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Kenya should negotiate trade deals alone, PS says

NEWS
By Moses Michira | July 21st 2016
Trade PS Chris Kiptoo

Trade Principal Secretary Chris Kiptoo has said Kenya should negotiate trade agreements with developed nations individually.

In response to a decision by Tanzania and Uganda to pull out of a regional trade pact, the PS said: “Individual Commonwealth countries should negotiate favourable bi-lateral trade deals between themselves as long as they have comparative advantages.”

He added that new trade agreements are hurting African businesses as they were structured in favour of developed nations. He said Kenya and other African countries have increasingly seen their contribution in global trade diminish as a result of alienation from the making of important trade agreements.

“The risk is that new rules and market access preferences agreed under these trade agreements will make it increasingly difficult for African businesses to compete globally, confining Africa to a shrinking share of international trade and diminish its attractiveness as a destination for investment,” Dr Kiptoo said.

Hurt Kenya

Africa is not involved in any of the mega-regional trade agreements, he added, citing that the Trans-Pacific Partnership (TPP) agreement was the most significant.

He spoke at the ongoing United Nations Conference on Trade and Development, where poor nations are making a case for agreements that would make it easier for them to boost cross-border commerce.

Among the agreements that Kenya is currently negotiating is with the European Union – which is likely to result in unfettered market access in either region. Differences on the level of development is however feared to disproportionately hurt Kenya.

Already, failure for the East Africa region to ratify the Economic Partnership Agreement with the EU is expected to see exports to the 28-member bloc attract taxes of up to 22 per cent starting October 1.

Kiptoo recommends that individual Commonwealth countries should negotiate favourable bi-lateral trade deals between themselves as long as they have comparative advantages, citing Kenya’s business reforms and economic transformation intent.

The eminent collapse of the EAC-EU trade pact is already informing prospects of Kenya negotiating alone rather than through the regional bloc.

Kiptoo called on the wealthy Commonwealth nations to increase better trade partnerships with African member countries to increase their integration to the global economy.

Investments in vital infrastructural facilities would make a substantial impact on exports and strengthen the resilience of Africa’s member countries’ economies to shocks.

Better infrastructure in the developed economies has placed major barriers to international trade, since the producers in the richer countries are able to deliver their produce at a much lower cost compared to their partners in the developing economies.

“While the continent is spending over Sh13 trillion ($131 billion) on infrastructure-related construction which is expected to grow to Sh20 trillion ($200billion), there’s an existing funding gap that needs to be addressed,” said Kiptoo.

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