WORLD TRADE
ORGANIZATIONG/AG/NG/W/136
12 March 2001
(01-1217)
Committee on Agriculture
Special SessionOriginal:  English
WTO NEGOTIATIONS ON AGRICULTURE
PROPOSAL BY KENYA
Introduction
Agriculture plays a vital role in the lives of people in Kenya.  It constituted over 30 per cent
of GDP in 1999, which far exceeded the GDP share of the manufacturing sector1 (17 per cent),
without taking into account that a large amount of agricultural products are either not exchanged for
money or not exchanged at all.  Agriculture is the main source of income as it employs more than70 per cent of the population especially in the rural areas.
Kenya has faithfully complied with its basic commitments on agriculture in belief of benefits
from freer trade.  The results of implementation however have been extremely disappointing.  The
reform process has neither helped the sector nor improved food security.  The annual average growthof our agricultural value added fell from 3.3 per cent during the 1980s to 1.4 per cent in the 1990s
without compensating growth  in the industrial or the services sectors.  Increase in imported foodstuffs
displaced rural farmers from the domestic market.  Without an alternative source of income, farmers
have found difficulties in purchasing imported foodstuffs however cheap they may be, hence
exacerbating poverty, food insecurity and malnutrition in Kenya.
Against this background, Kenya expects that the new negotiations on agriculture will take
into account the concerns expressed by a group of developing countries, including Kenya, contained
in document numbers G/AG/NG/W/13, G/AG/NG/W/14 and G/AG/NG/W/37 + Corr.1.
Market access
In the Uruguay Round, Kenya bound all its agricultural tariff lines at 100 per cent.  It also
bound "other duties and charges" at zero per cent.  Since the country opted for the ceiling binding as
opposed to tariffication, it has no access to the special safeguard (SSG) provisions.  Moreover, since
1995, Kenya has consistently applied tariffs at rates substantially below the bound rates.  The simple
average applied tariffs for all agricultural products are currently below 20 per cent.  In contrast toKenya's substantial progressive reductions in support and protection, exports from Kenya continue to
face high and complex tariff barriers and tariff escalation.
Apart from tariff barriers, Kenya's exports to developed country markets have been adversely
affected by instances of arbitrary imposition of SPS measures.  At the same time, there have beennumerous cases where food products that were considered sub-standard or that did not comply with
SPS measures in the developed country of origin, were being dumped in Kenya among other third
world markets.
                                                     
1World Bank, 2000. World Development Report 2000/2001 , Washington D.C.G/AG/NG/W/136
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We need also to mention the importance of non-reciprocal preferential market access to
Kenya's agricultural exports.  A large share of Kenya's agricultural exports in fact receive preferential
tariffs and are made under historical trading relations closely linked to preferential market access.
That is to say, Kenya, as many other developing countries, face the dilemma of expecting substantial
MFN tariff reductions on their exports on the one hand, and fearing the loss that may accrue fromerosion of tariff preferences as a result of MFN reductions on the other hand.
Domestic support and export competition policies
In the area of domestic support and export competition policies, Kenya, as many other
developing countries, exceeded the level of liberalization as almost all had been eliminated or brought
down to within the de minimis  levels under the structural adjustment programme prior to the Uruguay
Round conclusion.
Subsidized exports have in many instances displaced developing countries' exports thereby
affecting small-scale farmers, whose governments have no resources to compete against the treasuries
of developed countries.  In this regard, we would like to repeat here what Kenya already noted duringthe preparatory process for the Third Ministeria l Conference in 1999 in the document WT/GC/W/233,
"The trade-distorting measures of which export subsidies is perhaps the most prominent example that
continues to prevent products from developing countries to compete on a level playing field.  These
problems have been aggravated by the excessive budgetary resources allocated in this regard and
because of the circumvention of existing rules by some developed countries leading to furtherdistortion in the market."  Certain use of export credits, guarantees and insurance schemes seem to
have the same negative effects as export subsidies on prices and competition in the world market.
Kenya is prepared to actively participate in negotiations on establishing rules and disciplines on those
export competition policy measures, with a particular interest to ensure that paragraph 4 of the
Marrakesh Decision on LDCs and NFIDCs will be implemented.
Kenya is of the view that the much touted comparative advantage argument has not worked in
the global agricultural market, largely because some major producing countries have continued to
distort the market through massive cash injections to their domestic producers and exporters.  There
has been no political goodwill in the last six years to remove those distortions.  Instead the reverse
situation has occurred, the impact of which was putting the livelihood of the poor rural population in
Kenya in jeopardy.  We find no justification in the economic efficiency argument of tradeliberalization, if substantial liberalization only takes place in countries which have no financial means
to support their farmers and exporters, that is those countries with no choice but to liberalize.  Such
one-sided liberalization led to marginalization of millions, as their agricultural products are unable to
reach not only the global market but also the domestic market place.
In addition to subsidized exports, small-scale farmers in developing countries are facing a
losing battle in competition against transnational corporations (TNCs), which enjoy massive
advantages of economies of scale and monopsonic market power.
Special and differential treatment
The Preamble and Article 15 of the Agreement on Agriculture provides for special and
differential (S&D) treatment for developing countries.  Kenya has a view that the current S&D
provisions, which are limited to providing favourable thresholds and longer timeframe for the
implementation of the commitments, fall short of what a country like Kenya would require to strike abalance between its crucial development objectives (such as food security and rural poverty
alleviation) and multilateral commitments on substantial and progressive market liberalization.  There
is a need for fundamental re-conceptualization of what should constitute the S&D provisions.G/AG/NG/W/136
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In this regard, Kenya would like to bring the attention of the WTO Members to the following
facts.  At the end of our 6th year of the implementation of the Agreement on Agriculture, the
agricultural sector in Kenya is already more liberalized than what was committed as the final bound
level in 2004.  It is substantially more liberalized in terms of support to domestic farmers and
exporters than most high income developed country Members.  All of this is despite the fact thatKenya's future development critically depends on the income and the employment from the
agricultural sector, while the agricultural sector in high-income developed countries accounts for less
than 2 per cent of their GDP, and less than 7 per cent of their total employment, both of which are
constantly falling.  In Kenya, almost half of the rural population lives below the national  poverty line,
where over 60 per cent of the total population live with less than US$ 2 a day.  Could such facts fail to
strike as a structural imbalance built in the Agreement on Agriculture?
In our view, the S&D provision should target at filling the gaps between developed countries
and developing countries in terms of supply capacity, economic development, and financial resources,
so as to enable developing countries to face multilateral trade rules and disciplines without further
burdening the domestic population in terms of, among others, food insecurity and perpetuation of
poverty.
Food security
Food security is the paramount non-trade concern for Kenya.  It is sound economic sense for
an agrarian country with financial constraints due to debt problems, balance-of-payment difficultiesand adverse terms of trade to rely as much as possible on domestic food production for its domestic
food needs.  In this respect, we would like to suggest concrete negotiations on the proposal submitted
by eleven developing countries, including Ke nya, in document G/AG/NG/W/13 which proposed the
establishment of a Development Box to address, among other things, food security of developing
countries in the face of the continuation of the reform process.
Net Food-importing Developing Countries
There is recognition that this group of countries would face short to medium term problems
due to agricultural reform process.  This recognition led to the adoption of the Marrakesh Ministerial
Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-
Developed and Net Food-Importing Developing Count ries.  The non-implementation of this Decision
has caused anxiety and disappointment among NFIDCs, including Kenya.  While the issue is already
identified for appropriate action under "Implementation Issues", Kenya would like to emphasize that
the continuation of the reform process should be accompanied with commensurate and effective
measures in favour of the NFIDCs.
Recommendations
Against this background, Kenya would like to make the following recommendations:
1. Substantial improvement in market accesses to products of interest to developing countries
WTO Members should clearly define the criteria of "products of interest to developing
countries".  In this respect, Kenya suggests that those products should be identified on exportingcountry-by-country basis, and include agricultural exports which are, inter alia :  not receiving
substantial preferential market access from an importing developed country; exhibiting high growth
potential in the world market; receiving high domestic support and export subsidies in an importingG/AG/NG/W/136
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developed country.  Moreover, in any tariff reduction formula, focus should be on effective
elimination of tariff peaks and escalation on products of export interest to developing countries.
2. Minimize adjustment costs to developing countries from erosion of the values from
preferential market access
The current negotiations need to: find additional ways and means to improve market access
for exports from those countries; improve the use, predictability and certainty of existing preferential
arrangements by, inter alia , simplifying and harmonizing the rules of origin, removing
conditionalities, and binding them in the WTO;  and accept those non-reciprocal preferences given to
developing countries as conforming to the WTO rules.
3. Complete elimination of all trade-distorting subsidies by developed countries
Developing countries should not be expected to undertake any further liberalization
commitments until these distortions have been completely eliminated.  Before this is achieved, a
mechanism could be established to impose penalty, or special countervailing action , should
subsidized goods displace domestic production in developing countries, or displace non-subsidized
exports from developing countries.
4. The establishment of a Development Box
The Development Box should be designed with a view to consolidating, strengthening and
operationalizing the special and differential treatment for developing countries.  This should allow for
policy flexibility in applying urgent safeguard measures and domestic support measures that are
closely linked to policy measures to meet developmental concerns of developing countries.  Such
concerns should include; high dependency on food imports, the need to increase agriculturalproductivity, food security, and the need to protect small farmers and poverty alleviation.
WTO members should identify those border measures and domestic support measures that are
pertinent to those developmental concerns, with a view to starting concrete negotiations on what type
of flexibility should be provided to those measures in developing countries during the continuation of
the reform process.
5. The establishment of a mechanism to ensu re in a concrete way technical and financial
assistance to developing country exporters to meet SPS standards and regulations in developed
country market
Such mechanism should be built within the co mmitments in the continuation of the reform
process, well programmed and closely coordinated with the provisions given in the SPS Agreement.
6. Non-extension of the Peace Clause beyond 2003
However, domestic support measures provided by developing countries within the framework
of Food Security/Development Box and those un der Article 6.2 should be made totally non-
actionable.
7. All exported products must comply with international standards or with the national
requirements of the exporting country
Food exports which are sub-standard or which do not comply with SPS standards and
regulations of the exporting country should not be dumped in the third market, regardless to the non-
existence of national standards in the importing country.G/AG/NG/W/136
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8. Measures in favour of the NFIDCs should become an integral part of the Agreement
The measures and policy instruments in favour of NFIDCs should be part of the Agreement,
translated into concrete commitments by Members, and subject to the WTO monitoring andenforcement mechanisms.
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