Kenya targets farming subsidies at WTO forum

Kenya is this morning expected to put up a spirited fight to retain its multi-million shilling support to local farmers even as it lobbies other developing nations to reject production and export subsidies that rich countries offer their growers.

Kenya, which is hosting the WTO’s10th ministerial conference, argues that it needs a free hand to offer its farmers incentives until such a period that domestic production guarantees national food security. 

The subsidies include about Sh3 billion spent annually to ship in cheap fertiliser to maize farmers and the Sh1 billion the Agriculture ministry offers through the certified seed programme in partnership with agencies like the Kenya Seed Company.

“We know the state of our agriculture and have to speak honestly about it because it touches on our progress,” said Interior PS Karanja Kibicho, who led the negotiations until President Uhuru Kenyatta transferred him from the Foreign Affairs docket late last month.

The Trade ministers attending the WTO’s 10th ministerial conference (MC10) in Nairobi are expected to make major compromises when the actual negotiation of the draft global trade pact begins tomorrow.

Draft text

Under the draft text that failed to gain consensus in the past 14 years, developing nations such as Kenya are only allowed to keep farm subsidies that were in force by September 1994.

Negotiators have argued that by that date most African states were still under the tight grip of the International Monetary Fund’s much discredited structural adjustment programmes (SAPs), which discouraged state subsidy initiatives.

Dr Kibicho said Kenya will insist on tradeoffs that are “flexible, realistic and implementable” given that its agricultural sector is also a major employer.

Kenya, which is currently negotiating both as part of the African Caucus and African Caribbean and Pacific Group, wants rich states to drop subsidies that makes their agricultural products cheaper, rendering developed markets inaccessible even as the same products flood developing markets.

READ: Nairobi trade-offs key in new global agreement

In the scheme of WTO, however, Kenya can only seek concession as a developing state. The country has frequently protested what it sees as the rigid way in which the WTO classifies its members purely as LDC (Least Developed Countries), developing or developed nation.

That classification implies that Kenya’s interests are locked in with those of comparatively advanced states such as China, Brazil, India and South Africa, which have made great strides in getting industrial goods to the global market.

“As Kenya, our ultimate interest is to sell our agricultural products on favourable terms,” Dr Kibicho said.

Mr Kenyatta advanced the same line of argument Monday during the official opening of the fourth China round table, the first item on the agenda of WTO’s 10th ministerial forum.

“Trade rules in agriculture must be made fairer. Trade distorting domestic support is damaging African agriculture and industry,” the President said when he addressed the forum.

In addition to agriculture, the MC10 is expected to confront the largely sensitive issues proposed in the trade in service agreement (TISA), including the call for cross-border transfer of information that currently enjoys privacy protection.

If the TISA draft is passed in its present form, financial institutions – banks, cash dealers and professional bodies – will submit customers’ transaction data regularly to the Financial Reporting Centre (FRC) without legal sanctions.

Kenya is already travelling that path after Mr Kenyatta signed a similar deal with US President Barack Obama during his July visit to Africa.

Under the deal that both presidents said would curb money laundering and terrorism financing, Kenya agreed to share every financial transaction worth at least Sh1 million ($10,000) with the US and other jurisdictions through the FRC.

The MC10 ministers are also expected to extend the trade-related aspects of intellectual property rights (Trips) to 2033, allowing poor countries to continue producing generic forms of essential drugs without seeking permission from multinational patent holders.

Also read: Nairobi WTO deals seen guiding trade for the next 10 years.

The Trips — which has been credited with Africa’s successful fight against chronic diseases — is, however, not directly available to Kenya as it is meant for pharmaceutical manufacturers from LDCs only.

Uganda, Rwanda, Tanzania and Burundi, which have integrated their markets with Kenya through the East African Community, are all classified as LDCs.

“Generally, the MC10 will audit all the deals and compromises made since 2001 then agree on what to do with outstanding issues,” Dr Kibicho said.

Ministers attending the Nairobi forum are largely expected to make compromises to speed up conclusion of the Environmental Goods Agreement (EGA), a pact that seeks to cut import taxes on items imported by Kenyans.

Environmental products

The list of environmental products includes wind turbines, water treatment filters, and solar panels, which are currently attracting import tariff as high as 35 per cent.

Other goods covered by EGA are recycling equipment, composting systems, air and water quality monitors, water treatment equipment, soot removers and carbon dioxide scrubbers that currently attract duty at high rates of up to 20 per cent.

The WTO secretariat had initially indicated that the EGA would be concluded in Nairobi.

But Australian trade and investment minister Andrew Robb – who chairs a session of 40 states negotiating the EGA –Monday said the deal will be concluded by early January.

“The EGA remains very much open to all WTO members who are interested in joining our ambitious efforts,” Mr Robb told journalists in Nairobi on Monday.