Kenya-US Trade Deal at Liability and Reputation Risks Due To Coronavirus

UN Human Rights
US President Donald Trump

Kenya proposed free trade deal with the USA that would see the country open its borders for duty-free imports from the United State and export a range of goods tax-free, is likely to stall. The proposal was set to replace the African Growth and Opportunities Act (Agoa) agreement that expires in 2025 which allowed duty-free access of a wide range of African goods to the US. According to the Trade CS Peter Munya, this move seeks an alternative route for Kenya to access the US market, which accounts for up to 10 per cent of its export

Although the proposition violates East African Community Customs Union Protocol which provides that a member state has to inform its partners of its intentions to offer third-party preferential market access since member states share a common Customs territory, it will be a long while before Kenya proves to its neighbours that it made the right call.

The US is the second-largest buyer of Kenya’s goods after Uganda and the Kenyan export market will be hit hard as raw material shortage forces firms to delay export deliveries. The Kenya Association of Manufacturers (KAM), in a report to the Ministry of trade, has warned, that orders to the US will be affected much if the disruptions of supplies from China is not restored three months, with textile and apparel factories being in the frontline of a supply shortage. KAM noted that manufacturers are staring at liability and reputational risks due to failure to meet delivery orders.

“The majority of Kenyan manufacturers are negatively affected by the outbreak of coronavirus in China. 65 per cent of manufacturers foresee a shortage in their finished product within the next three months due to reduced supply of material inputs from China,” read findings on a survey on sampled firms in the industry.

Coronavirus has affected major economic strongholds across the globe, with the health sector,  oil and stock markets, sports, education, just to mention but a few adversely impacted by the deadly virus.

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