Monday, 27 August 2018

Kenyatta-Trump Meeting: The 'Big 4'- AGOA Conundrum

By Muthuma Njenga
President Kenyatta is scheduled to meet his counterpart POTUS Donald Trump at White House, Washington on Monday 27 August. The much anticipated and hyped meeting presents a chance for the two head of States to formally engage for the first time since the election of Donald Trump, with discussions ranging from trade to security issues. The visit maintains its traditional skewed development nature: Kenya seeking to get more funding (aid) in its 'Big 4' development programmes and regional security initiatives (Somalia mission). Kenya will also be seeking to maximize on preferential trade deals and opportunities and signing new ones. This comes at a time when US and China are locked in tariffs confrontation which could lead to a trade war, in this scenario Kenya proves to be an important pawn if there were to be a trade war between the two global economic giants, owing to the fact that Kenya is the economic gateway to the eastern region of the continent.

Trade discussions are expected to stretch to Africa Growth Opportunity Act (AGOA), where the US is mulling on replacing 18-year multilateral program with preferential bilateral programs with respective African states, Kenya being fronted as one of the first States to benefit from the new program. The ministries of foreign affairs and trade and industrialization are keen to clinch the deal which has its shortcomings and poses a threat to 'Big 4'.

President Uhuru Kenyatta. Picture courtesy 
Under manufacturing pillar, Textile and leather industries are key sub-sectors which the Kenyan government want to revive. Their revival terms and solution has been easy: reduce inflow of cheap second-hand clothes into the country. Prior to the Big 4, EAC head of States had sought to revive the textile industry in the region. They directed ministers of trade to draft regulations to guard local textile and leather products back in 2015. The ministers presented a draft policy document whose main recommendation was a joint restriction on imported second hand clothes and shoes. The draft policy was adopted unanimously and was set to be implemented by 2018. However only Rwanda took the leap of faith and courage by slapping imported second hand clothes and shoes with the agreed 25% EAC joint tariff. This causing a possible trade confrontation between Rwanda and US (which benefits highly from exporting second hand clothes), where US threatened to withdraw AGOA privileges from Rwanda.

Kenya and its two counterparts Uganda and Tanzania choose to stick to a 'pragmatic' policy of wait and see, and eventually 'chickened out' of the agreed tariff proposal. Defending Kenya's move former industrialization CS Adan Mohammed cited effects of the burn to importers and entrepreneurs of mitumba, and also considering the ultimate consequence; Kenya losing the AGOA privileges where it benefits greatly by exporting textile and apparels products. which are very valid justifications, but do not offer a long-term solution to the crippled local textile and Leather industries.

The Kenyan delegation will be faced with a great task of balancing between AGOA and Big 4. On big 4, they will seek funding to revive the local textile industry, and on the other hand the Kenyan delegation will have to appease the US delegation by caving in on mitumba restrictions so as to clinch the new bilateral deal, with the latter likely to carry the day. We might gain one and loose the other but we will certainly, never gain both.

Muthuma Njenga
International Relations Student
Technical University of Kenya

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