U.S. Announces Intent to Start Talks on Kenya Trade Agreement

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. 

The U.S. plans to start trade negotiations with Kenya, which could result in the first such agreement with a sub-Saharan African nation.

The White House announced the plan in an emailed statement Thursday following a meeting between U.S. President Donald Trump and his Kenyan counterpart, Uhuru Kenyatta.

U.S. Trade Representative Robert Lighthizer will officially notify “Congress of the Trump administration’s intention to start negotiations,” and will publish objectives for the negotiations in the Federal Register at least 30 days before the talks begin, the White House said.

The process will comply with the U.S.’s Trade Promotion Authority laws, which seek to support U.S. jobs. It’s designed to eliminate barriers in foreign markets and establish rules to stop unfair trade, and will require congressional approval at the end of the negotiations, according to the Trade Representative’s website.

Now that Trump has signed the first phase of a trade pact with China, and the Senate approved his U.S.-Mexico-Canada agreement, the White House is turning its attention to scrutinizing trade relationships with other nations and regions including the European Union, the U.K. and Africa.

Some Kenyan goods already have duty-free access to the U.S. under the African Growth Opportunity Act which provides 39 sub-Saharan African countries the benefit for about 6,500 products ranging from textiles to manufactured items. AGOA ends in 2025, and Kenya sees itself as a “pace-setter” that’s “clearing the field for future negotiations for the rest of the African continent,” Kenyatta told the U.S. Chamber of Commerce in Washington Thursday.

Both the U.S. and Kenya are committed to seeing pan-continental trade efforts succeed in addition to their bilateral plan.

All but one of Africa’s 54 nations have signed up to join the African Continental Free Trade Area, an African Union-led initiative designed to establish the world’s largest free-trade zone by area, encompassing a combined economy of $2.5 trillion and a market of 1.2 billion people. The AU favors a free-trade agreement to replace AGOA when it expires, AU Trade and Industry Commissioner Albert Muchanga said in August.

AfCFTA Commitment

The U.S. “pledges its continued support to help the AfCFTA achieve its fullest potential,” Lighthizer said in the statement. “We believe a trade agreement between the United States and Kenya will receive broad bipartisan support in Congress.”

Kenya is America’s 11th largest trading partner on the continent and the sixth biggest in sub-Saharan Africa, with total trade between the two countries at $1.17 billion in 2018.

“There’s a lot of room to grow,” said Scott Eisner, president of the chamber’s U.S.-Africa Business Center, told reporters Wednesday.

Over the next six to 10 years, should a deal come to completion, “the sky’s the limit,” he said.

To contact the reporter on this story: Max Reyes in Washington at mreyes125@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Ana Monteiro, Anita Sharpe

©2020 Bloomberg L.P.