The United States (U.S.) and Kenya commenced bilateral trade through the enactment of the African Opportunity and Growth Act (AGOA), signed in the year 2000.

Kenya is the second-largest beneficiary of AGOA tariff reductions and is a major beneficiary of U.S. security and foreign assistance as well as a hub for U.S. security initiatives. The United States, on the other hand, is Kenya’s 4th largest trading market.

AGOA is set to expire in 2025, leading to the former President of the United States initiating, on 6th February 2020, negotiations with Kenya for a Free Trade Area.^[1]

For the United States, this decision was made to help reduce Kenyan trade barriers and help U.S. firms maintain their competitiveness in the Kenyan market, especially in light of the signing of the Kenya – United Kingdom Economic Partnership Agreement.

For Kenya, the decision to enter into an FTA with the United States was made in order to allow continued duty and quota free access for Kenyan goods into the U.S, however, these bilateral negotiations were made outside of the outside of the East African Community – a regional intergovernmental organization to which Kenya has been a member of, since the year 2000.^[2]

Pursuant to this, there has been much discourse in the last 2 years, about whether Kenya can bilaterally negotiate a free trade area with a foreign country and what are the requirements of entering into such negotiations.

In a landmark decision by the East African Court of Justice (EACJ), delivered on 2nd December 2022, the EACJ discussed, in Christopher Ayieko & Another v Attorney General of the Republic of Kenya & Another, Reference No 5/2019, the framework of conclusion of agreements between EAC Members and foreign countries.

The Applicants in the case, are two Kenyan Advocates who alleged that Kenya expressed intent to negotiate a bilateral Free Trade Agreement with the United States of America (U.S), without regard to the provisions of the EAC Customs Union Protocol and the Common Markets protocol.

In determining the issue, the EACJ examined Article 37 of the EAC Customs Union Protocol and Article 37 of the Common Markets Protocol which each provide in sub-section 4(a) that:

“A Partner State may separately conclude or amend a trade agreement with a foreign country provided that the terms of such an agreement or amendments are not in conflict with the provisions of this Protocol.”

Article 37(4)(b) provides that:

“Where a Partner State intends to conclude or amend an agreement, as specified in paragraph 4(a) of this Article, with a foreign country the Partner State shall send its proposed agreement or amendment by registered mail to the Secretary General, who shall communicate the proposed agreement by registered mail to the other Partner States within a period of thirty days, for their consideration.”

In light of the aforementioned articles, the Court found that it would be imperative to examine firstly what constituted a proposed agreement that would warrant notification to other Partner States.

The EACJ specified that the ordinary meaning of the provision would require that where the Partner State has a plan in mind to conclude a trade agreement with a foreign country, it shall suggest the possible agreement to the other Partner States for consideration.

The EACJ further stated that the Kenya in a Statement released on 6th February 2020, by the Kenyan Cabinet Secretary of the Ministry of Industrialization, announced their intention to negotiate a Free Trade Agreement with the United States.

The EACJ declared that the next course of action as per Article 37 of the Protocol would be that once the intent has been ascertained, the Partner State should transmit a proposed agreement to the other Partner States within 30 days.

The EACJ noted that the Customs Union Protocol specifies a proposed agreement and not a completed one.

A proposed agreement, as the EACJ detailed, implies and includes all negotiation documents including Negotiation Principles and Objectives and an indication of the provisions to be addressed in the negotiations.

The EACJ went on to specify that up until the date that the determination was made – 2nd December 2022, Kenya had not communicated the fact of existence of these developments to any other Partner States and has therefore breached Article 37 of the Customs Union Protocol as well as Common Markets Protocol.

Interestingly, the EACJ delved into the argument Kenya had made regarding state sovereignty and in reliance of Article 37 (4)(a) of the protocols: that the Republic of Kenya is at liberty as a sovereign State to enter into agreements with other Sovereign States, so long as the terms of the agreement did not violate the EAC Treaty. The EACJ responded stating that the argument was “contextually and legal misconceived” as Article 37(4)(a) is qualified by Article 37(4)(b) which requires Partner States to be notified and given the opportunity to make give their input in the process.

The EACJ therefore declared that Kenya, through the acts and omissions of entering into, negotiating and or intending to negotiate an FTA with the U.S. violated its commitments to the community, specifically the principles of rule of law, transparency and cooperation for mutual benefit guaranteed under Articles 6 and 7 of the EAC Treaty.

Further, that Kenya’s actions and or omissions of negotiating and or intending to negotiate an FTA with the U.S. violated Article 37 of the Common Markets Protocol and Article 37 of the Customs Union Protocol.

The proposed FTA negotiated and or intended to be negotiated was declared illegal, null and void.

Through 2020 and 2021, while this case was being heard, trade talks between Kenya and the U.S. for an FTA had come to a standstill due to the 2020 American Presidential Election that saw President Biden being sworn in as the U.S. President.

This change in administration halted trade negotiations, and both governments decided to temporarily abandon the idea of the proposed FTA. The EACJ Judgement came a tad too late to declare the negotiations illegal.

Both Governments have, however, on 14th July 2022 launched the United States – Kenya Strategic Trade and Investment Partnership (STIP) which would act as a “placeholder” for a full FTA.^[3]

This judgement comes at a crucial point in time as Kenya’s Ministry of Investment, Trade and Industry released, on 6th February 2023, an official statement that the Kenya and United States are commencing the first round of Strategic Trade and Investment Partnership Talks.^[4]

The Official communication states that “the goal of the partnership is to increase investment, promote sustainable and inclusive economic growth, benefit workers, consumers and businesses and support African Regional Economic Integration.”^[5]

If Kenya is to follow this EAC judgment, since this is an intended partnership that is a “placeholder” for an FTA and therefore will take the form of an agreement, Kenya should transmit the proposed agreement to the other Partner States within 30 days.

The proposed agreement, as the EACJ had detailed, includes all negotiation documents including Negotiation Principles and Objectives and an indication of the provisions to be addressed in the talks.

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^[1] Naumann, E. 2020. The U.S.-Kenya Free Trade Area (FTA): insights into the bilateral trade relationship and early progress on setting terms for an FTA, tralac, June 2020 https://www.tralac.org/publications/article/14663-the-united-states-kenya-free-trade-area-fta-insights-into-the-bilateral-trade-relationship-and-early-progress-on-setting-terms-for-an-fta.html

^[2] East African Community, History of the EAC https://www.eac.int/eac-history

^[3] U.S. and Kenya Announce the Launch of the U.S.-Kenya Strategic Trade and Investment Partnership, Office of the U.S. Trade Representative, 14th July 2022.

^[4] Statement on the Kenya – United States First Round of the Strategic Trade and Investment Partnership Talks, 6th February 2023 https://twitter.com/Trade_Kenya/status/1622474806946824192

^[5] United States and Kenya to Hold First Round under their Strategic Trade and Investment Partnership, Office of the United States Trade Representative https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/february/united-states-and-kenya-hold-first-round-under-their-strategic-trade-and-investment-partnership