US embassy cable - 05NAIROBI5030

UNCLAS SECTION 01 OF 02 NAIROBI 005030 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
DEPT PLEASE PASS USTR FOR WJACKSON 
 
E.O. 12958:  N/A 
TAGS: ETRD, ECON, EAGR, EAID, PREL, PGOV, WTRO, KE 
SUBJECT:  WTO - KENYA'S PROTECTIONIST TAKE ON HONG KONG 
 
REF: A. USTR/BJACKSON-NAIROBI/HOOVER/BAIN 12/02/05 E-MAIL 
 
     B. NAIROBI 4983 
     C. NAIROBI 4949 (NOTAL) 
 
Sensitive-but-unclassified.  Not for release outside USG 
channels. 
 
1.  (SBU) SUMMARY:  As Kenyan Trade officials prepare to 
depart for the WTO Ministerial in Hong Kong, it is clear 
that their main goal, and perhaps for most African 
countries, is to promote "flexibility" in market access, 
protect existing preferences (through new compensation 
measures), and ensure continued safeguards.  It is 
therefore unlikely that Kenya at least, will push for a 
stronger EU offer on agriculture, or be forward-thinking 
on NAMA issues.  The Kenyan officials were positive on 
better interaction between their WTO working groups and 
U.S. officials in the future.  End summary. 
 
2.  (U) Econ/C and Econoff met with WTO experts from 
Kenya's Ministry of Trade and Industry on December 5 to 
present ref A points and follow-up the November 30 
meeting with the Ministry's Permanent Secretary (ref B). 
Representing Kenya was Elijah Manyara, Director for 
External Trade, and Trade Officers James Kuru (who covers 
Agriculture) and Michael Otieno (who covers NAMA issues). 
All three officials will likely be included in Kenya's 
Hong Kong delegation, which Manyara speculates will be 50- 
60 strong. 
 
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THOUGHTS ON AGRICULTURE 
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3.  (SBU) Manyara conceded that the EU's proposal on 
market access in agriculture is not ambitious enough and 
that the possible exemption of up to eight percent of 
product lines from tariff cuts was potentially 
problematic for African exporters.  He also agreed that 
the EU was trying to divert attention from Ag to NAMA 
issues.  He was, however, quite reluctant to speculate on 
how strongly Kenya or the Africa Group would publicly 
call for a better offer from the EU.  Manyara said that 
Kenya's priorities are for "policy space" and 
"flexibility" on agriculture market access, because 
Kenyan tariffs on ag products are already 100% bound. 
According to Manyara, the Africa Group has submitted 
proposals on its three "priority areas":  preferences, 
flexibility, and safeguards. 
 
4.  (SBU) Expanding on what Manyara claims is the Africa 
Group's position, Kuru said that developing countries 
should have 20% of agriculture tariff lines available for 
protection as "special products."  He added that the 
current situation is not flexible enough, and that even 
100% tariff rates are not enough of a "cushion" for some 
products, citing sugar, wheat, dairy, and sorghum as 
possible targets for special protection.  As for the U.S. 
proposal, Kura said that he would like to see USTR 
produce a report projecting the added value of exports 
for developing countries from significantly liberalized 
agriculture trade. 
 
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ON NAMA 
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5.  (SBU) For Kenya, there is on-going concern about 
proposals requiring significant binding of tariffs for 
paragraph 6 countries, again because of a potential lack 
of flexibility.  According to Otieno, Kenya's current 
average bound non-agricultural tariff rate is 58.4%, and 
the paragraph 6 requirement of 27.5% is too ambitious. 
[Note:  Otieno speculated that USTR's assessment that 
Kenya has a 35% bound tariff rate most likely refers to 
applied tariffs.  End note.] 
 
6.  (SBU) Otieno also asserted that the sectoral 
elimination proposals are problematic, noting in 
particular Kenya's concerns about textiles, footwear, 
fish, and electronics.  He added that Kenya would like to 
have flexibility to identify its own list of possible 
sectors for elimination (zero rating), but that 
 
NAIROBI 00005030  002 OF 002 
 
 
currently, the paragraph 16 text does not permit such 
flexibility.  According to Manyara, Kenya would also like 
to see more flexibility on addressing non-tariff barriers 
(NTBs), but did not elaborate on this point. 
 
7.  (SBU) Expanding on Kenya's thoughts regarding 
"compensation," Manyara speculated that in order to 
maintain successful preferences programs for LDCs, there 
should be a new formula for applying "corrective 
coefficients" where lowering global tariffs weaken such 
preferences. 
 
--------------------------------- 
WORKING WITH TECHNICAL COMMITTEES 
--------------------------------- 
8.  (U) When asked about Kenya's technical committees for 
WTO issues, Manyara explained that Kenya has a National 
Committee on WTO, with government officials and some 
private sector and academic representatives 
participating.  Below the national committee are 14 
topical subgroups, headed by Ministry of Trade officials, 
which include participation by civil society as well. 
Manyara added that that it is the Ministry's goal to have 
the subgroups become a better conduit of information and 
exchanges of ideas.  He was positive about Econ/C's 
suggestion that in the future Embassy officers meet with 
the subgroups and on the idea that the Embassy might host 
DVCs between select subgroups and experts in the U.S. 
Manyara also requested U.S.-assistance to increase the 
subgroups' technical capacity. 
 
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COMMENT 
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9.  (SBU) Former Trade Minister Kituyi has been an 
excellent interlocutor for the Embassy, and it is good 
news that he has agreed to lead the Hong Kong agriculture 
negotiations as a "Friend of the Chair," regardless of 
his Ministerial status in the coming days. 
 
10.  (SBU) However, based on our recent meetings with 
Ministry officials, we believe that Kenya, perhaps like 
most of Africa, will be unwilling to push aggressively 
(if at all) for the EU to improve its offer on 
agriculture because they still see freer trade in 
agriculture as more of a threat to domestic producers 
rather than as an opportunity for expanded exports. 
Kenya, and likely most African countries, is also 
concerned that lowered global tariffs will harm current 
access under U.S., EU, and other preference systems. 
Simply put, unless Kituyi can somehow change the dynamic, 
Kenya will go into Hong Kong fearful of - and resistant 
to - the kind of deep liberalization embodied in the U.S. 
agriculture proposal.  It will therefore favor a lesser 
outcome, unless the deal struck somehow insulates it from 
all the risks inherent in trade liberalization.  End 
Comment. 
 
BELLAMY