Trump eyes Kenya for next trade talks

With help from Doug Palmer, Megan Cassella and Sue Allan

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Quick Fix


— President Donald Trump and Kenyan President Uhuru Kenyatta are expected to announce plans to launch trade talks at the White House today. A Kenya trade deal would be the U.S.’s first with a sub-Saharan nation.

— Trump succeeded in shrinking the trade deficit with China last year, but China’s loss meant a win for the European Union. The U.S.’s trade deficit with the EU in 2019 jumped to a record $178 billion. Late breaking news: China to cut tariffs on $75 billion worth of U.S. goods as of Feb. 14.

— U.S. Trade Representative Robert Lighthizer will meet with Canadian Deputy Prime Minister Chrystia Freeland and a number of Canadian premiers later this week to discuss USMCA as Ottawa works to ratify the deal in the next couple of months.

IT’S THURSDAY, FEB. 6! Welcome to Morning Trade, where your host is heading to New Orleans this weekend. Any recommendations for a first-timer? News tips to share? Let me know: [email protected] or @sabrod123.

Driving the Day

TRUMP EYES KENYA FOR NEXT TRADE TALKS: Trump has spent the past three years focused on a trade agenda that fights major economic powers like China and the European Union. But in a seemingly unusual move, Trump today is expected to announce plans to negotiate a bilateral trade deal with Kenya — the U.S.’s first with a sub-Saharan nation.

Not only about money: Kenya is the U.S.’s 98th largest goods trading partner, with two-way trade totaling about $1 billion in 2018. A U.S.-Kenya trade deal could serve as part of a larger geopolitical strategy to improve U.S. relations across the African continent, set a template for future trade deals in the region and combat China’s strong influence in Africa.

Prepping for an AGOA-less world: A U.S.-Kenya deal could also help lock in Nairobi’s current duty-free access to the U.S., as the African Growth and Opportunity Act is set to expire in 2025.

“2025 is around the corner and there is no indication that there will be another AGOA,” Kenyatta said Wednesday in remarks at the Atlantic Council, adding Kenya wants to lead the way in deepening U.S. trade ties with the African continent. “We’re saying Kenya wants to be a pace setter.”

Capitol Hill visit: Kenyatta on Wednesday met with a bipartisan group of House Ways and Means members to discuss the future of the U.S.-Kenya trading relationship.

House Democrats' priorities: House Ways and Means Chairman Richard Neal said following the visit that he looks forward to working with Kenyatta’s administration to “make sure that any U.S.-Kenya trade arrangements that build on AGOA are mutually beneficial, reflect our shared economic aspirations and democratic values, respect Congress’ freedom to regulate in dynamic areas of domestic policy, and demonstrate a commitment to the enforcement of strong worker rights, environmental protections, and good governance.”

Win McNamee/Getty Images

TRADE DEFICIT WITH EU HITS RECORD $178 BILLION: The bilateral U.S. trade deficit with the European Union increased 5.7 percent in 2019 to a record $178 billion, as Trump’s trade war with China pressured American companies to seek other sources of supply. Strong U.S. economic growth also brought in more European imports, economists said.

The new trade data could prove awkward for the EU, which hopes to “reset” trade relations with the U.S. after clashing with the Trump administration on a number of trade fronts.

Trump’s tariffs helped lower the bilateral trade deficit with China to $345.6 billion, down 18 percent from the record high $419.5 billion in 2018. But that was partly offset by higher deficits with other trading partners.

Deficits on the rise: Twenty of the 25 countries where the U.S. ran the largest trade deficits in 2018 showed an increase in 2019. Those included Mexico, Japan, Vietnam, Ireland, Italy, Malaysia, Canada, Switzerland, India, Taiwan, South Korea, Thailand, France, Russia, Indonesia, Denmark, Sweden, and Cambodia.

Germany was a notable exception to that trend. Even though imports from Germany hit a record $127.5 billion, the U.S. trade gap with that country shrank ever so slightly to $67.1 billion because U.S. exports to Deutschland rose to a record $60.3 billion.

South Korea auto imports up: Trump renegotiated a trade agreement with South Korea in 2018 to correct alleged deficiencies with the pact, including in its auto provisions. He condemned the previous agreement reached by the administrations of George W. Bush and Barack Obama as a “horrible deal” for fostering “one-way trade.”

However, the U.S. goods trade deficit with South Korea increased 16 percent in 2019 under Trump’s revised deal. That reflects an increase in imports of South Korean autos and auto parts to nearly $25 billion in 2019, from $22 billion in 2018.

China announces tariff reprieve: China announced early Thursday that it will cut in half the duties it has in place on $75 billion in U.S. imports, including crude oil and agricultural products, as of Feb. 14. Our partners at the South China Morning Post have more details.

TRAVEL INDUSTRY SEEKS GAINS FROM NEW TRADE DEALS: The U.S. travel industry is hoping for big gains from proposed new trade deals with the United Kingdom and the European Union and possible “phase two” deals with Japan and China, Roger Dow, president and CEO of the U.S. Travel Association, said Wednesday.

“It’s time to treat travel like the trade powerhouse we are,” Dow said in a speech on the state of the industry. Travel is the No. 1 services export and deserves as much attention as other sectors, such as agriculture and manufacturing, he said.

Dow said the Trump administration should “bake” a number of industry priorities into every new trade deal: eliminating barriers to business travel, agreeing not to politicize travel warnings and advisories, requiring trading partners to meet the highest standards of travel security, and eliminating tariffs that raise costs for travel businesses.

‘Global headwinds’: Inbound international travel is expected to increase this year “by a modest 2 percent, amid global headwinds such as a slowing global economy and a strong dollar,” Dow said. The U.S. share of the global travel market could also fall to 11 percent in 2020, “a full percentage point lower than three years ago,” he added.

The current U.S. ban on travel from China due to the Wuhan coronavirus is another major challenge facing the industry. But Dow expressed doubt in a Tourism Economics estimate that the outbreak would cut Chinese visits to the United States by 1.6 million through 2024.

USTR CHECKING IN WITH CANADA ON USMCA: Freeland is set to sit down with Lighthizer in Washington on Friday, a trip that coincides with the National Governors Association’s winter meeting she’ll attend this weekend with a handful of Canadian premiers. The face-to-face also comes as Ottawa is considering the new North American trade pact, which is expected to pass in the next couple of months.

Lighthizer will also meet with the Canadian premiers this week “to discuss the trade relationship between Canada and the U.S.,” Scott Moe, the premier of Saskatchewan, told Pro Canada’s Lauren Gardner.

One goal of the meeting, Moe said, will be “to provide assurance that all of Canada’s premiers have been working closely with all of our federal parties in Canada to ensure that the ratification will take place as swiftly as our parliamentary process allows.”

Don’t miss it: Moe and Alberta Premier Jason Kenney will join Lauren at the Wilson Center for a conversation about U.S.-Canada relations. RSVP here.

CANADA’S USMCA ASSESSMENT COMING SOON: Canada’s top trade negotiator promised members of the House International Trade Committee studying the USMCA implementing bill that they will very soon see an economic analysis of the USMCA.

“We are not prepared to buy a pig in a poke,” Ed Fast, a Conservative member of Parliament, said as he demanded assurances from Canada’s USMCA point man, Steve Verheul.

Verheul assured the committee that a report from the Office of the Chief Economist is imminent — though he cautioned members on the difficulty in creating an assessment for a new agreement that replicates many of the outcomes of an existing deal. Among the measures more difficult to quantify, he said, would be any work done on regulatory cooperation or reducing technical barriers to trade.

A big what if: One of the first questions members asked Verheul had to do with the process: “If Canada decides to amend the agreement, does it have to be sent to the United States and Mexico to be ratified?”

Verheul’s reply: “Yes, if we were proposing to make some change in the agreement, which has already been agreed trilaterally between the three parties, we’d certainly have to ensure the U.S. and Mexico were on board.”

AP Photo

NOT SO FAST ON U.K. NEGOTIATING OBJECTIVES: The United Kingdom today is expected to release an outline of its trade policy with the rest of the world, our U.K. colleagues report, not the U.S.-specific negotiating objectives that need to be published before bilateral trade talks can begin. Those will not be released this week but are expected soon.

On the bright side: Today’s outline will at least provide a glimpse into what Prime Minister Boris Johnson’s administration is seeking from the U.S. in upcoming trade negotiations.

International Overnight

— Coronavirus hits shipping as China port traffic slides, The Wall Street Journal reports.

— White House trade adviser Peter Navarro accused Amazon CEO Jeff Bezos of backing out of a meeting on counterfeit products, The Washington Post reports.

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