Mr Pascal Lamy addresses Kenyan investors in Nairobi last week. He said the risk of Doha talks falling apart is higher today than it was a few years ago. Photo/FREDRICK ONYANGO
The long-drawn search for a global pact to lower trade barriers around the world is headed for failure, World Trade Organisation director-general Pascal Lamy said in Nairobi last week, even as government officials maintain the decade-old talks will be concluded this year.
Mr Lamy said the risk of failure of the talks — commonly referred to as Doha Development Round or Doha Development Agenda (DDA) after the Qatari city that first hosted them — is higher today than it was a few years ago.
Should the talks fail, this could lock exports from poor countries out of major world markets and dash Kenya’s hopes of integrating her trade and investments into the global economy as envisaged under Vision 2030.
“This is the sombre news that I have brought from Brussels, but it is my duty as a public servant to deliver it to you,” Mr Lamy told the seventh round of the Prime Minister Roundtable meeting with private sectors in Nairobi last week.
The DDA talks have dragged on due to sharp divisions on treatment of major issues such as agriculture; industrial tariffs and non-tariff barriers; services; and trade remedies.
WTO says 80 per cent of the topics have been agreed on, adding that discussion of the remaining 20 per cent in coming weeks will determine the fate of global trade and economy.
At the global level, the impasse in the talks is linked to the push by developed nations led by the US to force emerging economies like China, India, and Brazil to open bigger portions of their markets to imports, said Mr Lamy.
In their meeting held in Seoul last November, the G20 members — a club of 20 richest countries in the world — committed to concluding the talks by this year.
The negotiating team had given itself a timeline of up to Easter to come up with a draft agreement.
“I am afraid to report that the G20 only gave us hot air, that their actions are still inconsistent with the promise they made to us late last year,” Mr Lamy said.
Kenya, which chairs the DDA’s African Group in Geneva, blames entrenched national interest for holding back the developed world from acceding to poor countries’ demands for non agricultural market access (NAMA).
Agreement on NAMA encompasses all items not covered by the Agreement on Agriculture like fuel, minerals, fish, forestry and manufactured products that Africa has a greater potential to export and account for close to 90 per cent of the global merchandise.
Among the items, a global pact that lowers barriers to trade is expected to significantly raise Kenya’s fish exports which generated Sh3.5 billion in 2009 according to government records.
The high circulation of NAMA products has made them a target for increased tariffs by developed countries.
“NAMA is responsible for slowing DDA, but these negotiations must succeed as failure is not an option for us because of the responsibility we have to millions of poor people around the world,” said Prime Minister Raila Odinga, adding that Kenya would only support outcomes that reflect the needs of developing economies.
Data by the Kenya National Bureau of Statistics in 2010 indicates that Kenya’s exports stagnated at Sh344.9 billion between 2008 and 2009.
The Kenya Private Sector Alliance (Kepsa) attributes the stagnation to lopsided trade relations with the developed world, which is also blamed for Africa’s lower share of the global trade.
Farm subsidies
Mr Jas Bedi, the Kenya Association of Manufacturers chairman, said farm subsidies were specifically hurting Africa’s agro-based economies as commodities produced in the region end up being more expensive than those from developed countries.
Sixty per cent of Kenya’s exports are primary commodities; mainly horticulture, tea, and coffee, according to Trade ministry statistics.
“We have a big war with these subsidies because they tilt global market in favour of developed countries,” said Mr Bedi.
Kenyan firms have also contested the UN classification that groups Kenya as a developing nation, alongside Asian and South American economies such as China, Singapore, India and Brazil. Under WTO, countries are classified into developed, developing, and least developed countries (LDCs) with each category getting different treatment in the negotiations.
Kenya is the only developing country within the East African Community, a categorisation that has made it difficult to conclude economic partnership agreements with the European Commission.
Amina Mohamed, Kenya’s ambassador to WTO, called for a rule-based system to enhance the country’s participation in international trade but maintained the UN classification had both positive and negative sides for Kenya.
“It is very tricky to be a developing country amidst LDCs, but in most of our DDA talks Kenya’s situation is always taken as EAC’s position,” Ms Mohamed said.
