Regional Trade Agreements

Econometric Study On The Kenya-U.S. Free Trade Agreement.

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About the Study:

This study sought to respond to the Kenya Government’s initiative for joint negotiations with the United States
(U.S.) on a Free trade agreement (FTA), by undertaking and econometric study to guide the proposed FTA
negotiations between Kenya and the U.S.The study will assist the Kenya Government in all aspects of the issues
under negotiations. The document also endeavours as much as possible to respond to all issues tabled by the
U.S. Kenya- US FTA Negotiations. The Kenya-U.S. FTA commenced in June 2020 and both parties released their negotiations objectives. The U.S. produced the “United States-Kenya Negotiations: Summary of Specific Negotiating Objectives” while Kenya released “Proposed Kenya – United States of America Free Trade Area Agreement: 

Negotiation Principles, Objectives and Scope”.Both parties have set out to negotiate a full FTA, which is reciprocal in nature. Kenya’s trade, under current arrangement with U.S., indicates that only 373 out of 6,883 tariff lines were in use in 2019. In 2018, the number was much lower, 296 out of 6,883 tariff lines were in use. These tariff lines had trade volume ranging from USD 1- 68,000 thousand. Furthermore, Kenya had a negative trade balance with the US, in 2019; this was valued at USD -82,000. Kenya largely exports textiles, clothing, fruits and vegetables to the US, while the US is exporting high valued manufactured products to Kenya.

By: Dr. Miriam W. Oiro Omolo PhD

The Kenya-U.S. Free Trade Agreement.-Legal Analysis

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About the Study:

This report assesses the legal and policy implications of a comprehensive, deep and high-standard free trade agreement (FTA) between the Republic of Kenya (Kenya) and the United States of America (U.S.) using the United States–Mexico–Canada Agreement (USMCA) as the organizing framework. The USMCA is a comprehensive (34 chapters) trade and investment agreement between the U.S., Mexico, and Canada that was signed on November 30, 2018, and entered into force on July 1, 2020. The USMCA is a revised version of the North American Free Trade Agreement (NAFTA) which went into effect on January 1, 1994. The reason for using the USMCA as the organizing framework should be obvious. Judging by the summary of negotiating objectives released by the U.S. and Kenya, both sides are aiming for an agreement that is similar to the USMCA in terms of scope and coverage.

Because the U.S. typically negotiates FTAs in light of previous ones, the USMCA is likely to be the starting point for negotiations. A review of the legal implications of a free trade agreement is extremely important for a number of reasons. First, based on the pacta sunt servanda principle enshrined in Article 26 of the Vienna Convention of the Law of Treaties (VCLT), once ratified, an FTA is binding upon the parties and must be performed by them in good faith. Under Article 27 of the VCLT, a party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. Second, FTAs are not benign policy instruments. FTAs have legal consequences and can expose states to considerable legal risks and legal consequences. Third, accentuating the legal risks associated with FTAs is the fact that most FTAs come fully equipped with one or more binding and built-in dispute resolution mechanisms. Fourth, given their increasingly expansive scope, high-standard, comprehensive FTAs reach too deeply into the domestic regulatory space of states and have the potential to chill regulatory action and undermine rights protected under domestic, regional, and international law. Fifth, FTAs can create a different type of legal risk for states, an internal one.

By: Professor Uche Ewelukwa Ofodile, SJD (Harvard)