Make the best of Kenya-US trade deal

This column previously lamented the possibility of a trade deal between Kenya and the US turning the former into a bazaar for American products with limited job creation. These concerns have not gone away.

This week President Uhuru Kenyatta confirmed that the talks are ongoing, and that he hopes to strike a deal that will simultaneously open up the Kenyan market for US products and make opportunities in Kenya and the region for American investment available. This sounds good on paper. However, are we ready to do the homework required to get a good trade deal? 

Let us consider the trade negotiation process. Do we know exactly what we want? This is a legitimate question, given recent missteps coming from the Foreign Affairs docket. We have stumbled on a number of issues, including the ongoing maritime dispute with Somalia and the failure to secure leadership of the African Union’s commission.

These failures suggest that we are likely not going to put in the necessary homework needed to get the best deal possible from Washington DC. Are we lobbying influential business people and politicians in the United States? What are our irreducible minimums? And to what extent are we willing to let public opinion inform the negotiations? We cannot sit back and view this as an act of American benevolence. We should go out and negotiate for the best deal possible, in good faith. 

The use of public opinion, in particular, can be a powerful bargaining tool. By making sure the public is sufficiently informed about the negotiations, the government can claim that its “hands are tied” on account of public opinion. That would allow it to get a deal that is closest to the will of the people. Secret negotiations not only create opportunities for corruption, but also minimise the potential power of public opinion in shaping diplomatic negotiations. The more involved Kenyans are, the more likely that an eventual trade deal will actually benefit ordinary wananchi. 

Bigger than ours

In addition to making sure the formal agreement reflects the best possible deal, we should also prepare our people and economy for closer relations with America. While the US economy is multiples times bigger than ours, there are some dimensions in which we can be competitive (vis-à-vis American firms and its other trading partners). To this end, we should continue to support legitimate Kenyan business – from small and medium carpentry enterprises to industrial conglomerates that already dominate the EAC – by lowering the cost of doing business, abolishing unnecessary regulations, and being more serious about human capital development. 

As we work on preparing our firms and labour pool, we should also be cognisant of the fact that because of Covid-19’s disruptions to global supply chains, a lot of countries are eager to diversify away from East Asia. How can we leverage this, including perhaps in collaboration with Chinese firms, to increase our exports to the major markets in Africa and beyond? And as we contemplate these developments, we should also consult widely with other smaller economies that have trade agreements with the US. These need not be useless “benchmarking” trips. We simply need to ask our friends in the relevant countries for ideas concerning specific aspects of the negotiation process. 

The claim that trade expands markets, thereby creating opportunities for specialisation and division of labour, is as true today as it was when first penned by Adam Smith. Yet to fully benefit from trade, we must also ensure that the benefits are equitably shared with our trading partners and within Kenya.

- The writer is an assistant professor at Georgetown University