Trade Reports
The United States-Kenya Free Trade Area (FTA): insights into the bilateral trade relationship and early progress on setting terms for an FTA
On 6 February 2020, US President Donald Trump announced the United States’ intention to initiate negotiations with Kenya on a bilateral Free Trade Area (FTA). This followed a meeting between President Trump and Kenyan President Uhuru Kenyatta at the White House during a state visit by Kenyatta to the US.
An FTA between the US and any country would be noteworthy, but even more so when it potentially involves the first country in Sub-Saharan Africa (SSA) and only the second on the African continent after Morocco. The US-Morocco agreement entered into force in 2006 and is considered a comprehensive agreement that has seen bilateral trade between the countries grow significantly (with the US enjoying a substantial trade in goods surplus with Morocco).
A Kenya-US agreement would be remarkable for many reasons, including some issues and challenges that are potentially complex in the light of other existing arrangements and dynamics. In terms of US-African trade, Kenya was ‘only’ the seventh largest source of (imported) goods by the US from Sub-Saharan Africa during 2019, by comparison accounting for less than 10% of South Africa’s exports to the US, with South Africa being the largest SSA exporter to the US.
This working paper looks at the planned Kenya-US FTA mainly from the perspective of the current trade relationship, reviewing developments and growth in Kenya’s US-bound exports since 2000 when the African Growth and Opportunity Act (AGOA) began to offer expanded preferences to Kenyan exporters, and also the extent to which Kenya utilises and perhaps relies on such preferences. It also analyses patterns in US exports to Kenya, which take place on standard Most Favoured Nation (MFN) terms, and for some context provides a snapshot of Kenya’s imports from other global sources as well as the EU with which it has previously concluded a reciprocal free trade agreement, albeit not yet fully operational. Finally, it looks at the legislative framework and related guidelines for the US to conclude new free trade agreements with third countries, and the manner in which such policy objectives relate to the planned US-Kenya FTA.
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