The African Growth and Opportunity Act (Agoa) has been a cornerstone of Kenya’s trade relationship with the US for over two decades.However, as it approaches its expiration this year, and with increasing uncertainty under the new US administration, Kenya faces a critical juncture. The potential end of the Act presents challenges and opportunities, forcing Kenya to rethink its trade strategy in a rapidly shifting global economy. The question now is: what next for Kenya? Since its enactment in 2000, Agoa has provided duty-free access to the US market for thousands of products from eligible African countries.Kenya, in particular, has significantly benefited, especially in the textile and apparel sector.In 2023, Kenya’s apparel exports to the US under Agoa were valued at over $540 million, constituting nearly 70 percent of its total exports to the US The sector employs over 200,000 workers directly, with thousands more in supporting industries. Beyond textiles, Agoa has facilitated Kenya’s access to the US market for horticultural products, including flowers, nuts, and coffee. This preferential access has enabled Kenyan businesses to compete favorably in a high-value market, generating employment and foreign exchange earnings. However, despite these gains, Kenya’s trade balance with the US remains skewed, with imports from America outpacing exports.This structural imbalance underscores the need for Kenya to develop a more sustainable trade strategy beyond Agoa. The re-election of Donald Trump has injected fresh uncertainty into Agoa’s future.The previous Trump administration was skeptical of multilateral trade agreements, favouring bilateral deals that prioritise American interests. This stance suggests that Agoa, which is framed as a unilateral US initiative to support Africa, may not align with Trump’s broader trade agenda. Furthermore, the US has already demonstrated its willingness to revoke Agoa benefits for countries that fail to align with its foreign policy priorities. In 2022, Ethiopia, Mali, and Guinea were removed from the programme over governance and human rights concerns.Similarly, South Africa’s current geopolitical positioning—particularly its stance on the Israel-Palestine conflict—has raised concerns about its continued eligibility.Kenya must, therefore, prepare for a scenario where Agoa is not renewed, or where access is conditioned on stricter political and economic criteria. With Agoa’s future in doubt, Kenya must proactively explore alternative trade arrangements. One avenue is strengthening its bilateral trade agreement with the US In 2020, Kenya initiated negotiations for a Free Trade Agreement (FTA) with the US, aiming to establish a long-term trade framework beyond Agoa. While these talks stalled due to changes in US administrations, the return of Trump provides an opportunity to re-engage on terms that reflect Kenya’s economic priorities.A bilateral FTA could offer Kenya more certainty in trade relations with the US, particularly if it secures favorable terms for its key exports.However, such a deal would require careful negotiation to ensure that Kenya’s industries are not exposed to unfair competition from American goods. Additionally, a bilateral agreement must include provisions that support value addition and industrialisation, rather than merely serving as a conduit for raw material exports. Kenya’s trade strategy should not be solely US-centric. While the American market is important, over-reliance on Agoa has limited Kenya’s ability to fully exploit other trade opportunities.The African Continental Free Trade Area (AfCFTA) presents a significant opportunity to expand intra-African trade.Kenya can access a broader market of over 1.3 billion people by leveraging AfCFTA thereby reducing dependency on Western trade arrangements. Beyond Africa, Kenya should explore stronger trade relations with the European Union, China, and emerging Asian markets. The Economic Partnership Agreement with the EU already provides duty-free access for Kenyan exports, and deepening engagement with the bloc could mitigate the effects of losing Agoa benefits. Similarly, strengthening ties with China—already Kenya’s largest trading partner—could unlock new trade and investment opportunities, though care must be taken to avoid excessive trade imbalances. (ICE NAIROBI)

Fonte notizia: Business Daily