This dynamic confirms President Trump`s strategy outlined in the 2018 U.S. and Africa POLITICS. However, since the Kenyan agreement is an initiative of President Trump, the significant pressure to reach an agreement could harm Kenya`s interests. Pressure is further hampering Kenya because of the asymmetry of capacity between the two states. Data taxes. Few countries have made as rapid progress as Kenya in the use of mobile financial services and digital transformation. In order to generate more revenue from digital transactions, the government recently introduced two taxes: a 1.5 per cent tax on digital services, which will come into effect on 1 January 2021, and a former withholding tax levied on “non-resident marketing, sales promotion and advertising services”. U.S. technology companies find these taxes discriminatory. Indeed, last month, the United States announced tariffs on certain French products in retaliation for France`s unilateral tax on digital services, which targets American companies. While this issue has not been directly related to trade negotiations, it remains to be seen how the United States could address this issue in the negotiations. How will efforts to resolve this problem in the OECD conflict fuel discussions between the parties? Genetically modified organisms (GMOs).
The U.S. agri-food industry is an innovator in GMOs and related technologies that improve yields and reduce demand for chemical fertilizers and pesticides. Kenya strongly opposes the importation of genetically modified foods. These food products are not allowed to enter or cross Kenyan ports to other destinations. Like the WTO Agreement on Health and Plant Health Standards (SPS), U.S. trade agreements require that the rules be scientific and factual, which is a conflict with Kenya`s attitude towards GMOs. This disagreement could have an impact on small and medium-sized enterprises, particularly in the agricultural sector, which depend on low-cost raw materials and other inputs. Based on discussions with industry representatives in the United States and Kenya, we believe that both sides will be able to find a satisfactory solution to this issue.
On February 6, 2020, U.S. President Trump announced that the United States would negotiate trade agreements with the Republic of Kenya after a meeting at the White House with Kenyan President Uhuru Kenyatta. The announcement came when the U.S. Kenya Trade and Investment Working Group held its third meeting in Washington (see the inaugural session, second session) – set up by President Trump and President Kenyatta in August 2018 to lay the groundwork for a stronger bilateral trade relationship.