, Chief Economist at Mentoria Economics, shed light on the progress of these bilateral talks and the potential implications for Kenya's economy. According to Gichinger, the discussions have reached an advanced stage, as indicated by communications from State House following a meeting between President Uhuru Kenyatta and the US Secretary of State. The dialogue underscored the new prospects that the Kenya-U.S. Free Trade Agreement could usher in. Additionally, the discussion touched on Kenya's evolving role in East Africa's security landscape, given its recent admission to the UN Security Council, as well as its stances on climate and human rights issues. Gichinger emphasized the promising nature of these talks, indicating that not only Kenya, but other African countries are eager to observe the outcomes closely. One of the key points highlighted during the interview was the existing trade surplus that Kenya holds over the US. In 2019, Kenya exported goods worth around $600 million to the US, while US exports to Kenya stood at a lower value of approximately $400 million. This surplus underscores Kenya's advantageous position in the trade relationship and sets a solid foundation for further collaboration under the Free Trade Agreement. Gichinger pointed out that Kenya's preference for bilateral agreements over multilateral ones aligns with its current strategy, emphasizing the practicality and efficiency of such arrangements. The shift towards bilateral trade agreements from regional agreements was also a topic of discussion. It was noted that bilateral agreements could potentially streamline trade discussions by simplifying negotiation processes, as it is much easier to engage with a single country than with multiple nations within a regional framework. Drawing parallels with the UK's decision to exit the European Union in pursuit of greater autonomy, Gichinger hinted at the possibility of more countries, including Kenya, leaning towards bilateral arrangements for trade partnerships. The potential challenges arising from overlapping trade agreements, such as the US-Kenya Free Trade Agreement and AGOA (African Growth and Opportunity Act), were also analyzed during the interview. Gichinger emphasized that the intricate details of the trade agreements would determine the extent of their impact on Kenya's trade dynamics. Noting that some sectors might face contradictions if multiple agreements cover the same export commodities, he highlighted the importance of aligning the trade provisions to avoid potential conflicts. The uncertainty surrounding the extension of AGOA, set to expire in 2025, and the potential renegotiation of trade agreements under the new political landscape in the US were addressed. The divergent approaches towards trade agreements between Republicans and Democrats were discussed, with Gichinger suggesting that a balance between bilateral and multilateral arrangements might be struck based on prevailing economic philosophies. Additionally, the relevance of US-Africa trade relations and the implications of shifts from AGOA to bilateral agreements on smaller African economies were deliberated. Gichinger underscored the significance of direct engagement with the largest global economy, encouraging smaller nations to pursue bilateral trade agreements with the US while remaining open to broader regional collaborations. While acknowledging the potential contradictions in trade policies that might arise, he emphasized the need for strategic management of evolving trade dynamics to navigate the changing economic landscape effectively. Overall, the insights shared by Gichinger shed light on the evolving trade landscape between Kenya and the US, highlighting the opportunities and challenges that lie ahead as both nations seek to strengthen their economic ties through bilateral agreements.