Identifier
Created
Classification
Origin
05NAIROBI4983
2005-12-01 12:30:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Nairobi
Cable title:  

WTO - KENYA, WITH THE EU, PREPARES FOR HONG

Tags:  ETRD ECON EAGR EAID PREL PGOV WTRO KE 
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UNCLAS SECTION 01 OF 04 NAIROBI 004983 

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DEPT PLEASE PASS USTR FOR WJACKSON

SENSITIVE

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E.O. 12958: N/A
TAGS: ETRD ECON EAGR EAID PREL PGOV WTRO KE
SUBJECT: WTO - KENYA, WITH THE EU, PREPARES FOR HONG
KONG

REF: (A) STATE 211956 (B) NAIROBI 4949 (NOTAL)

Sensitive-but-unclassified. Not for release outside USG
channels.

UNCLAS SECTION 01 OF 04 NAIROBI 004983

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DEPT PLEASE PASS USTR FOR WJACKSON

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON EAGR EAID PREL PGOV WTRO KE
SUBJECT: WTO - KENYA, WITH THE EU, PREPARES FOR HONG
KONG

REF: (A) STATE 211956 (B) NAIROBI 4949 (NOTAL)

Sensitive-but-unclassified. Not for release outside USG
channels.


1. (U) This report includes an action request for State,
USTR, and USDA; please see paragraph 9.


2. (SBU) SUMMARY: Despite the fact that it does not
have a sitting Trade Minister, Kenya hopes to play a
leadership role in developing a consensus among African
countries at the upcoming WTO Hong Kong Ministerial,
according to David Nalo, Kenya's Permanent Secretary for
Trade and Industry. Nalo provided draft points on
Kenya's current thinking for Hong Kong (copied in
paragraph 8) and invited U.S. reaction. The points
indicate that the EU has significant influence on the
policy positions being developed by the Trade Ministry's
technical groups, a point Nalo acknowledged. END
SUMMARY.

--------------
Kenya Wants to Lead the Africa Group
--------------

3. (U) Econ/C and Econoff met with Kenya's Permanent
Secretary for Trade and Industry, David Nalo, on November

SIPDIS
30 to discuss U.S. and Kenyan preparations for the
December 13-18 WTO Ministerial in Hong Kong. Econ/C
reiterated ref A points and highlighted the need for
Kenya to push for a more ambitious EU response on
agriculture.


4. (U) Nalo explained that despite the current lack of a
Trade Minister and Assistant Minister (the result of
President Kibaki's November 23 dismissal of all
Ministers),the Ministry's External Trade Division is
continuing to draft Kenya's positions in order to bring
up to speed Kenya's (likely large) WTO delegation. He
offered to brief Emboffs early the following week and
said the Ministry also plans to better publicize its
positions before Hong Kong. [Note: We expect news at
any time of President Kibaki's new Cabinet, and it is
possible that former Trade Minister Kituyi will be asked
to return. In any event, Nalo said that even if Kituyi
is posted to a different cabinet slot, he would still

join the delegation to Hong Kong. Separately, Kitui told
the Ambassador December 1 that he will definitely be
leading the Kenyan delegation to Hong Kong, regardless of
his status at the time. End Note.]


5. (SBU) According to Nalo, in Hong Kong, Kenya will try
to organize side meetings with a few "pro-trade" African
countries (naming Mauritius, South Africa, and Uganda -
likely not the complete list) to encourage a consensus,
based on Kenya's position, that would then be taken to
the entire Africa Group. When asked about current
negotiating groupings, Nalo agreed that Kenya, and other
less developed countries, need to examine closely the
logic of holding common positions with large, rapidly
developing countries such as India and Brazil, but said
that changing the current lineups would be a "delicate
matter." He admitted that these large, rapidly-growing
economies should be more open to exports from the less
developed world.

--------------
The EU's Influence
--------------

6. (SBU) As reported in ref B, in raising the issue of
geographic indications, Econ/C noted that Kenya's
position in favor of the EU proposal appeared at odds
with Kenya's economic interests. Nalo replied that the
Ministry needed a significant overhaul of its technical
groups, who were often too strongly influenced by
supporters of one side on an issue. He admitted that the
EU, or groups or individuals promoting EU positions, are
closely involved with some of the technical groups. He
said that these advisors provide funding for the groups'
work, but stopped just short of saying the EU is paying
directly. Nalo added that it is probably too late to

NAIROBI 00004983 002 OF 004


attempt any major revision of Kenya's positions ahead of
Hong Kong, but he welcomed a continued dialog with U.S.
officials.

--------------
The GOK's Current Thinking for Hong Kong
--------------

7. (U) Nalo presented talking points, pulled together
specifically for the meeting with Econ/C, (copied in para
8) of Kenya's WTO negotiating position. He noted that
these were draft points and still under discussion among
the Trade Ministry and its advisors. Nalo said he would
welcome our comments.


8. (SBU) Begin Text of Kenya Draft Talking Points:

-- The preparations for the 6th WTO Ministerial
Conference scheduled for Hong Kong are at an advanced
stage and the main challenge for all members is to
identify priorities to ensure a successful outcome that
will set the pace for the conclusion of the DDA
negotiations by 2006. It is important therefore for
members to focus on resolving the outstanding
difficulties before the Hong Kong Ministerial Meeting,
particularly in the major areas of agriculture, non-
agricultural market access, services, rules, trade
facilitation and development issues. This will be crucial
so as to ensure a successful outcome of the ministerial
conference.

-- Kenya has been very supportive of initiatives and
proposals to ensure a successful outcome that will
reflect the ambition set forth under the Doha mandate and
in particular the development dimension that takes into
account the needs and interests of developing countries.
In this respect Kenya is keen to work with other key
players in the negotiations including the EU, US, G20,
the G90 and others to ensure a balanced outcome in Hong
Kong.

-- We acknowledge with appreciation the recent proposals
by the major players in the negotiations which include
the US, G20 and the E.C particularly after the Zurich
meeting where selected trade Ministers exchanged views on
the key Doha negotiating subjects and the challenges of
striking a deal before Hong Kong. The EU on its part has
indicated that all participants have domestic constraints
and political limitations and shall therefore negotiate
on the basis of the mandate decided by the Council of
Ministers.

-- On the other hand the US has given a conditional offer
to eliminate all tariffs, subsidies and other barriers to
free flow of goods and services provided other members
are prepared to make significant contributions. The
target of this offer is to create new trade opportunities
in manufactured goods and services comparable to those
created in agriculture.

-- The US offer is similar to the recent EU contribution
on agriculture negotiations which is conditional to
certain targets being met in other areas of the Doha Work
programme and specifically a higher ambition for NAMA and
benchmarking for Services. However despite the difficult
political circumstances that both the EU and the US face,
they both have a responsibility of ensuring that the
outcome of the Hong Kong meeting takes into account the
specific concerns of developing and least developed
countries. In this respect Kenya calls upon the US in
particular to continue providing the necessary leadership
during the preparatory process leading to the Ministerial
conference.

-- As a country Kenya is particularly concerned that on
the overall there has been a predominant focus on the two
major issues of Agriculture and Industrial Tariffs,
leaving many of the important issues of interest to
developing countries on the sidelines. This has led to
the process and pace of the negotiations largely being
dependent on the position of the major players, and in

NAIROBI 00004983 003 OF 004


particular the US and EC. Many developing countries are
concerned at this state of the negotiations, as it
marginalizes the issues of interest to them as well as
their involvement in the negotiations process. Some of
the key issues include;

-- On Agriculture, the critical issue is agreeing on the
structure of the tiered formulae to be used for the
tariff reductions and how this will impact on the
different Members. A resolution of this issue is
necessary to unlock possible movement on the issues of
domestic support and export competition pillars. In
addition specific concerns for developing countries which
include, special and differential treatment provisions,
the question of preference erosion, Special Products,
Special Safeguard Mechanism, implementation periods for
commitments and increased market access through the
expansion of tariff rate quotas, cotton initiative and
commodities should be adequately addressed in the
negotiations.

-- On NAMA there is need to resolve the formula to be
used for tariff reductions and the treatment of unbound
tariffs to avoid a situation where developing countries
could assume a disproportionate burden of the tariff
reduction commitments. On average, developing countries
have high tariff rates compared to the developed
countries, and hence the potential impacts of any tariff
reduction formula on their economies will need to be
assessed. In this respect number of flexibilities for
developing countries should be factored into any final
framework on tariff reductions to incorporate longer
implementation periods, exemption from applying formula
cuts, provision to maintain some unbound tariffs and the
full exemption of least-developed countries from
undertaking any reduction commitments. The key concern
for Kenya is the treatment and the flexibilities to be
accorded to countries that have bound less than 35% of
their tariff lines and in particularly with regard to the
conditions attached.

-- On Services the general assessment is that the offers
on the negotiating table are unsatisfactory in terms of
quality, including the sectors and modes of supply
covered by the offers. The recent proposals are calling
for additional modalities to raise the coverage, quality
and number of participants in the services negotiations
including complimentary approaches that would establish
mandatory benchmarks for all Members to meet in terms of
the offers. However in Kenya's view the approach to be
agreed must ensure that developing countries will only
undertake liberalization commitments which are consistent
with their development needs as provided for in the GATS
and the negotiating guidelines.

-- The Services negotiations should equally focus on
specific measures to strengthen the capacity of
developing countries in the supply of services and their
participation in international trade. Such measures
should include ways and means to increasing the
competitiveness of their services sectors, providing them
with access to distribution channels and information
networks in developed country markets, and for developed
countries to undertake increased commitments on temporary
mobility under mode 4.

-- The general assessment on Trade Facilitation is that
these negotiations are `progressing well and on
schedule'. Consequently, the expectation is that the Hong
Kong Ministerial could result in a broad agreement on the
main elements on trade facilitation, and pave the way for
the finalization of the relevant legal instrument by

2006. However WTO members should take stock of the
negotiations and the implications of a possible agreement
on trade facilitation. This will give a clear assessment
of the capacity of different Members to implement new
commitments on trade facilitation, special and
differential treatment provisions, as well as the
implication of a dispute settlement process that is
likely to be an integral part of the agreement.

NAIROBI 00004983 004 OF 004



-- On Development issues it is important to recall that
the Doha mandate and the July Package provide that the
interests and needs of developing and least developed
countries should be placed at the core of the DDA
negotiations and also their outcome. In this regard the
Special and Differential Treatment provisions should be
strengthened to make them more precise, effective and
operational", through increased market access for
developing countries, balanced rules as well as the
provision of capacity building and technical assistance
to enable developing countries implement both Uruguay
Round Agreements and results of the Doha Round.

-- On TRIPS and Public Health, Kenya is keen to have a
speedy adoption of an amendment to implement the 30th
August, 2003 Decision on TRIPS and Public Health in line
with the African Group proposal which is widely supported
by a large majority of developing countries. It is
therefore important for members to intensify
consultations to complete the necessary amendment before
Hong Kong. The amendment should address the difficulties
regarding the implementation of compulsory licensing
measures and also integrate the 30th August Decision into
the TRIPS agreement in a manner that will guarantee the
interests of developing countries are taken into account.
The issue of access to essential drugs that are subject
to higher prices due to the stronger patent regime
resulting from the TRIPS agreement, for diseases other
than the HIV/AIDS, malaria and tuberculosis should
provide the motivation for a more dynamic resolution of
this matter. In this regard the issue of incorporating
the Chairman's statement in the amendment of the TRIPS
Agreement remains a genuine concern for many developing
countries including Kenya.
End Text.


9. (U) Action request: Post would appreciate any
comments or questions from Washington agencies on Kenya's
draft points to deliver to Ministry of Trade officials.
Econ/C and Econoff meet again the morning of December 5
with Nalo and the technical-level officials who are
working on finalizing Kenya's positions going into Hong
Kong.

--------------
Comment
--------------

10. (SBU) Our reading of Kenya's draft points indicates
an obvious slant towards an EU perspective, despite our
good relations with Ministry of Trade officials,
including former Minister Kituyi. Kenya's trade
officials have a fairly good grasp of the issues at hand,
and we believe Kenya wants to see a successful Hong Kong
outcome. However, to date, we have not seen a
willingness by Kenyan officials to call on the EU to
improve its offer on agriculture, and without Kenya's
leadership, it is unlikely any larger African grouping
will do so either.

BELLAMY