US firms freeze Kenya expansion in Biden trade review

Joe Biden

US President Joe Biden speaks during climate change virtual summit from the East Room of the White House campus April 22, 2021, in Washington, DC. PHOTO | AFP

US firms have frozen investment plans in Kenya due to uncertainty about a new free trade deal between the two countries.

Many American firms had already begun investing in Kenya, spurred by the prospects of a fresh bilateral trade and investment pact between Washington and Nairobi.

Talks on the free trade deal were, however, jolted by the exit of President Donald Trump’s administration late last year.

Scott Eisner, president of the US-Africa Business Center at the US Chamber of Commerce, confirmed the setback for American firms, even as President Joe Biden’s administration sought to review the proposed trade deal.

“Many companies had begun investing in Kenya in the wake of the Trump administration’s talks with Kenya on a bilateral free trade agreement, but that those plans were on ice until the Biden review of that policy was completed,” he was quoted by Reuters as having said.

Talks for the free trade deal between Kenya and the US took a major hit this month following the expiry of a key law known as Trade Promotion Authority (TPA) that would have expedited its approval by Congress.

Negotiators had been banking on a TPA enacted by Congress to fast-track the talks before its expiry on July 1.

President Joe Biden, however, allowed the TPA to expire to provide his administration more time to scrutinise the proposed deals that had been initiated by his predecessor’s government.

A TPA guides US administrations in pursuing trade agreements that support domestic jobs, eliminate barriers in foreign markets and establish rules to stop unfair trade.

Under this law, Congress retains the authority to review and decide whether any proposed US trade agreement will be implemented.

Records show that since 1974, Congress has enacted TPA legislation that defines US negotiating objectives and priorities for trade agreements and establishes consultation and notification requirements for the President to follow throughout the negotiation process.

At the end of the negotiation and consultation, Congress gives the agreement an up or down vote, without amendment.

President Biden’s administration on Tuesday announced a new push to expand business ties between US companies and Africa, with a focus on clean energy, health, agribusiness, and transportation infrastructure on the continent.

Kenya is keen on signing a new trade deal with Washington before the expiry of the current arrangement under the Africa Growth and Opportunity Act (Agoa), which allows sub-Saharan African countries to export thousands of products to the US without tariffs or quotas until 2025.

Agoa grants 40 African States quota- and duty-free access to the US market of more than 6,000 product lines.

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

The US and Kenya in 2018 formed a working group to lay the groundwork for formal negotiations for the bilateral trade pact that were officially launched in July last year.

President Biden, who requested nearly $80 million for the initiative in his budget proposal in May, aims to focus on women and equity, with an expanded role for small- and medium-sized businesses.

In addition to the UK and Kenya negotiations, the Biden administration has shown little interest in agreements like the Environmental Goods Agreement and the Trade in Services Agreement, which could help the president advance his environmental objectives and promote America’s pandemic-stricken services sector.

In its place, the Biden administration’s trade agenda places a premium on enforcing existing trade deals, strengthening America’s manufacturing supply chains, and encouraging domestic investment and innovation.