The US will this week hold talks with Kenya aimed at clinching a bilateral trade agreement as the Trump administration turns its back on what has been a traditionally multilateral approach to trade with Africa.
The US president has said he wants to conclude bilateral deals with African countries to replace the 20-year-old African Growth and Opportunity Act that expires in 2025, overriding the wish of most African states for a new multilateral deal.
Agoa, which gives nearly 40 African states tariff-free access to the US for 6,500 products, has come under increasing criticism in Washington, which wants fast-growing African economies to open up to US goods and services.
Robert Lighthizer, the US trade representative, has long sought an African country willing to negotiate a “model” trade agreement with Washington that could be replicated by other African states.
Many African governments have expressed a preference for a multilateral deal, particularly as they move towards a 54-nation African Continental Free Trade Agreement, which comes into force in July.
“The Trump administration has been flailing around trying to find an African country that will sign this free trade agreement,” said Aubrey Hruby, co-founder of the Africa Expert Network. “Their position is they want to do bilateral deals, not multilateral deals.”
Ms Hruby said other African governments, particularly in the East African Community, a regional trade bloc, might criticise Kenya for “breaking rank”.
Uhuru Kenyatta, Kenya’s president, is expected to announce the start of negotiations for a bilateral deal, first reported by Bloomberg, in a ceremony in the White House Rose Garden on Thursday, according to people familiar with his plans.
Macharia Kamau, Kenya’s principal secretary for foreign affairs, confirmed that talks would begin in Washington this week and expressed hope for rapid negotiations. “We are trying to figure out which is going to be the path forward for our arrangement with the US post-Agoa,” he said, adding that the Trump administration was seeking to “re-engineer its relationship with the continent”.
However, Mr Kamau said that Kenya would move cautiously in terms of reciprocity, since it needed to protect infant industries and services, including its airline. “They could easily swamp our markets into oblivion,” he said. Any deal “cannot be at the expense of our local capabilities, which are nascent at best”.
Mr Kamau said that Nairobi was sensitive to the concerns of neighbours in east Africa where many goods transit tariff-free and which would therefore be affected by US goods coming into Kenya. His government, he said, would “proceed with supreme caution in renegotiating a free trade agreement”.
According to US statistics, two-way trade between Kenya and the US was about $1bn in 2018, with a $280m surplus in Kenya’s favour. In the same year, Kenya’s total trade with China, its biggest partner, was more than $5bn, with almost all of that going from China to Kenya.
Kenya, which has borrowed heavily from China in recent years, including for its controversial $3.2bn Mombasa to Nairobi railway, is keen to bolster relations with western democracies, according to Ms Hruby. With the trade deal, Nairobi wanted to send a message, she said, that “we’re not just in China’s pocket, we’re a global player”.
Witney Schneidman, a former US deputy assistant secretary of state for Africa, said the US should be encouraging African integration by making a continent-wide post-Agoa deal. “Africans are saying, we are trying an integrated approach, but you are proposing a single bilateral deal. It doesn’t make any sense.”
However, Mr Schneidman added, any post-Agoa agreement must provide better access for US goods and services. The same refrigerator exported to South Africa from Frankfurt with a 2 per cent tariff would attract an 18 per cent tariff if it were shipped from Atlanta, he said. “Africa has 1.2bn people today and that’s going to double in the next 20 years,” he said. “If we don’t structure our trade relationship for the next 20 years we are going to miss out.”
Mr Lighthizer’s office did not respond to a request for comment.
Additional reporting by James Politi in Washington
Source: Economy - ft.com
