Economy

No clear timelines for US-Kenya trade deal after key meeting

betty-maina1

Industrialisation, Trade and Enterprise Development CS Betty Maina during SMEs Conference. PHOTO | SILA KIPLAGAT | NMG

brianngugi_img

Summary

  • Separate statements issued after a virtual meeting did not provide any timelines for resuming the stalled talks on the deal signalling a persisting deadlock.
  • Both Nairobi and Washington however emphasized on deepening trade engagement between the two countries.

The United States remained mum on the fate of a free trade pact after US trade Chief Katherine Tai met her Kenyan counterpart Betty Maina on Monday, amid growing unease in Nairobi about the delay by Joe Biden's administration to conclude the deal.

Separate statements issued by both Kenya’s trade Cabinet Secretary Betty Maina and her US counterpart US trade Chief, Katherine Tai, after a virtual meeting did not provide any timelines for resuming the stalled talks on the deal signalling a persisting deadlock.

Both Nairobi and Washington however emphasised deepening trade engagement between the two countries.

"During the meeting, Ambassador Tai discussed the importance of Kenya and the African continent to the Biden-Harris Administration. The trade ministers also discussed their shared worker-centered values, a resilient pandemic recovery, and strengthening the US-Kenya economic and trade relationship," said a statement released by Ms Tai's USTR team in Washington after the meeting. 

"In addition to reflecting upon the significance of and their mutual support for African integration, Ambassador Tai and Cabinet Secretary Maina agreed on the importance of strengthening bilateral engagement between both countries and committed to maintaining an open dialogue moving forward."

A separate statement issued by Kenya's trade ministry however struck an optimistic tone on the future of the deal saying Nairobi remains committed to conclusion of the talks.

The statement said Ms Maina had expressed "Kenya’s desire to negotiate and conclude a predictable trade arrangement that gives confidence to investors while safeguarding Kenya’s commitments under its regional, continental and multilateral trade agreements."

"Amb. Tai observed that the US was interested in an approach to trade policy that fits in the overall Biden-Harris Administration’s “Build Back Better” and worker-centric trade policy," it said.

The Biden administration had called for the objectives of the bilateral pact to be recast to recognise Biden’s agenda with some of the aims of the negotiations set by the Trump administration likely to be dropped.

The new US administration had said it wants to make sure that the negotiations for a bilateral trade agreement and talks objectives are consistent with Biden’s $4 trillion revamp of the American economy that focuses on a muscular industrial policy with an eye on fighting climate change.

Negotiations for the free trade deal earlier this year faced further hurdles after the expiry of a key legislative tool for getting faster Congress approval, dimming the prospects for its conclusion.

President Biden allowed the Trade Promotion Authority (TPA), which delegates powers to the US head of state to fast track trade negotiations with the Congress, to expire on July 1.

In the absence of a TPA, any deals reached would be subject to amendments by US legislators and would face difficulties getting ratified.

Ms Tai, said earlier that the negotiations over a bilateral trade pact with Kenya must reflect the priorities of the new administration — which is pushing for procurement of America-made goods both in the US and outside.

A trade agreement with Kenya, which would be the first US free trade deal in sub-Saharan Africa, comes amid a growing concern about China’s investments across Africa.

The Biden administration is seeking to cut China’s share of the global trade.

Kenya and the US formally launched negotiations in July last year for a bilateral trade pact that the two economies hope could serve as a model for additional agreements across Africa.

Kenya wants to do a deal with Washington before the expiry of the Africa Growth and Opportunity Act (Agoa), which allows sub-Sahara states to export thousands of products to the US without tariffs or quotas until 2025.

Two-way goods trade between the US and Kenya totalled Sh118 billion in 2019, up 4.9 percent from 2018.

The bilateral talks paused in the wake of American presidential elections last November.

Mr Biden was sworn in as US President on January 20, ending the tumultuous four-year presidency of his predecessor Trump.

A change of guard at the White House raised uncertainty over the FTA deal, with Mr Biden embarking on the reversal of many polices that had been rolled out by the Trump administration.

Biden’s “Build Back Better” blueprint aims to revive the US economy from the ravages of Covid-19 through a sweeping use of government power to reshape the world’s largest economy and counter China’s rise.

His policy mix includes increasing corporate taxes to fund innovation and buy American products to expand jobs; tax incentives and penalties to encourage US firms to keep and create jobs in the US as well as $2 trillion investment in clean energy.

He bets on creating millions of jobs building infrastructure, such as roads and tackle climate change — a topic that Trump gave little prominence.

The Biden’s plans signal that the US will be keen to protect American firms in the quest to shore up manufacturing and seek a larger share of the global trade currently in the hands of China while pushing for bilateral trade deals.