Government officials are racing to finalise a free trade agreement (FTA) that, if signed, is set to ease the entry of established US companies into the local market.
Through the reciprocal trade deal, the US government is seeking unfettered entry for its companies into nearly all segments of Kenya’s economy including the heavily guarded ones.
According to its wish list — specific negotiation objectives — unveiled last week, two months after it received go-ahead of Congress to pursue the talks, the US government is pushing to have its agricultural products allowed into Kenya at zero or reduced tariff.
It also hopes to ride on the FTA to ease the entry of its telecommunication firms into Kenya in what signals a shift in competition landscape for a segment currently dominated by Safaricom #ticker:SCOM.
The Office of the US Trade Representative (USTR) says it will make use of the envisaged FTA to “promote the competitive supply of telecommunications services … and secure commitments to provide reasonable network access for US telecommunications suppliers”.
The pact will also protect whatever choice of technology that US investors opt to use in Kenya’s telecommunications sector, the wish list adds.
“Our vision is to conclude an agreement with Kenya that can serve as a model for additional agreements in Africa, leading to a network of agreements that contribute to Africa’s regional integration objectives,” the USTR office states in the document
“We seek to support higher-paying jobs in the United States and grow the US economy by improving US opportunities for trade and investment with Kenya.”
If the US has its way, its industrial goods will enjoy duty-free market access, ending the free rein of Chinese and Indian suppliers that currently dominate the segment. Last year, Kenya imported Sh257.6 billion worth of industrial goods mainly from the Asian markets.
Also facing tumult is the competition landscape of the banking sector, which is currently dominated by about five firms. The US says it will make use of the FTA to “expand competitive market opportunities” for its financial service providers.
The FTA, the US agency adds should “improve transparency and predictability in Kenya’s financial services regulatory procedures … and ensure that Kenya refrains from imposing measures that restrict cross-border data flows or that require the use or installation of local computing facilities”.
Firms that are either owned or controlled by the State — which are free to favour local firms in their tendering — may have to extend similar treatment to US companies.