3 days ago
Kenya revives FTA negotiations with US as clock ticks towards Agoa expiry
Kenya has announced plans to kickstart negotiations with the United States on a bilateral Free Trade Agreement (FTA) that President Donald Trump initiated during his first administration.
Trade Cabinet Secretary Lee Kinyanjui is expected to lead a Kenyan delegation to Washington DC in the next week to meet with the US Representative of Trade and other top trade officials over possible revival of the FTA.
The revelation came as Nairobi started a public relations campaign to reassure the country that all was well after the US seemed ready to sanction it over its dalliance with China.
Earlier in the week, the US announced it had drafted a bill that would pave the way for Washington to review its trade and defence relations with Kenya.
Republican Senator for Idaho James Risch has introduced an amendment to the National Defence Authorisation Act for the Fiscal Year 2026 seeking a 90-day reassessment of Kenya's Nato status over it ties with Beijing.
If adopted, the amendment would mandate US Secretary of State Marco Rubio to submit a report on Kenya's foreign policy alignments, defence partnerships, and human rights record within 180 days, reassess Kenya's Major Non-Nato Ally status.
But President William Ruto fought off the push for a probe into Kenya's ties with rivals of the US, links to armed groups and human rights violations, including abductions, citing trade benefits to justify Nairobi's bond to China.
'Some of our friends are complaining that we are doing too much trade with China… but it is what I must do for Kenya. It's in the best interest of Kenya that we get into this (China) market,' President Ruto told a private sector meeting in Nairobi on Wednesday.'We have concluded the high-level conversation with China. They have agreed to a reciprocal arrangement. They have agreed to remove all the tariffs on our tea, on our coffee, on our avocado, and all other agricultural exports. That, I think, is a major breakthrough for us,' President Ruto said.
As the US returns to a more protectionist trade agenda under Trump, Kenya, like many other African states, faces a renewed wave of uncertainty.
In response to US disengagement, many African countries have accelerated economic diplomacy with China, the European Union, and the Gulf states.
The EU's Global Gateway and China's Belt and Road projects have provided infrastructure and market alternatives.
The African Continental Free Trade Area (AfCFTA) is also gaining traction, helping countries diversify away from dependence on Western trade preferences.
The Trump administration has shown a preference for bilateral deals in place of blanket ones such as the African Growth and Opportunity Act (Agoa), which is set to expire on September 30.
With Agoa gone, the 10 percent tariff would affect Kenya's total trade with the US. Nairobi exported goods worth $737.3 million to the US in 2024, according to the US Trade Representative's Office.'We want to have a better trading platform with the US, and we have a huge plan around it. Both the US and Kenya are on the same page,' Kinyanjui told The East African.
He said that the Trump administration is likely to revive the FTA.
Yet, there was a US-Kenya Strategic Trade and Investment Partnership (Stip) in the works with the Joe Biden administration.'Trump started the FTA, that was his dream,' Mr Kinyanjui said. 'But after he left office, the thinking of the people who he left changed. Now that he has come back, there have been such huge changes that there is no time now to sit back and agree on some of the things.'The US and Kenya began a free trade agreement negotiations in 2020, under Trump and Uhuru Kenyatta.
The Stip emphasises strategic trade and investment rather than a full-fledged FTA.'The trade conversation started between the US and Kenya was only shelved, not cancelled,' Mr Kinyanjui said this week.
The reasoning behind the Stip was reducing non-tariff barriers, lowering costs for US businesses and helping US firms maintain their competitiveness in the Kenyan market, especially given Kenya's new trade agreements with the United Kingdom and the European Union ratified by both parties as of April 2024, both of which lower tariffs.
But an FTA is considered superior to a Stip by both the Kenya-US stakeholders.
The Stip was not a comprehensive free trade agreement in the traditional sense: It would not address tariff barriers, as would a comprehensive FTA.
According to a US Congress document, the FTA was more popular than the Stip. For instance, while the Stip is not slated to address tariff barriers, some businesses support the inclusion of tariffs.
For example, the US agriculture industry asserts that Kenyan tariffs on agricultural products will continue to hinder US market access even if NTB concerns are addressed.
The US provided unilateral duty-free treatment to most Kenyan exports through the Generalised System of Preferences (GSP), which lapsed in 2020, and Agoa which expires next month.
Both Agoa and GSP require congressional reauthorisation every few years, and so Kenyan exporters have expressed interest in gaining permanent market access to the US under a comprehensive FTA, rather than preferential benefits provided under Agoa and GSP.
"Kenya is looking for a comparative and comprehensive advantage against other exporters of textiles and apparel to the US, such as Bangladesh and Vietnam,' said Jas Bedi, chairman of the Kenya Private Sector Alliance.'We are undergoing a transformation under a new world trade order. There is now more protectionism and bilateralism, as opposed to multilateralism and rule-based trading agreements.'Kenya qualifies for Agoa's third-country fabric rule, which allows it the flexibility to export apparel made with imported fabrics to the US duty-free.
In 2023, nearly all US apparel imports from Kenya under Agoa were assembled from third-country fabrics.
By contrast, US FTAs typically require local or US sourcing of yarn and fabrics to qualify for duty-free treatment, which would now favour Kenya.
'The issue of Kenya remaining a leading manufacturer and exporter of textile and apparel is going to be the case for a long time to come,' said CS Kinyanjui.'Even if Agoa ends, the US market still needs clothes and they are not producing them there. Kenya, with other African countries, has written petitions to the US to allow stability and certainty to avoid a slowdown, which is not easy once Agoa expires.'Apparel exported to the US market under the Agoa earned Kenya $470 million last year, a 19.2 percent jump from $392 million in 2023, according to the Kenya National Bureau of Statistics Economic Survey 2025.
The survey indicates that Kenya's volume of apparel exported to the US market under the duty-free programme increased from 97.3 million pieces in 2023 to 116.0 million pieces in 2024.
He said that Trump's 10 percent tariff would hurt US citizens most as they would have to bear the extra cost.'Normally, you impose a tax on a product that you are producing to discourage importation. So, textiles and cotton are not what they want to bring to their country -- they want to import. With increased tariffs, they are making the cost of living higher,' Mr Kinyanjui said.
Meanwhile, Agoa is a US trade programme that provides eligible sub-Saharan Af-rican countries with duty-free access to the US market, covering over 1,800 prod-ucts.
Among others, Agoa, which was enacted in 2000, US economic relations with the region. Agoa has been considered a cornerstone of US-Africa trade relations over the years.
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