The Agony of waiting: What next for AGOA and STIP?
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President Trump spent his first week in office signing proclamations, memoranda and executive orders, some of which will directly impact Africa. For example, the ‘America First’ trade policy calls for a review of the US’s current trade policy to establish how the country can benefit more from trade agreements. President Trump wants to bring back manufacturing to the US, especially to the Rust Belt areas, which traditionally had manufacturing jobs.
Trump has also considered imposing tariffs on imports to establish industries in the country. The US middle class was built on manufacturing, and having favourable trade tariffs is crucial to protecting and restoring domestic industries that have been lost. In the order, Trump directed that the US:
- Shall review existing trade agreements and sectoral trade agreements and recommend any revisions that may be necessary or appropriate to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries.
- Shall identify countries with which it can negotiate agreements on a bilateral or sector-specific basis to obtain export market access for American workers, farmers, ranchers, service providers, and other businesses and shall make recommendations regarding such potential agreements.
The executive order put on hold a bilateral agreement with Kenya that was under discussion. During his call with the current US Secretary of State, Marco Rubio, President William Ruto discussed the Strategic Trade and Investment Partnership (STIP), whose negotiations had advanced to the eighth round before the new administration took office.
In 2023, Kenya’s exports to the US stood at KES 62.3 billion. If successfully concluded, Kenya could secure at least 5% of the US market through the bilateral trade agreement, potentially generating over KES 2 trillion in annual export earnings.
When Rubio was being grilled for his position as Secretary of State, the Senators in his interview panel were concerned that the US had ignored its relations with Africa, allowing China and Russia to dominate through investments, military alliances and resource extraction. The hegemony of these two eastern powers on the continent was viewed as a way to win geopolitical influence, economic leverage, and diplomatic support from African nations in global affairs.
China has used its Belt and Road Initiative (BRI) to entrench its economic dominance by funding critical infrastructure projects on the continent with fewer conditions than Western aid. Russia, through military alliances and resource exploitation, has secured strategic footholds in unstable regions. While African countries want to trade with the US, the deals are often supplanted by foreign aid organisations often motivated by ideology.
But STIP is not the only trade agreement on shaky ground. Kenya’s textile and apparel industry could lose out if the African Growth and Opportunity Act (AGOA) agreement, which is set to expire in September 2025, is not renewed. During Trump’s first term, AGOA trade hit record lows. A second Trump administration may leave it unchanged due to its limited economic impact or modify it by removing key imports, such as automobiles, to protect US industries.
African countries have not utilised AGOA as expected with crude oil being the most traded good under the agreement. Kenya is one of the continent’s largest utilisers of the trade agreement, exporting mostly textiles and apparel. In the last few years, AGOA-based exports have declined from $66 billion in 2008 to $9.3 billion in 2023. Therefore, the agreement will only affect a few key sectors and companies. However, under Trump, AGOA could expand if trade in critical minerals is increased, aligning with US efforts to reduce reliance on China. As things stand, everything hangs in the balance until President Trump’s administration is ready to lay out its strategy regarding Africa. In the meantime, Kenya’s STIP may be reviewed to align with Trump’s aspirations, which could set it back in terms of time, direction and milestones.