Private Sector Dialogue on the U.S.-Kenya Free Trade Negotiations
On Monday, July 13, the Corporate Council on Africa (CCA) in partnership with the Kenya Private Sector Alliance hosted the Private Sector Dialogue on the U.S.-Kenya Free Trade Negotiations in celebration of the first round of Kenya-U.S. FTA talks. CCA and KEPSA have an MOU, and both organizations are committed to providing a platform for policy discussions, promoting trade, investment and business linkages between the United States and Kenya.
This U.S-Kenya public-private sector dialogue was the first of many that brings the private sector voice to the government to government talks and aims to support the negotiation of a Kenya-U.S. FTA that benefits the economies, businesses, and people of both countries. The Dialogues featured high-level speakers including, Dr. Ruth Kagia, Deputy Chief of Staff, Policy and Strategy in the Executive Office of the President; Honorable Betty Maina, Cabinet Secretary in the Ministry of Industrialization, Trade and Enterprise Development, Ambassador Kyle McCarter, US Ambassador to Kenya; Maxwell Okello, CEO, American Chamber of Commerce Kenya; Carole Karuga, CEO KEPSA and Florie Liser, President and CEO, CCA.
Ms. Liser began her remarks by confirming that CCA fully supports the negotiation of a U.S-Kenya Free Trade Agreement (FTA). Adding that it would strengthen trade and business relationships between the two countries. She believes that this agreement will be a win-win and that there will be potential benefits for both the US and Kenya. Past FTAs between the US and developing countries like Morocco, Chile, Peru and Colombia which increased trade and investment opportunities for the US and for those Nations and created more employment opportunities are a good guide. For the process to be successful, Ms. Liser also believes that there needs to be private sector participation and it is the role of organizations like KEPSA and CCA to ensure that the private sector’s voice is heard and their concerns are taken into account.
Mrs. Karuga, in her remarks, conveyed her excitement in having KEPSA cohost this timely discussion on the US-Kenya FTA. As the end of AGOA approaches in 2025, we must begin to think ahead on what the gains of AGOA are and how we can safeguard them. In 2019, the US was Kenya’s second-largest export market generating $508.5million. It is also Kenya’s leading source market for tourism and among the leading sources of FDI into Kenya. This FTA will facilitate a partnership framework where both countries can share access to markets, increased investments, capacity building, and innovations.
Kenya is building special economic zones to make it easier for joint ventures and for US businesses to set up in Kenya. KEPSA hopes to see more of Kenyan exports such as tea, coffee, and apparel exported to the US market. They also hope to see more Kenyan companies doing business in the US and an enhanced partnership between Kenyan and US companies. To ensure that KEPSA members and the private sector are represented, KEPSA has set up a private sector consortium comprised of private sector players who are interested in the FTA to collectively submit their contribution for inclusion as well as consideration for a win to be achieved.
Mr. Okello began by applauding the Kenyan government for stepping up to take advantage of this great opportunity. He is encouraged by Kenya's commitment to a private sector-led to economic development and the ongoing efforts to improve the ease of doing business in the country. He elaborated on the private sector consortium mentioned by Mrs. Karuga. This group comprises 30 multi-sector business leaders and industry experts drawn from the membership of KEPSA comprising the American Chamber of Commerce, the Kenya National Chamber of Commerce and Industry, the Kenya Association of Manufacturers, the Agriculture Sector Network, the Kenya of Healthcare Federation, and other industry stakeholders. As the Vice-chair of the consortium, he looks forward to the structure and the predictability that this Trade Agreement will bring in improving the business environment, improving the ease of doing business, growing our SMEs, creating quality jobs, and uplifting the standard of living.
Dr. Kagia focused her remarks on explaining the importance of this agreement to Kenya. The FTA provides an opportunity to move from Aid to Trade. In practical terms, this means reciprocity. As important as AGOA is in terms of helping Kenya expand its export base, AGOA is not reciprocal. This FTA will be reciprocal where both countries will play to their comparative advantage. This FTA is also a political statement by the US on its interest in cementing its position in Africa. It is a pace-setting agreement. If we do it well, it becomes a guide for other countries in Africa. If well done, it makes Kenya the defacto entry point for the continent through the first-mover advantage.
Honorable Maina echoed Dr. Kagia’s sentiments on the significance of the negotiations. She also reassured that the FTA would recognize Kenya’s commitment and obligations with existing multilateral, regional and bilateral trade agreements which Kenya has signed and ratified.
These regional integration Agreements are critical for American investors keen on Africa. Their aim as a ministry is to maximize the trade and investment benefits that arise from engaging in bilateral, regional, international and multilateral Trade Agreement Arrangements. The Ministry of Industrialization and Enterprise Development has developed the negotiation principles objectives and scope to guide them in the first bilateral FTA talks. Kenya will leverage on export potential in priority areas of investment. There will be a focus on the Kenya market but most importantly the regional market. The government will use the National Export Development and Promotion Strategy to expand its market potential for priority exports that have considerable potential in the US market. As part of this strategy, the government will strengthen key action agencies including the Kenya Bureau standards, Kenya Revenue Authority, Kenya Plant Health Inspectorate Service KEPHIS to ensure they can enforce global standards. The government will also deepen our business climate reforms to support investors from the US and other developed markets. Investor interest is already growing in areas such as science and technology, textiles, and apparel.
Ambassador McCarter talked about his belief that this agreement will enhance Kenya's leadership on the continent and complement Africa's regional integration efforts, the East African Community and the African Continental Free Trade Area. The United States pledges its continued support to the African Continental Free Trade Agreement and the continent so that it can achieve its fullest potential. Both countries will benefit from increased trade and investment and to achieve this, they must work together to promote good regulatory practices to increase market access for goods and services as well as compatibility between the United States and Kenya regulations; eliminate tariff and non-tariff barriers that hinder trade and increase trade facilitation factors; target sectors that reduce both of our country's dependence on China; and promote transparency and a level playing field for companies interested in providing solutions in Kenya.
Ambassador McCarter concluded his remarks by reaffirming that both governments are committed to an FTA that makes workers, farmers and business people in both our countries more prosperous.“Kenya is deserving of self-reliance and there is no better way to do this other than going from Aid to Trade.”
In attendance were business leaders who also contributed to the discussion. Farid Fezoua, Africa CEO, GE talked about what he would like to see within the framework of the Free Trade Agreement efforts. He is hoping that the FTA will provide the right framework for companies like GE that are looking forward to the next level of Foreign Direct Investment. Mrs. Temitope Iluyemi, Director, Global Government Relations for Africa, P&G mentioned that P&G has been very active in Kenya for almost three decades contributing both economically and socially partnering with the government. It is a very welcome development to see the partnership growing between the US and Africa even though it has begun in Kenya. Sir Jim Dutton, regional president for Africa at Bechtel, cited concerns about whether a bilateral deal with the U.S. would “sit well alongside” the AfCFTA. Mr. Nick Nesbitt, General Manager of IBM Eastern Africa and Chairman of KEPSA discussed how marketing and publicity could be utilized to increase American exposure to Kenya and its business opportunities. Whereas the FTA announcement made a lot of noise in Kenya and the rest of the continent, there’s a concern that US businesses are not familiar with Kenya.
This CCA-KEPSA dialogue was a well-rounded discussion on how the private sector could support the government in their negotiation efforts. Ms. Liser and Mrs. Karuga concluded the webinar by committing to keeping the door open to the FTA discussions. CCA and KEPSA are looking forward to having more issue-focused discussions around the US-Kenya FTA.