Problems with the Trump-Uhuru trade deal on US grain imports

Kenya’s surprise trade deal with the United States has angered many African states that have strenuously worked for a unified position on important matters like trade and food security. While details of this deal are yet to be fully disclosed, it will no doubt renew perceptions that Kenyan leaders are political sell-outs and faceless traitors to the spirit of pan-Africanism.

The country’s shady dealings with the Apartheid regime has always been viewed as an unforgivable act of betrayal that caused Nelson Mandela and virtually all South African presidents to hold a dim view of Nairobi. It is also true our Tanzanian neighbours, including their current president have a measure of considerable disdain for our leaders.

President Uhuru Kenyatta’s deal with ‘Uncle Sam’ has been linked to the 2025 expiry of the African Growth and Opportunity Act. Approved by the US Congress in 2000, Agoa provides trade preferences for quota and duty-free entrance into America of certain goods from several African countries, including Kenya.

AGOA BENEFITS

Agoa benefits aside, trade and investment negotiations between the US — or even EU — with any of the ill-prepared African governments can never lead to a win-win situation. It is against this backdrop that the African Union continues to sound the alarm against bilateral deals. Instead of going it alone, Nairobi could have sought its interests through regional bodies like EAC, Comesa and AU.

By getting Nairobi to drop tariffs on grain imported from the US, this deal potentially opens Africa to American agricultural products including meat and poultry — and therein lies a problem for our farmers.

Developing countries have imposed a tariff on American commodities as a way of protecting their farming communities and as a reasonable response to the market-distorting subsidies enjoyed by American farmers. Since there are no plans to abolish them, one can see that the president simply chose to throw his farmers under the bus.

This could explain, perhaps, why State House has remained tongue-tied even as the Trump Administration relishes its outcome. It is even citing this negotiation as a model for engagement with other developing countries.

TRADE NEGOTIATIONS

In advanced countries, trade negotiations are based on sound economic rationale and rigorous studies on public welfare. Alternative options are considered before principals sign off the final document that would inherently leave them, not necessarily the other side, better off.

By opening ourselves to subsidised wheat, rice and low-quality yellow maize, one wonders if President Kenyatta was properly appraised on its implications to the Kenyan farmer in his own backyard.

This could be a moot point, however, for cartels have freely undermined and destabilised dairy and cereals prices and distribution through illegal importation and dumping of these products into the market.

This deal casts doubts that the government is keen on reviving the agricultural sector often considered the bedrock for economic development. The Uhuru-Trump deal makes a mockery of the recently announced price increase for rice farmers or talks of reviving irrigation schemes. One needs to visit our sugar belt to see the economic cost of bad policies.

Agriculture is the country’s economic backbone that creates the lion share of formal and informal employment opportunities.

FOOD DEMAND

In the face of dwindling land holding, increased food demand, climate change and unemployment, we need trade deals that boost agricultural productivity, value addition and rural incomes through capital, technology, innovation and market access. Africa can feed its people, cheaply and affordably, through intra-Africa trade.

It should shun schemes that would lead to capital loss, impoverishment and food dependence.

Other than being seen as traitors, African institutions are ranking us poorly. While President Mwai Kibaki was praised for attempting to meet the AU-agreed target of increasing expenditures to agriculture by at least 10 per cent yearly, the most recent Comprehensive Africa Agriculture Development Programme implementation report gives the Kenyatta government a failing score — which is hardly surprising.

Mr Chesoli is a New York-based development economist and global policy expert. [email protected], @kenchesoli