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Why Kenya could be site of WTO history

FINANCIAL STANDARD
By Frankline Sunday | Nov 3rd 2015 | 5 min read
By Frankline Sunday | November 3rd 2015
FINANCIAL STANDARD

For 14 years now, the world has been trying to sign a deal that will balance the scales between rich and poor economies in the global marketplace.

The negotiations to achieve this goal are moderated by the World Trade Organization (WTO) through the Ministerial Conference; a congress of ministers from 161 member states and representatives from dozens of economic blocs and customs unions that meets once every two years.

Next month, the WTO Ministerial Conference will be holding its 10th meeting in Nairobi in its first ever sitting on the African continent.

This is the first time that the WTO Ministerial Conference is being hosted on African soil. What does the agenda for the member states look like, even as the WTO celebrates 20 years?

Our 160-plus members have to agree on a package of actions, and timelines for which these actions are to be executed, and a key outcome would be to achieve something that would be of great benefit to developing countries.

For 14 years we have been working on the Doha development agenda, and because of the changing circumstances geopolitically and economically, the conditions have changed.

What we are hoping to do in Nairobi is to discover how we can recalibrate our agenda in the most realistic way possible so that we can deliver concrete outcomes that can help developing countries in general, and Africa in specific.

Specifically, we are expecting to see an agreement signed that will remove all forms of direct subsidies to rich country farmers. This is because the system right now favours production in rich countries and exports to poor countries, an imbalance that affects the livelihoods of farmers in poor countries.

Fourteen years is a long time. Why has it taken so long and what reason do you have to believe that the discussions this year will be different?

All our decisions have to be made by consensus, and when you have 162 different diverse countries from all types of economic zones, agreeing on specific policies is complicated.

One of the things we have been looking at on the agricultural front is the issue of agricultural subsidies. Rich countries have subsidies in place that encourage their farmers to produce more, regardless of whether or not the respective domestic economy can absorb the supply. The surplus is exported to developing countries, and this is often at a disadvantage to poor farmers who are crowded out of the market.

Agriculture is intensely political in every country and farmers hold a lot of sway, but we are hoping that lawmakers will have the goodwill to rise above short-term political gains at home and make decisions that benefit the entire global economy.

I have been around for far too long to be optimistic or pessimistic — but hope springs eternal and I am hopeful.

There has been criticism that Africa is not getting its fair share of representation in global trade blocs, and should instead turn inwards for solutions to unlocking its full trade potential. What’s your take on this?

I think that is an unfair generalisation. I think there are examples where Kenya or other African countries have not benefited as much as they’d have liked, and I think that there are other situations where they have benefited.

What we need to do is unlock these complicated negotiations because everyone is telling us that it is taking too long and we need to move ahead.

Businesses move faster than governments, and the businesses leaders I have engaged with in Kenya and elsewhere in the world tell me we need to mordernise our rule book.

So should Africa find its own way through intra-regional trade blocks?

Continental-wide negotiations taking place in Africa focused at linking African economies and sub-regional trade blocs are happening alongside international trade talks and are welcome.

Intra-African trade is only 12 per cent of all overall trade, and is the smallest figure across all the regions in the world. There are several reasons for this, and key among them is that African countries do not trade with their neighbours, so everything that is going to enable African traders to do more trading locally and globally is welcome.

The principal objective of the free trade agreement sought through merging the three main African trade blocs is to melt boundaries. Removing trade barriers, having border crossings opened all at the same time and making paperwork less cumbersome could easily be achieved through this synergy.

However, you still need the framework of the international trade system because we are in a global economy. Kenya’s trading partners are all over the world and having up-to-date rules to trade that allow Kenyan entrepreneurs to prosper in the global trade system should be the key goal.

Where does China fit in all this, and should Africa’s traditional trade partners be concerned about Asia’s growing influence?

I think that African businesses and countries want foreign direct investment from wherever they can get it. At the same time, every other region in the world is alive to the significance of Africa in the global trading system and are willing to explore what role they can play.

The important issue is that these are solid investments being undertaken, job creation is happening and Africa is building its infrastructure and expertise, boosting its capacity to compete in the global economy.

We’ve been through a rocky path in the global economy in the last decade, and the growth in China has been a diamond in the rough. Having strong growth in China has been important to create demand for African exports, and Kenyan entrepreneurs should begin to move upwards in the value-add chain.

The sale of basic commodities is important, but processing the commodities within the local economy is even more important. This means to be able to produce and sell chocolate — and not just sell raw cocoa — and find markets for this everywhere, not just China.

At the value creation chain is where jobs are created, and it is where growth will be pronounced. I know people would like it to happen faster, but it is happening and it is encouraging to see the amount of energy and focus from entrepreneurs here in Kenya and other developing countries.

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