US, Kenya trade gets boost with renewal of Agoa deal

Politics and policy

Workers at the EPZ in Athi River. The Agoa trade deal has been extended for 10 years. PHOTO | FILE 

By GEORGE OMONDI

In Summary

• The Agoa window allows Kenya and other African countries to export about 6,000 kinds of goods to the US without paying taxes.

The US Congress has approved extension of preferential trade pact with sub-Saharan African states by 10 years, safeguarding nearly 40,000 jobs and providing a lifeline to investments worth billions of shillings in Kenya.

The US trade representative Michael Froman said last week’s passage of the revised African Growth and Opportunity Act (Agoa) Bill would improve trade relations.

The Agoa window, introduced by the Clinton administration 15 years ago, allows Kenya and other African countries to export about 6,000 kinds of goods to the US without paying taxes.

“Renewal for a 10-year period, the longest ever in the programme’s history, will incentivise good governance and pro-growth, pro-development policies, including on labour and human rights, while providing much-needed certainty for African producers, US buyers, and investors,” Mr Froman said in a statement.

The passage by the Congress means the Agoa Renewal Bill will become law immediately President Barack Obama signs it.

Africa has been pushing for a 15-year extension, saying a longer period would encourage capital-intensive investments in the continent.
Mr Obama is expected to assent to the Bill before he begins his much publicised African tour later this month.

His itinerary includes Kenya, Nigeria and Ethiopia.

In Kenya, Agoa has sustained a multibillion-shilling business at the Export Processing Zone, with capital investment of Sh15 billion and employed a total of 37,758 people by end of last year.

Exports of duty-free goods to the US under Agoa increased by a quarter last year to Sh30 billion. The goods, mainly textile products, rose 24.2 per cent from Sh24 billion in 2013 and accounted for 79 per cent of the total export exports to the US.

Other exports to the US included coffee, which fetched Sh3 billion while titanium ores and concentrates earned the country Sh2.1 billion.

In their push for Agoa extension, the Kenyan delegation pledged to deliver 100,000 jobs and Sh98 billion ($1 billion) revenue in the first three years of extension.

“Our preference programmes – including Agoa – not only promote sustainable and inclusive development abroad, but also encourage the rise of markets for ‘Made-in-America’ exports that support good jobs here at home,” Mr Froman said.