Trade Negotiations Insights • Volume 7 • Number 5 • June 2008
In focus Understanding Kenya: post-election crisis, land and the interim EPA
It is tempting to dismiss the violence that engulfed Kenya in the months of January and February 2008 as an unfortunate, though not totally unexpected, resurgence of African atavist ontological disposition. Indeed, this is what the Western media and analysts did with relish. Many argued that even though the mayhem was triggered by electoral fraud, the violence that followed was unrelated. This could be true, but only partially. The stark reality is that the crisis in Kenya has exposed the class tensions that have been papered over for more than 100 years. Moreover, it has exposed the depth of vulnerability in Eastern – and to some extent Southern – Africa, and has had noticeable impact on the trade negotiations for Economic Partnership Agreements between the region and the European Union.
The importance of land
Western media has a tendency to simplify complex African issues. In January 2008, The Economist newsmagazine, for instance, claimed that Kenya represented hope for Africa. Sadly, this optimism was equated with a vibrant Stock Exchange, fast food outlets, thriving casinos, manicured golf courses and a booming tourism industry. The article completely ignored that 60% of Nairobi residents occupy only 18% of the city’s land; that more than 63% of Kenya’s urban population has no access to clean water; that two out of every three Kenyans survive on less than a dollar a day; and that only a few own huge tracts of idle land amid large armies of squatters.
While many living in industrialised countries are often affluent, most of the African people are impoverished, under-nourished and illiterate. In contrast to the economies of industrialised Northern countries that are strong and resilient, offering hope and security to the populations of these nations, African economies are mainly weak and vulnerable. Moreover, while the developed countries of the North are typically more in control of their resources and destinies, those of Africa are susceptible to external factors and often lack functional independence and sovereignty. This is the context in which we should understand the attachment to land in many African countries like Kenya and Zimbabwe. Ownership of land, however small, gives a sense of security and independence.
We cannot therefore contextualise the mayhem in Kenya and the subsequent disruption to the EPA negotiations without appreciating the ‘Kenyan national question’. Kenyans are not polarised because they belong to different sub-nationalities, but rather because they relate differently to the country’s resources and productive forces—land in particular. Here, it is useful to observe that the agriculturally-rich Rift Valley region was the epicentre of the recent clashes. This was no accident. Rift Valley is the most settled region of Kenya. Yet, it is also in the Rift Valley that communities like the Maasai, the Pokot, the Nandi and the Sabaot have unresolved grievances over land ownership centred on historical injustices traceable to the colonial occupation.2
Wider implications
The area has since been a ticking time bomb; the recent violence is not the first incident where the region has exploded over land issues. In the early 1960s Jean Marie Seroney, a former legislator, shook the country with the ‘Nandi Declaration’, which called for the region’s autonomy and the expulsion of ‘foreigners’. Other major clashes over land occurred throughout the 1990s in response to demands for the re-introduction of pluralist politics and all along the Kenyan Coast there have been similar land-related skirmishes. Therefore, when it seemed as though the presidential vote had been stolen, it is easy to see why Kenyans– especially those in the Rift Valley– resorted to violent protests.
However, it was not only Kenya that was uprooted during the fighting: neighbouring countries like Uganda, Rwanda and Burundi, as well as Congo and Southern Sudan, were subjected to hardships as protestors ripped up railway lines and longdistance commercial vehicles stayed off the roads for fear of attack. To date, the prices of petroleum products in Uganda have yet to stabilise, leading to unprecedented inflation. Moreover, as one of the stronger economies in the region, the electoral matters in Kenya also noticeably impacted trade negotiations, especially between the EAC and the EU.
The interim EPA
On November 27 2007 an interim Economic Partnership Agreement (IEPA) was initialled between the European Commission and the partner states of the East African Community (EAC) comprising Burundi, Kenya, Rwanda, Tanzania and Uganda. The agreement was signed in an attempt to provide a legal framework for the continuation of European trade preferences for EAC and other ACP exports despite the end-2007 expiry of the WTO waiver.
In late 2007, as the deadline for signing an EPA drew nearer, the European Commission chose not to pursue alternatives or answer calls for more negotiating time. Instead, it threatened to raise tariffs on January 1 2008 on exports from any ACP country that did not sign an IEPA. As a result, the EAC countries were forced to lower their expectations regarding what EPAs could deliver as they were pressed to secure any agreement that would provide continued market access. Kenya, once a strong voice against EPAs in their current form, capitulated. Gripped with elections that preoccupied the country’s political leadership, the negotiations and considerations of the deal were left to bureaucrats ‘trained’ by the European Commission under the Kenya European Union Post-Lomé Trade Negotiations (known as KEPLOTRADE).
A topsy-turvy situation
The KEPLOTRADE initiative was established by the European Commission in 2001 to provide a national structure to facilitate Kenya’s EPA negotiations. Comprised of government ministries, public institutions, private sector and civil society groups, KELOPTRADE was set up within the realms of the Commissions’ Trade.com project. The idea behind this project was to provide trade-related assistance to ACP countries through capacity building, negotiations training and related projects focused on institutional and supply-side constraints.
While such technical assistance for trade negotiating is desperately needed in Kenya, the ultimate efficacy of the project has been called into question. Concerns have been voiced—albeit in muted tones—that the Trade.com project undermines national policy autonomy. Many fear that the national negotiating position may be decided for its acceptability to the EU, rather than the economic development interests of Kenya and the ACP. In recent weeks this concern has been raised by MPs from Kenya, Uganda, Tanzania and the East African Legislative Assembly. Could this be a situation of a horse negotiating with its rider?
A broad and stringent agreement
While the European Commission has portrayed the IEPA as a soft and flexible agreement, the detailed provisions create several binding obligations and require a number of reforms. The implementation of these reforms or disciplines is tied to specific deadlines and non-compliance with the terms could be sanctioned through a dispute settlement mechanism.
In a bid to entice ACP countries to negotiate, the European Commission initially proposed a 25-year transition period for liberalisation, but later required at least 80% tariff liberalisation from ACP countries over a period of 15 years. However, in some interim agreements – although not in the EAC IEPA - tariff elimination starts from entry into force of the agreement in 2008 and the elimination of other barriers (such as export taxes) is not always gradual. Only a marginal share of trade volume is subject to long implementation periods for tariff elimination. Even for least developed countries the pace of liberalisation is faster than some stakeholders would have hoped for.
Several contentious elements
The European Commission has insisted on the inclusion of a standstill clause (Article 13 of the IEPA), which is not required under WTO rules. This freezes tariffs on all trade between parties, regardless of whether these products are subject to liberalisation. As a result, even if a product is on the ‘exclusion list’ and therefore privy to liberalisation, the tariff cannot be raised after entry into force of the agreement.
The removal of export taxes was another request made by the European Commission. Export taxes have been used for raising revenue in some developing countries, accounting for more than 20% of government income in places like Burundi, Ethiopia and Guinea. Yet, the IEPA forbids the introduction of new taxes—including export taxes—with only limited carve outs.
Additionally, while the interim EPA addresses the need to review the rules of origin (RoO), in terms of actual commitments, the EU only agreed to consider the possibility of offering more ‘development-friendly’ rules in the future. This is unfair on several counts. First, without a binding agreement on RoOs, it is difficult for the ACP regions to accurately assess the value of the EU’s market access offer. Second, ACP countries contend that RoOs should recognise the increasingly global nature of input procurement and the need for the ACP to base their initial industrial development on the final stage of processing of foreign inputs. If ACP countries cannot secure a political commitment from the EU on this matter, then many opportunities for the development of value-added processing activities in countries like Kenya will be held back by the arcane minutia of rules of origin and the lengthy and obscure workings of derogation provisions.
No rosy future
Since the initialling of the IEPA, Kenyan civil society organisations have entertained a certain degree of scepticism, if not outright pessimism, about the content of the deal. They claim that the Cotonou Agreement, under which the EPA is being negotiated, proposes to remove the principle of nonreciprocity, which has been the linchpin of the preceding Lomé Conventions. This means that whatever concessions the EU grants to the ACP, there is an obligation under the EPA to reciprocate. While the principle of reciprocity is acceptable— indeed encouraged—in an economic relationship between parties of equal strengths and means, it is an aberration in a partnership among unequals. It is a well established maxim that equal treatment of unequal parties amounts to injustice.
Furthermore, they claim that EPA configurations undermine efforts at regional integration within East Africa. The EAC initialled a coherent regional IEPA on its own, with a single undertaking and liberalisation schedule. Five other Eastern and Southern African (ESA) countries initialled their own individual IEPA-specific liberalisation schedules, while the remaining six countries in the region did not conclude any interim agreements at all. This status quo prevents the formation of a COMESA customs union and significantly challenges one of the fundamental principles of the agreement: that is, to build on continuing efforts at regional integration.
Civil society also claims that the EPA negotiations left Kenya (and Zimbabwe) defencelessly exposed within the ESA region. Of the sixteen nations that make up the configuration, an impressive twelve are categorised as LDCs and as such are not under great pressure to negotiate—especially if no additional resources can be accrued—as they already benefit from the EU’s Everything But Arms (EBA) initiative.
The issue of Sanitary and Phytosanitary Standards (SPS) has also been seen as a cardinal concern for the region. One of the ACP proposals is for a standstill on EU measures on SPS for five to ten years, coupled with the establishment of dialogues on how EU health concerns can be addressed without imposing excessive burdens on ACP suppliers that make it impossible or uneconomical to take advantage of market opportunities within Europe. The EU has rejected this proposal as wholly impractical. Failure to get to grips with the challenges that accompany increasingly strict SPS measures is likely to progressively undermine the value of ACP trade preferences.
Kenya’s position damaged by stand-off
All the issues outlined above were vociferously expressed by Kenya’s former trade minister. But as the country approached general elections at the end of last year, such fears slowly but steadily disappeared from the radar of national discourse. The situation was made worse by the stand-off that followed the flawed elections when the country had to function without a trade minister for four months. In the interim, the European Commission-trained bureaucrats served to further entrench the EU’s own interest in Kenya’s negotiations.
1 Oduor Ong’wen is Country Director for Kenya in the Southern and Eastern African Trade Information and Negotiations Institute (SEATINI). See: www. seatini.org
2 It was in the Rift Valley that British settlers alienated huge tracts of land from indigenous Kenyans. It was here that the Maasai community were duped into signing a 100-year agreement with the British in 1904 and denied a hearing by the Kibaki government in 2004 when the agreement elapsed. The Rift Valley was also where the Pokot were forcefully pushed out of their communal land. During the struggle for independence, a new ruling class interested in land property was quickly recruited. With aid from the colonial state, the gentry swiftly began occupying land belonging to entire communities and they were awarded titles by the colonial authorities, while the displaced were herded into detention camps and concentration villages. However, once Kenya gained independence, the new rulers could not relinquish their claim to these lands. Instead, they created a scheme for settling the new landless in former settler areas. As a result, large Kikuyu populations from Central Kenya settled—though they were not necessarily accepted—among the Nandi, Maasai, Pokot and other communities in the Rift Valley.