Apparel Chapter Expected to Be Tough in Kenya FTA Negotiations, CRS Says
The Congressional Research Service, in a May 1 report, noted that Congress may want to turn its attention to the U.S.-Kenya negotiations not only because of the free trade agreement's potential economic effects, but also because of mandates in the African Growth and Opportunity Act (AGOA) -- Kenya is the second-largest beneficiary of AGOA when oil is excluded.
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Kenya is a small trading partner for the U.S. -- 95 other countries are more significant -- but the U.S. is Kenya's second-largest export market, and its fifth-largest trading partner, CRS said. Apparel is the largest import from Kenya, at $454 million in 2019. Nearly all of Kenyan imports are duty free, either because the lines are tariff free for all, because of AGOA, or because of the Generalized Systems of Preferences benefits program. One of Kenya's major imports from the U.S., aircraft, is duty free, but ag exports from the U.S. face an average tariff of 20%. (Wheat is still one of the top five exports from the U.S. to Kenya).
The report's authors predict that negotiating the apparel chapter will be particularly challenging, because currently Kenya exports apparel made with imported fabric, but U.S. free trade agreements typically require a “yarn forward” rule of origin, which would require either Kenyan or U.S. fabric to be used.