This article first appeared in my weekly column with the Business Daily on December 13, 2015.
The World Trade Organisation (WTO) Ministerial Summit due to be held in Nairobi this week is important to Kenya for two reasons. Firstly, it’s the first WTO Summit to be held in Africa and secondly, it’s the first time the Summit is happened after what is largely considered to the failure that was the Doha round back in 2008. So what should Kenya, and indeed Africa, be pushing for during this round?
Africa should firstly, use this round to push for the reclassification of countries such as India, China and Brazil that still fall under the docket of ‘developing’ countries. Currently, such countries essentially are lumped together with Africa in negotiations despite the fact that over the past seven years these countries have significantly ramped up their presence and role in global trade. China’s share of global trade stands at about 12 percent, India stands at 2 percent and Brazil stands at 1.2 percent. Although Africa’s share of global trade is 3.5 percent that is a share at continental level; Kenya’s share of global trade is 0.03 percent. Therefore, Africa as a bloc should use this Summit as an opportunity to push for a more sophisticated classification of countries where the percentage of contribution to world trade preponderates rather that GDP per capita.
Secondly, Africa should continue to build pressure with regards to agricultural concerns. The main issue of contention African countries, Kenya included, have with current trade realities is that governments of developed economies still grant substantial subsidies to their farmers creating trade barriers to agricultural products from Kenya and other African countries. It is important that Africa continue to push for the removal of tariff and non-tariff barriers for agricultural commodities as these are a significant forex source for many African countries. But it should be noted that while African countries are likely to push on the agricultural subsidies issue, developed economies are unlikely to agree and there will be another impasse. This is clearly because if Africa’s request is to be honoured, the governments of developed economies will essentially be telling an important portion of their electorate, namely farmers, that the demands of African governments are more important than the welfare of their electorate; this is unlikely to happen.
Another issue pertinent to Africa is the issue of bolstering returns from natural resources in relevant exporting countries. Bear in mind that according to WTO the merchandise trade values in 2014 revealed a paucity of trade flows in natural resource commodities (such as fuels and metals) from exporting regions such as Africa. In fact the continent experienced a 7.6% decline in natural resource exports as lower commodity prices cut into export revenues. Thus again here the story is an old one; Africa has to push for a greater role in producing finished goods from raw materials as finished goods are not as susceptible to commodity price fluctuations.
The final point really has more to do with the work that Kenya and East Africa in general should implement if the region’s economy is to have a larger share of global trade. Firstly, the region should, together, devise a strategy through which they can bolster their share of exports globally. Secondly, although East Africa is one of the fastest growing regions in the world, tariff and non- tariff barriers such as over-stretched ports and time consuming customs and border operations hamper the ability of the region to play a strong role in global exports. Finally, there is a need for the region to hone into compliance to global technical standards as doing so will ease the region’s access to global markets.
Anzetse Were is a development economist; firstname.lastname@example.org