Kenya Trade Policy Description
In the past, Kenya Trade Policy has been centred around the pursuit of strategic interests, which has meant that at different points in time, the significance attached to different players has shifted and vacillated. For instance, the thawing of relations with key Western powers and multilateral lenders during the agitation for multiparty democracy coincided with the imposition of conditionalities.
Kenya Trade Policy in its broadest sense, however, has been poorly defined.
While trade diplomacy has not been a centrepiece of Kenya Trade Policy, the country has remained fully engaged in global trade diplomacy. Kenya was a longstanding member of the General Agreement on Tariffs and Trade (GATT) and under Amina Mohamed, actively participated in a raft of trade negotiations at the World Trade Organisation under the aegis of the African Group at the WTO.
It was during Mohamed’s tenure as Kenya’s ambassador to the WTO that the country helped originate and sponsor several negotiating proposals on diverse Kenya Trade Policy issues such as agriculture, special and differential treatment, and development issues.
As chair of the all-powerful General Council in the lead-up to the 2006 WTO Ministerial Conference in Hong Kong, Mohamed laid a firm basis for a new development trajectory commonly referred to as the Doha Development Agenda.
The Doha Development Agenda sought to place the development concerns of African and other developing countries at the heart of trade liberalisation.
The underlying objective was to reform and improve on existing trade rules to provide more flexibility in favour of developing countries while urging industrialised countries to reform their trade rules to create a level playing field.
The areas most canvassed for reform have included agriculture, market access, domestic support and export subsidies in addition to emerging areas such as industrial tariffs and the proposed new rules on government procurement and investment.
It is widely expected that the country’s foreign policy will focus on increasing regional trade and advocating for reforms within key trading blocs such as the East African Community and the Common Market for Eastern and Southern Africa (Comesa).
Further progress on dismantling non-tariff barriers to trade and fast-tracking the monetary union at the EAC and Comesa will be key objectives.
The uncertainty in the multilateral fora, such as the stalled WTO negotiations, has led to greater attention to regional integration. One area of interest is the strengthening of existing Regional Economic Communities (RECs) with the aim of improving trade between African countries by removing trade barriers and quickening the pace of economic integration and co-operation in Africa.
In recent times, Kenya has shown greater interest in consolidating trade with regional partners, where the greatest potential for future growth lies, than with traditional partners like the EU. The Common Market for Eastern and Southern Africa (Comesa) is the most prominent. Kenya’s total trade with Comesa stands at nearly $1 billion, making it the country’s most important trading partner. This figure is expected to grow further once the Customs union comes into force.
Comesa is already fast-tracking the creation of a Customs union, which indicates the strategic importance of economic integration to Kenya’s future trade orientation. But there are significant questions that demand reflection:
For instance, will a Customs union, while creating a more predictable trade regime among the Comesa countries, unduly open the market to increased EU exports by lowering the transaction costs and unpredictability of trading in the region by the EU?
However, given the strategic importance of the European Union market to key agricultural sectors such as coffee and horticulture, Kenya’s trade diplomacy is likely to exert increasing pressure on dismantling tariff and non-tariff barriers that undermine market access.
This has been most pronounced in relation to horticultural exports, which are subjected to constantly changing non-tariff trade barriers (NTBs) such as on traceability and other sanitary and phytosanitary (SPS) measures. Kenya may, therefore, push for a more enabling policy framework at the WTO on market access, including more predictable rules on SPS and dismantling NTBs to facilitate export of agricultural products.
Kenya Trade Policy diplomacy will need to take into account several realities such as the country’s huge public debt portfolio. External debt as a percentage of GDP currently stands at about 30 per cent. While a significant proportion of this public debt was incurred when external borrowing was mostly on non-concessional terms, subsequent borrowing has increasingly been on concessional terms.
There will be significant interest in reforming the management of public debt to satisfy the huge appetite for spending on development programmes and easing the burden of external debt. Foreign policy must be one that helps stimulate capital inflows through an expansion of trade opportunities and concessional lending to support capital-intensive development projects and programmes. The overriding impetus must be towards increasing ODA and concessional lending, which will drive investment in social services and long-term development.
Kenya Trade policy to be ready in two months, says senior trade official
The long awaited Kenya Trade Policy will be ready in October amidst fears that it might conflict with on-going efforts in the EAC to develop a common policy on trade issues.
Already, the EAC countries are operating under a customs union that allow free movement of all factors of production, including labour and any trade policy by any member state cannot change that.
However, the planned review of the trade policy, which involves, among other thing, consolidating existing legislation, is expected to be presented to the Cabinet for approval by October.
Trade Permanent Secretary Abdulrazaq Ali said that once it is adopted, the policy will allow Kenyans to know what competitors are bringing into the market while enabling the country to negotiate better terms of trade.
“The document will also spell out dispute resolution measures among players,” said Mr Ali.
Current policies on trade in Kenya are scattered in several policy documents, legislation and institutions, and the review is expected to consolidate them all to develop a coherent trade policy.
Analysts are however skeptical that the policy might not achieve much in terms of expanding trade due to liberalization process that has allowed forces of demand and supply to dictate terms of trade.
However, Ali say the revised policy is intended to enable the country to benefit from a collective bargaining arrangement for better terms during the EAC/WTO second Joint Trade Policy Review scheduled for October 24-26, 2012, in Geneva.
He revealed that other EAC partners are also developed or revising their policies, which will be presented to the region’s secretariat.
“Once the other partner states come up with their own policies, the secretariat will coordinate the drafting of a joint document,” Mr. Ali said.
The joint document will also make regional trade easier saying it will eliminate the needs for a mark of quality, the mark of quality that the partner states have agreed on in order to fasten the movement of goods.
The states have agreed to recognize quality marks of the partner states, though there are still areas of concern due to the huge amount of counterfeit goods entering the region.
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