The Star (Kenya)

The planned Kenya-us free trade deal is un­favourable, says Mukhisa

He has asked the Kenyan del­e­ga­tion to bal­ance na­tional of­fen­sive and de­fen­sive

- VICTOR AMADALA @It­samadala Finance · Politics · Business · Kenya · United Nations · United Nations Conference on Trade and Development · United States of America · Africa · Congress of the United States · United States Congress · U.S. government · Nigeria · Uganda · Rwanda · Tanzania · African Union · Union · United Airlines · Australia · China · Credit Suisse Group · Brookings

The Kenya-us trade deal is lop­sided and will only ben­e­fit the lat­ter, the United Na­tions Con­fer­ence on Trade and De­vel­op­ment (UNCTAD) un­der­sec­re­tary Mukhisa Ki­tuyi has said.

In an ex­clu­sive in­ter­view with the Star, the UNCTAD head, said the US mar­ket is al­ready open for Kenyan prod­ucts un­der the Africa Growth Op­por­tu­nity Act (AGOA) that ex­pires in 2025. Ki­tuyi won­dered what mar­ket Kenya is set to cre­ate in the US un­der the planed Free Trade Agree­ment, con­sid­er­ing it is yet to ex­haust ex­ist­ing mar­ket open­ings un­der AGOA.

“Kenya is cur­rently per­mit­ted to ex­port more than 1,000 items to the US mar­ket. It how­ever ex­ports only tex­tiles and a few ar­ti­facts worth less than $500 mil­lion a year. It should ad­dress pro­duc­tion and not mar­ket,” Ki­tuyi said.

He added that Kenya should work to­wards pro­duc­ing more com­pet­i­tive prod­ucts for the US mar­ket in­stead of ty­ing it­self to con­di­tional mar­ket agree­ments that give much lee­way to the US.

He said one of the pro­pos­als sent to the US Congress is seek­ing abo­li­tion of im­port duty on agri­cul­tural ex­ports to Kenya, an as­pect that is likely to erode the lo­cal mar­ket.

He asked the Kenyan del­e­ga­tion on FTA to ef­fec­tively bal­ance na­tional of­fen­sive and de­fen­sive in­ter­est by con­stantly look­ing at the trade-off.

“How can I have an agree­ment where my of­fen­sive in­ter­ests are eco­nom­i­cally more ben­e­fi­cial than the cost I in­cur on my de­fen­sive in­ter­est?’’ Ki­tuyi asked. He ad­vised that Kenya should con­sider go­ing with the rest of the con­ti­nent to the ne­go­ti­a­tion ta­ble with the US on the re­newal of Agoa as there was power in num­bers.

He added that Kenya should not fall prey to the US gov­ern­ment’s trade dom­i­nance pol­icy where it is in­ter­ested in re­plac­ing costly mul­ti­lat­eral deals with bi­lat­eral deals that mostly work against smaller coun­tries. His views on the pro­posed trade deal cur­rently un­der ne­go­ti­a­tion echo ear­lier ones by sev­eral trade bod­ies and lobby groups both lo­cally and re­gion­ally.

In July, at least 27 trade lobby groups from Kenya, Nige­ria, Uganda, Rwanda and Tan­za­nia wrote to the Kenyan gov­ern­ment, voic­ing their op­po­si­tion to the pro­posed deal. They ar­gued that the FTA will sti­fle the growth of lo­cal in­dus­tries and lead to the dump­ing of cheap US im­ports in the re­gion.

“The agree­ment por­tends the dan­ger of crip­pling sec­tors such as agri­cul­ture and man­u­fac­tur­ing and dis­in­te­grat­ing of the Kenyan econ­omy,” the joint let­ter by the group said.

The African Union had ear­lier crit­i­cised Kenya for go­ing alone de­spite ac­tive ef­forts to set up the African Con­ti­nen­tal Free Trade Area (AFCFTA).

Ac­cord­ing to Al­bert Muchanga, AU’S com­mis­sioner for trade, AFCTA would be the pre­ferred ve­hi­cle for a con­ti­nent-wide trade deal with the US.

In March, the Brook­ings In­sti­tute said the mo­ti­va­tions for the US trade deal with Kenya seem more sym­bolic than eco­nomic. Ac­cord­ing to the body, Kenya of­fers the US an op­por­tu­nity to de­velop a repli­ca­ble model for fu­ture trade deals with Africa, lim­ited risk in a coun­try where China has tried and failed to se­cure an FTA.

“The out­come of a US -Kenya FTA will have sig­nif­i­cant con­se­quences both to in­tra-african trade as well as coun­ter­ing China’s in­flu­ence in Kenya,” it said.

Kenya ex­ported goods worth $527 mil­lion in 2018, pri­mar­ily ap­par­els, cof­fee and nuts.

Its im­ports were mainly com­mer­cial air­planes and other space­craft, poly­mers and medica­ments. Kenya has a slim trade sur­plus that the US will prob­a­bly be keen to bal­ance.

Trade CS Betty Maina says Kenya is keen to tap at least five per cent of the US mar­ket, which has the po­ten­tial to earn the coun­try more than Sh2 tril­lion in ex­port rev­enues an­nu­ally.

 ?? /VICTOR IMBOTO ?? UNCTAD Sec­re­tary Gen­eral Mukhisa Ki­tuyi dur­ing an in­ter­view with the Star at the Lions Place, West­lands, Nairobi on Septem­ber 10
/VICTOR IMBOTO UNCTAD Sec­re­tary Gen­eral Mukhisa Ki­tuyi dur­ing an in­ter­view with the Star at the Lions Place, West­lands, Nairobi on Septem­ber 10
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