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US-Kenya FTA Could Open Door to Greater African Apparel Sourcing

United States Trade Representative Robert Lighthizer and Kenya’s Cabinet Secretary for Industrialization, Trade and Enterprise Development, Betty Maina, formally launched trade agreement negotiations between the two countries on Wednesday.

The U.S. and Kenya said in a joint statement that they aim to conclude a free trade agreement (FTA) that will complement regional integration efforts within the East African Community (EAC), as well as the landmark African Continental Free Trade Area. The two countries said they recognize that an agreement between them has the potential to serve as a model for additional pacts across Africa, including with other EAC partner states.

“Kenya is a recognized leader across the continent, an important strategic partner of the United States, and there is enormous potential for us to deepen our economic and commercial ties,” Lighthizer said.

In light of the ongoing global pandemic, the first round of negotiations is being conducted virtually, with the U.S. and Kenyan negotiators engaging in discussions over the next two weeks in multiple negotiating sessions covering all aspects of a comprehensive trade agreement.

The two countries said they share “a deep and enduring relationship that encompasses longstanding social, cultural, economic, and political ties.”  Both countries have worked closely together to strengthen agriculture, protect wildlife, improve health and welfare, assist in civic education and combat terrorism.

“Kenya and the United States have strong trade relations demonstrated by growing exports and imports, which have increased over the years,” Maina said. “The United States of America is a significant destination market for Kenya, a position that has been sustained over the years after the East Africa Community (EAC), European Union (EU) and Common Market for Eastern and Southern Africa (COMESA).”

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The U.S. imported $22.91 million worth of apparel for the year to date through May. In all of 2019, apparel shipments from Kenya rose 15.7 percent to $453.73 million. It has also become a growing denim supplier, with the U.S. importing $18.16 million of jeans in 2019, a slight uptick from the previous year.

“Increasing and sustaining export performance to the United States requires a trade arrangement that is predictable and guarantees preferential market access for Kenyan products,” Maina said. “Kenya is also keen to attract foreign direct investment from the United States that will improve vertical and horizontal linkages in the Kenyan economy. The increased inflow of investment from the United States has the potential to create job opportunities and catalyze other value chains that will benefit micro and small enterprises in Kenya.”

In 2018, Presidents Trump and Uhuru Kenyatta elevated the U.S.-Kenya bilateral relationship to a strategic partnership, and established a Trade and Investment Working Group to explore ways to deepen the trade and investment between the two countries and lay the groundwork for a stronger future trade relationship. This year, the two presidents agreed to pursue closer economic ties through the negotiation of an FTA.

In addition to the launch of trade negotiations, the U.S. and Kenya agreed on a Strategic Cooperation Framework to provide technical assistance and trade capacity building in Kenya, with the aim of maximizing Kenya’s utilization of the African Growth and Opportunity Act trade benefits for the remaining years of the preference program that is scheduled to expire in 2025. The framework will also support the development and competitiveness of key agricultural value chains in Kenya.

The U.S. and Kenya intend to increase efforts to boost commercial cooperation under the bilateral commercial Memorandum of Understanding signed in June 2018, and to work together to identify and prioritize trade and investment opportunities in strategic sectors, including energy, health, digital economy, infrastructure, manufacturing and agriculture.

Both governments said they are “committed to a successful outcome that makes workers, farmers and businesspeople in both countries more prosperous.”