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Kenya: Govt should be cautious in free trade negotiations

Kenya Times | 31 July 2007

Govt should be cautious in free trade negotiations

An outgrowers sugar company in western Kenya has announced a programme to encourage its members to diversify crop farming, noting that many of them still rely on sugarcane farming while facing acute food shortages.

The Mumias Outgrowers Company (MOCO) says it will assist its more than 70,000 members to raise other crops other than cane, which will face increased competition from next January when Kenya joins the COMESA customs union.

To many sugarcane-dependent families in western Kenya, January 2008 will come with adverse consequences to livelihoods and life itself as Kenya joins more efficient sugar producers in a free market regime.

What free market access can do to local producers is evident in the occasional challenges the firms have faced from regulated importation. Throughout most of this decade Sony, Mumias, Chemelil, Muhoroni, Nzoia, and the region have faced intermittent surpluses as Kenya imports sugar from foreign markets.

Kenya’s signature to the free trade area’s law will commit the country to implement all agreements removing tariffs that Kenya has traditionally employed to protect domestic industry.

Global economy

Theoretically, trade liberalisation leads to increased interdependence in the global economy and more efficient allocation of production resources as countries check where advantages lie.

In the Kenyan sugar industry this logic might seem more apt, for indeed local firms ground to a halt during the early 1990’s before the country implemented structural adjustment programmes fully.

Moreover, after more than five years safeguarding local producers, their production has not become more efficient. Nor has foreign competition impressed upon the firms to employ contemporary methods.

Yet one still can conclude that Kenya is not working in her best interests when it comes to global trade negotiations.

The free-trade provisions of the COMESA treaty overlaps others proposed under economic partnership agreements the European Union is currently negotiating with Kenya and other developing countries.

While Kenya is progressively giving concessions to foreign producers, little is happening on the home front to make the sugar companies more competitive. With the exception of Mumias, the companies are still choking in debt that threatens their very viability.

Under COMESA 2008 and EPAs that Kenya is negotiating, the government will lose the only tool it has always relied on to protect them. Without tariffs, EPAs and COMESA 2008 would consequently cause import surges, kill local production and threaten the livelihoods of millions of farmer population in west Kenya.

EPAs irreversible

The government would not use quotas and other market regulation to protect their citizens from sinking into further poverty, for EPAs is a point of no return! According to UN Economic Commission for Africa (UNECA) studies, the full implementation of EPAs would lead to a loss of 1,516 million sterling pounds per annum in tariff revenues to Sub-Saharan Africa governments, crippling the countries’ ability to provide scarce basic social services such as health and education.

Whereas MOCO is encouraging its members to diversify the crop, Kenya itself needs to diversify its methods of economic diplomacy. The threat of free trade in Africa is no longer a subject for pessimists only. It is real. And in the most part it affects helpless people like Mumias farmers who lack the food to eat while they toil on a slave’s crop.

 source: Kenya Times