Lately there have been different views on the alleged “frustration” that Kenya’s avocado farmers have faced in their attempt to export their avocado produce to China following a bilateral agreement that the People’s Republic of China and Kenya inked recently. Whereas most of these views have largely been informal and sometimes contained in brief media reports, the most recent and formal is an opinion by Edwin Kimani in which appeared in the East African on November 28th 2019 under the title “ Trade Negotiations Caused Kenyan Farmers the Avocado Deal” ( https://www.theeastafrican.co.ke/oped/comment/Trade-negotiators-cost-Kenyan-farmers-the-avocado-deal/434750-5366040-vxc7qb/index.html). There is therefore a need for a different perspective on this subject as below.
On the aspects of trade negotiations, the author correctly points out that in trade negotiations countries need to take advantage or exploit their competitive advantage and thus create opportunities for its citizens to trade so that there can be economic growth.
On the Avocado deal, the article laments about the so-called stringent aspects that required the exporters from Kenya to peel the avocadoes, freeze the peeled products at -30 degrees Celsius, and further freeze them at -18 degrees while in transit.
It is the above requirements that the Author seem to have had issue with, describing them as “regulatory, non-tariff barriers to trade”.
It is worth pointing out at this juncture that Non-Tariff Barriers or Non-tariff Measures (NTMs) are usually applied by the World Trade Organization (WTO) members in trade in goods and they include technical barriers to trade (TBTs), Sanitary and Phytosanitary Measures (SPS) as well as Anti-Dumping and Countervailing Measures (SCM).
In the case of the Avocado exports from Kenya, China, in putting the stringent measures, has adopted the Sanitary and Phyto sanitary measures (SPS). This being the case, the question that needs addressing is, whether China was justified in applying these measures with regards to the intended avocado exports from Kenya. Is it really an unnecessary barrier to trade as has been suggested?
To get a clear perspective on the above, we need to trace the “Avocado Agreement” in question. The Agreement was reportedly signed by the two Countries sometime in April,2019 and it made Kenya the only African country to sell its avocado to China. This was a culmination of the talks between Kenya’s President Kenyatta and his China’s counterpart Xi Jinping during the Forum on China-Africa Co-operation meeting that happened in Beijing in 2018.(https://www.theeastafrican.co.ke/business/Kenyan-avocados-cleared-for-China-market/2560-5087764-4fbuijz/index.html).
Unfortunately, like most bilateral agreements between Kenya and China, whether trade or otherwise, it is usually an onerous task for one to lay their hands on the actual texts as most as quite secretive. However, that is a story for another day! And, for purposes of the discussion here we have to rely on the what has been reported, in the hope that is factual.
It would appear that apart from the Agreement on the export of the fruit the two countries also negotiated and signed a “Protocol on Sanitary Requirements” meaning therefore that Kenya’s farmers and exporter were to abide by China’s Sanitary and Phytosanitary standards. It is therefore not correct to suggest that China is using the [ sanitary measures] to shield its domestic producers from competition.
As members of the World Trade Organization both China and Kenya are subject to the Agreement on Application of Sanitary and Phytosanitary Measures (SPS )https://www.wto.org/english/docs_e/legal_e/15sps_01_e.htm.
This agreement governs when and how SPS measures should be applied. Specifically, Article 1 states that the agreement applies to “all sanitary and phytosanitary measures which may directly or indirectly, affect international trade.” The Agreement in Article 2 expects these measures to be applied on an MFN basis meaning their country applying them must not do so on a discriminatory manner.
It therefore means that China ought to apply the standards it has applied to the Kenya’s produce to the produce from other countries. And it is only at this point we can determine whether or not the standards are unfair to the Kenyan farmers.
To asses this further there is need to look at the other countries who are exporting their avocadoes and the sanitary conditions that China is applying to them. According the statistics, the world leading exporters of avocados to China are Peru, Chile and Mexico these countries are reportedly exporting their [avocado] produce when chilled and frozen, just like Kenyan produce is required to be. Hence the sentiments that Kenya received a raw deal in this arrangement as the opinion suggests, cannot fly. If the treatment China is giving to Kenya are regards conditions for shipping like the freezing are being equally applied to other exporters, the Kenya cannot cry foul and indeed there was nothing the negotiators would have done differently.
As thing stands it appears Kenya does not even have standards that are close to those applied by China. If this were the case, then it would have been quite easy for these standards to be accepted by China as in accordance with Article 4 of the SPS Agreement. Article 4 deals with “equivalence” and it simply means that the importing member, in our case China is bound to accept the phytosanitary standards of the exporting member in this case Kenya so long as it can be demonstrated that these measures will achieve appropriate levels of sanitary and phytosanitary standards.
As things stand, given the negligible percentage that Avocado from Kenya will contribute to China’s total avocado imports, it will be next to impossible to expect any lesser standards that what China has demanded.
Therefore, it is up to Kenya to ensure that the SPS standards that are in place are world-class as this is the only way the only way Kenya’s agricultural produce can access the world market. After all, Kenya is also bound by the provisions of the SPS Agreement and should implement its requirements just like the other countries are doing. This calls for proper investment in the agricultural sector, resuscitation of the agricultural extension services, and creation of facilities such as freezing containers to meet the standards of the target markets such as China.
The challenges that the avocado farmers are facing with regards to accessing the lucrative larger markets point to bigger problems, that is, there is very little Intra-African trade and lack of value addition. It has been argued, and correctly so, that African countries are better off trading among themselves as this is the easiest trade. Easiest because most African Countries have more or less the same standards and therefore the products are less likely to encounter market access challenges. One can only hope that the famed African Continental Free Trade Agreement (AfCFTA) currently being operationalized will address, in detail, Intra-African Trade.
As regards value addition, there is need to move from exporting of raw materials to finished or intermediate products. For instance, other than scrambling to export raw avocados, why doesn’t the government help farmers by attracting firms that would extract the oil from the produce and export the same? These suggestions of course need deeper evaluation of Kenya’s industrialization and agricultural policies. For now, until we meet the Chinese standards, we may as well use the avocados Kenya grows to prepare nice guacamole for consumption by Kenyans residents, in Kenya’s restaurants.
One thought on “Kenya -China “Avocado Deal” A True Test Of Kenya’s Competitiveness In Export”
Reblogged this on firstname.lastname@example.org.