America plots to counter China in EAC with new pact
The US assistant secretary of commerce, Mr Michael Camunez, answers questions from journalists at a press conference in Nairobi last week. He said the US plans to boost its investments in the East African Community. Photo/Diana Ngila
Kenya and other East Africa economies could witness a huge inflow of investment and development support as the US moves to counter the gains made by surging Asian nations such as China and India.
The US said it is crafting a new incentive-laden trade and investment treaty for the East African Community (EAC), which it has identified as a potential hub to host its regional business interests.
“We are working on a treaty that will create important incentives and protections that can help drive investments in the region,” Michael Camunez, US assistant secretary for Commerce, told a media briefing in Nairobi.
The proposed binding treaty would mark a major shift in America’s engagement with the region, which at present is largely anchored on a simple Trade and Investment Agreement (TIFA) signed with the EAC in July 2008.
The TIFA’s main role is to strengthen the US-EAC trade and investment relationship, expand and diversify bilateral trade, and improve the climate for business between the two blocs.
READ: East Africa trade ties with US get boost The framework further seeks to bolster partnerships in initiatives such as the African Growth and Opportunity Act, the World Trade Organisation’s Doha Round of negotiations, trade facilitation and skills building.
The US, however, said it was now pursuing a full treaty with the EAC, just six months after China signed a TIFA with the bloc to promote commodity trade, tourism, investment, infrastructure development and training.
“It is great that other parties such as China are looking more to East Africa and that shows the region has huge potential,” said Mr Camunez.
“We however cannot hide the fact that America is also interested in the region.”
America’s influence
China is particularly active in the construction and infrastructure development sector in East Africa and has since branched into other key economic areas such as manufacturing.
“I’ve witnessed first-hand the skyrocketing level of investment that has come into Kenya from other parts of the world such as China, India, the Gulf region and elsewhere,” he said. “It’s easy to see why American exporters and investors simply must be more fully engaged.”
To claw back America’s influence in East Africa, President Barack Obama’s administration has taken on a fresh campaign to press for new trade and investment partnership with the bloc.
“The proposal calls for the negotiation of a regional investment treaty, the creation of trade enhancing agreements in areas such as trade facilitation, and importantly the establishment of a new commercial dialogue that will facilitate engagement between public and private sectors,” the US official said.
Mr Camunez said as part of the deal the US will press for good governance in key areas such as procurement and the adoption of asset protection and intellectual property rights enforcement policies.
“We are hopeful that our proposed regional trade package will be accepted by Kenya and the greater EAC and we look forward to deepening our engagement here,” he said.
Kenya is likely to benefit immensely from the new treaty owing to its strategic location that makes it a hub into most African markets.
“Kenya is extremely well positioned to capitalise on this momentum. It holds great potential, enormous opportunity and extra ordinary promise,” Mr Camunez said.
“Kenya is a critical hub for American companies in Africa and it offers an important platform for doing business in the continent.”
Kenya hosts more than 60 US firms including giants like General Electric, IBM, Citi, Dow Chemicals, farm machinery maker John Deer, Google, Microsoft, Corn Products, General Motors East Africa and Coca-Cola.
An audit by consultancy firm, Ernest & Young showed that the US was the highest source of new foreign direct investment into projects in Kenya between 2003 and last year.
