1. Discuss the implications of a potential US- Kenya Free Trade Area rules of origin on EAC cross border production of processed agricultural goods bound for the US market.

The USA FTA agreement under AGOA is somehow questionable while some f countries in the EAC has a bad relationship with AGOA agreement.  

Eg. Rwanda during the cutting importation of used clothes were some misunderstood with USA partnership.

my take on this is that the negotiations will make good use of the fraternal relationship between Kenya and USA and especially for Kenya as one of key non-oil African trading partner of United States. The FTA will be WTO compatible under application of the Special and Differential Treatment and will preserve and build on AGOA acquis

Both sides have described what they hope to achieve in the negotiations. The U.S. objectives are predictably comprehensive. USTR has identified 24 chapters on which it plans to negotiate, including technical barriers to trade, intellectual property, digital trade, anti-corruption, good regulatory practices, and subsidies, among others. Kenya’s statement of objectives is equally fulsome if not quite as detailed. The Ministry of Industrialization, Trade, and Enterprise Development has identified 22 chapters it intends to negotiate with the U.S. So it will be more applicable in others countries of Africa because it will facilitate the follow of goods , removal trade barriers .

Rules of Origin (RoO) are a set of requirements that specify the working and processing that must be undertaken locally in order for a product to be considered the “economic origin” of the exporting country. The purpose of RoO is to prevent trade deflection and transshipment, whereby goods made elsewhere are merely routed through a beneficiary country with no or insufficient local value-adding activities having taken place. The stringency of the relevant RoO impacts on the ability of producers and exporters to meet their requirements and can have a significant impact on trade. The key areas of focus under the US-Kenya Free Trade area rules of Origin are as follows:

• Develop simple and easy to implement rules of origin which ensure that the benefits of the Agreement go to products genuinely made in Kenya building on AGOA Rules of Origin.
• Establish rules of origin that encourage regional value chain by allowing cumulation across the existing regional blocs;
• Establish flexible rules of origin that allow for wider cumulation provision, including extended cumulation;
• Rules that recognize the different levels of development between the USA and Kenya and therefore allow asymmetrical rules.
• Establish rules of origin that incentivize the development of the nascent agricultural and industrial sectors in Kenya.

There is likely going to be some limitations on the EAC cross-border production of agricultural processed goods due to the US- Kenya Free Trade Area rules of origin. To ensure continuity of trade post-AGOA, prevent trade disruption on EAC cross border production of processed agricultural goods bound for the US market, and ensure that the FTA is built on the acquis of AGOA, the market access conditions for trade in goods under the FTA should, as a strict minimum, be on par with AGOA in terms of ROO.

The ‘acquis’ of AGOA Rules of Origin in the case of US-Kenya FTA are namely the 35% value addition and specific rules of origin for textiles and clothing in particular the maintenance and further improvement of the third-country fabric rule.

 I believe that it will be outrageous if the FTA will violate the East African Community (EAC) Treaty and its protocols. Kenya will have to provide and insist that its prior commitments that it has taken at regional -EAC will not be violated by FTA. I think the negotiations between Kenya and the rest of EAC member states could also start along side FTA and provide some assurance that the FTA will be WTO compatible and that, MFN principles will be observed and further, the application of the ‘Special and Differential Treatment’  if applied, will not be used to the detriment of the rest of EAC member states.

My Take:

I agree with most of your contributions. In fact Kenya longs to observe all agreements under the trade blocs she is a party. She expresses her intention to extend the benefits she gets from AGOA in case it ends in 2025. Briefly her offer for negotiation with the US is guided by the following principles:

• The FTA will be WTO compatible and will allow for application of the ‘Special and Differential Treatment’
• The FTA will be an instrument for economic and trade development.
• The FTA negotiations shall respect the commitments that Kenya has taken at Multilateral (WTO), Continental (AfCFTA), Regional (EAC, COMESA, TFTA) and Bilateral level
• The FTA will preserve and build on AGOA acquis
• The Negotiations shall cover substantially all trade
• Any EAC Partner State that did not participate in these negotiations at the outset should be allowed to join the negotiations, subject to terms and conditions already agreed or accede to the concluded FTA

About negotiations on SPS, shall be based on the existing Cooperation Agreement between the USA and EAC while negotiations on Customs shall be based on the existing Trade Facilitation Cooperation Agreement between the USA and EAC and WTO Customs Valuation

About Rules of Origin, Kenya aspires the US-Kenya Agreement to develop simple and easy to implement rules of origin which ensure that the benefits of the Agreement go to products genuinely made in Kenya building on AGOA Rules of Origin, that which encourages regional value chain by allowing cummulation across the existing regional blocs, etc.

Now, the proposal by the US for negotiations with Kenya are in a nut shell as follows:

• On the Rules of rigin: the US proposals in great extent are similar to what has been proposed by Kenya. These are:
• The aim is to develop rules of origin that ensure that the benefits of the Agreement go to products genuinely made in the United States and Kenya
• Ensure that the rules of origin incentivize production in the territory of the Parties;
• Establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles;
• Promote origin procedures that ensure that goods that meet the rules of origin receive the Agreement’s benefits.
• On Investment: - Kenya has to secure for U.S. investors in Kenya important rights consistent with U.S. legal principles and practice, while ensuring that Kenyan investors in the United States are not accorded greater substantive rights than domestic investors. - Establish rules that reduce or eliminate barriers to U.S. investment in all sectors in Kenya. (How do Kenyans comply with the US laws?)
• Kenya shall have provisions governing intellectual property rights that reflect a standard of protection similar to that found in U.S. law, including, but not limited to, protections related to trademarks, patents, copyright and related rights (including, as appropriate, exceptions and limitations), undisclosed test or other data, and trade secrets;
• The US requires Kenya to have laws governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.
• Kenya must establish rules that will ensure that Kenya does not waive or derogate from labor laws implementing internationally recognized core labor standards in a manner affecting trade or investment between the Parties.
• Kenya must establish rules that will ensure that Kenya does not fail to effectively enforce labor laws implementing internationally recognized core labor standards and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health laws through a sustained or recurring course of action or inaction in a manner affecting trade or investment between the Parties.
• Kenya must prohibit the importation of goods produced by forced labor, regardless of the source country, etc

NB; What has been bolded in the text, exposes my doubt on implementation especially when I think of the level of development between Kenya and the US in terms of the size of economy (GDP, GDP per Capita), technology, e.t.c for the two countries to be put on the same ground field to fight.

The implication of the potential US-Kenya FTA’s RoO on EAC cross-border market is that, if the proposal by Kenya succeeds in negotiation with the US, then market will not be negatively impacted due to remaining intact of principles of the EAC and WTO Agreements. However, the vice-versa is true.

Take note as well that, there is a pending case in the East African Court of Justice, against the EAC and Kenya, alleging the latter to have violated the EAC Treaty challenging the potential FTA, probably in fear of the conditions by the US against other EAC Member states.