I have great pleasure to be here today at the University of Nairobi to officially launch the WTO Chairs Programme. On this occasion, I also want to share my thoughts with you on the importance of the WTO in helping to better achieve domestic progress. In this context, I want to emphasise the significant role of Kenya in the evolving global governance regime as well as the major potential which can be realized through the substantial opportunities provided by international trade and investment. The University of Nairobi and its School of Economics can play a very important role in this process, and the WTO Chair Programme can be one of the lynchpins for such contributions.

The University of Nairobi's School of Economics has shown dynamism and relevance by building better opportunities and evolving with time. An example is its launch in recent years of a number of new academic programmes, including a Master of Arts in the Economics of Multilateral Trading Systems. For those of you who may not yet know this, I want to recall that the WTO is also called the multilateral trading system.

The work at WTO also evolves to maintain stability in the international trading regime, providing an important basis for increased economic opportunities at home and abroad. It responds quickly to specific situations such as during 2009, when we all faced the worst economic crisis within the last seventy years. The WTO system helped both to limit the incidence of protectionist measures in global markets and to reduce trade tensions that could have sharply lowered market opportunities in our interconnected world. A major effort at the WTO to enhance opportunities for all is the Doha Round of trade negotiations which aims to substantially improve the multilateral trading system. Work on this has progressed significantly.

Thus, we see that both the Nairobi School Of Economics and the WTO respond to immediate needs and work towards strengthening their respective systems. Of course, the links between the WTO and the University of Nairobi go beyond such similarities. Both institutions have had immensely beneficial cooperation for several years now. For quite some time, the University has played an important role in the WTO's technical assistance and training programmes. In fact, Kenya, in close collaboration with the University of Nairobi, was the first ever country to host one of WTO’s most ambitious technical assistance programmes, the Regional Trade Policy Course for English-speaking African countries from 2002-2005. The establishment of the WTO Chair at the University of Nairobi is another important evidence of this relationship.

While many of your may see this as a natural outcome of our longstanding relationship and your capabilities, I see the establishment of the WTO Chair as reflecting the commitment of the academic community in Kenya, which has played a vital role in educating, training and analysing matters related to trade policy and international trade. The Chair at the University of Nairobi is one of 14 WTO Chairs awarded in 2010, through a tough competitive selection process, involving a very large number of institutions and the evaluation conducted through an external Advisory Body. The WTO Chair Programme will contribute both through augmenting domestic capacity and through interactive links with other bright minds in the other countries with these Chairs. The aim is to help make better socio-economic policy and further strengthen informed decision-making on economic matters.

Economy and International Trade

Since 2004, the Kenyan economy has shown relatively robust growth though the rate of growth was subdued in 2008 and 2009. This was due mainly to negative growth in the agriculture sector for these two years. The economic and financial crisis faced by the world economy in recent years has, not surprisingly, also been a difficult time for Kenya.

The economic situation has improved significantly this year for both Kenya and the world economy. Kenya's real growth rate is expected to be almost 4% in 2010. For next year, i.e. 2011, the Economist Intelligence Unit has forecast that Kenya's real GDP growth would be 5.4 %.

This economic recovery of Kenya also reflects the increased opportunities provided by the rebound in world trade this year. After declining by over 12 % last year, world trade is expected to grow this year by about 10%. For Kenya this is important because through regional and other global markets, international trade has played an important role in the Kenyan economic performance.

The present ratio of international trade to GDP for Kenya is about 67%. This is the combined ratio of exports and imports to GDP. Individually, Kenya's exports to GDP are 26% and imports to GDP are 41%.

This ratio of trade to GDP for Kenya is expected to increase over time, with the country's international trade in goods and services forecast to increase at a faster rate than its GDP. For example, the forecast by the Economist Intelligence Unit is that ratio of international trade of Kenya to its GDP will become 74% by 2014. Therefore, we can see that the importance of international trade for Kenya's economic will increase over time, in the same way as it has happened for a number of other high performing developing countries.

Another interesting feature is that though Kenya gets a very small portion of global Foreign Direct Investment coming to its economy, in the next five years, it will get an increasing share of global FDI than now. While this will still remain small, the likely rising share of global FDI indicates a major potential for further increase.

These developments portray the greater likely dynamism and potential of Kenya's trade and overall economic performance, but they still do not indicate the full contribution of international trade to development. Economic analysis shows us that the positive effects of international trade for a country's development process can be far larger than that indicated by the share or growth of trade in relation to GDP. International trade provides incentives for greater efficiency, new products, technologies, ideas, markets, benchmarks for higher quality of skills and products, greater flexibility of response, higher growth trajectories, and much more. For example, to quote WTO Director General, Pascal Lamy, “International Trade is a global insurance against depression and nationalism”.

Of course, trade performance and policy has to be combined with appropriate domestic policies to achieve the relevant socio-economic objectives. With the recent revival in global trade, Kenya now has greater possibilities available to it through regional and global trade. Examples of Kenya's focus on benefiting from these opportunities are its initiatives such as the recently formed East African Community common market, and the active role which Kenya is playing in the Doha Round negotiations to improve the global trading regime.

Developing countries have historically used opportunities through international trade to promote deeper domestic diversification and greater value added in their agricultural and industrial production. Kenya too seeks these objectives together with more employment, income and investment in the services sector, building on its rich potential of traditional services such as tourism and new ones resulting from technological changes in communications. To achieve these objectives, Kenya recognizes the importance of improved domestic capacities, physical infrastructure, initiatives for closer economic links with various markets, improving international trade opportunities, and addressing concerns relating to the international trading system.

The Doha Round of trade negotiations are a major effort by WTO Members to address concerns regarding the prevailing distortions in the international trading system, including trade restrictions likely to be more prevalent in the future, i.e. non tariff measures. Moreover, in the present economically difficult times, it is especially worthwhile to remember that several world leaders, across the spectrum of developed and developing countries, have emphasised that a successful Doha Round would be an important economic stimulus package with many additional positive attributes. It is worthwhile to see how the results of the Doha Round would meet the aspirations of Kenya, while taking account of its concerns.

Aspirations and Concerns of Developing Countries

The aspirations of Kenya are similar to the historically important objectives of various other developing countries. These include, for example, raising economic growth, reducing poverty and inequality by improving production capacities in agriculture, manufacturing and services sectors; diversifying domestic production and skill patterns, and deepening the coverage of higher-value added activities. Opportunities through the international trade system have long been recognized as being highly relevant for achieving these objectives, and efforts have focused on removing obstacles to such opportunities.

Thus, developing countries have long emphasised removing distortions in international trade such as tariff peaks and tariff escalation, reducing subsidies by rich countries which distort the level playing field, creating more stable and larger market opportunities, and seeking assistance with improving skills and physical capacities to better achieve wide-ranging efficiencies. I think you would agree with me that these issues also encompass Kenya's development aspirations and concerns. It is interesting to note that the Doha Development Round addresses many of these issues. This is why a successful Doha Round is of major importance for developing countries. I will explain how this is so, through examples of areas of specific interest to Kenya.

Doha Round

(a) NAMA

In the area of industrial market access, Doha Round results will get rid of all tariff peaks and tariff escalation in developed country markets. The highest industrial tariffs in these major markets will be about 6 or 7 per cent, with average tariffs being close to 1 or 2 per cent. Since I am at the School of Economics, I do not need to explain that this result will mean an end of the concerns about tariff peaks and tariff escalation for industrial products in developed countries. Imagine how powerful this result is, achieving an objective which developing countries have sought since at least the last 50 years.

Additional market access will be also available in a number of developing country markets, enhancing the opportunities that will arise in the growing South-South trade.

The NAMA results do take account of the different levels of development, and the level of obligations vary with major flexibilities for least developed countries, small and vulnerable economies, recently acceded countries, and other developing countries. Kenya is the spokesperson in these negotiations for “developing countries with a low binding average”. In this context, the greater flexibilities that Kenya sought for itself on this issue are among the results that have been already achieved in the negotiations.

Another defensive interest of Kenya is to limit adverse effects that would arise due to preference erosion when tariffs decline in general. As part of the ACP group, work has progressed in a very substantive way on this issue to reach a major level of consensus and mutual comfort in the recent past.

The group on NAMA is also addressing the issue of non-tariff measures. Kenya is actively taking part in these negotiations. Through the African Group position, Kenya is a co-sponsor of the “horizontal mechanism” which seeks a general mechanism to address non-tariff measures. At the initiative of Kenya, a workshop on non tariff barriers was organised in Nairobi in May this year. Following that, on behalf of the African Group, Kenya has provided several questions to clarify issues. In this part of the negotiations, efforts are being made to have greater disciplines on such measures and to create mechanisms which help to address adverse protectionist effects of non tariff measures, and thus sustain greater market opportunities. Therefore, this is an effort to deal with potential problems that may arise in the future with greater use of non tariff measures, i.e. the types of measures which affect developing countries more severely than others.

(b) Agriculture

Agriculture is of immense importance for Kenya, which has most of its population in rural areas and is a Net Food Importing Country. Kenya's focus in agriculture negotiations has been mainly to retain its policy flexibilities, limit preference erosion, get greater disciplines to limit distortionary subsidy policies of major developed countries, and achieve greater market access for its agriculture exports, including more processed exports.

Interestingly, the results of the Doha Round will address all these objectives. In fact, the results on the Table already address most of these objectives of Kenya.

Kenya will be able to maintain its policy flexibilities through a number of special provisions. Examples include, Kenya's access to a highly flexible special product provision, which will provide it the flexibility with respect to its applied tariff regime. It also has flexibilities through the special and differential treatment for its domestic subsidy policies. As a Net Food Importing Country Kenya has a 360 to 540 days repayment period for its export credits, in comparison to 180 days for others. Similarly, the interest of Kenya which it represented as spokesperson of the group on commodities, has been accommodated in the negotiations. Likewise, for preference erosion, as in the case of NAMA, we have a similar positive result for agriculture also.

Regarding reduction of distortions due to subsidy policies of developed countries, we again have substantial results. This can be seen for instance from the text prepared by the Chairman of the negotiating group. The disciplines on domestic subsidies of major developed countries are very significant, and include ceilings on both overall and product specific levels of trade distorting support. Likewise, export subsidies to agriculture are to be phased out. These disciplines will reduce the prevailing agriculture trade distortions in a major way.

The reduction of these distortions will also help promote agriculture exports of Kenya. In addition, larger market opportunities would be provided by new market access through an increased tariff rate quotas in most developed countries, the much larger than average market access provided for tropical products, and the reduction in tariff peaks and tariff escalation which will encourage more processed exports from Kenya.

An important issue for Kenya, as part of a large group of developing countries, is specifying a simple special safeguard mechanism to protect farmers against volume surges and price declines. For agriculture exporters, an opposite concern in this area is that this mechanism should not become an instrument of arbitrary protection. Negotiations on this matter are continuing, based on submissions made by different parties in these negotiations.

We can see in this background that, as I have mentioned earlier, there is a large body of positive results already on the table, which will meet Kenya's aspirations and concerns in agriculture.

(c) Services

In services, there are ongoing initiatives in several areas, aimed at great market access, better regulatory mechanisms, and disciplines relating to subsidies, safeguards and government procurement. The negotiations on market access being based on requests and offers among countries. Thus the details are as yet known mainly bilaterally among Members. The clearest indications came during the signalling conference in July 2008, which showed major positive likely moves by several large markets. Services is one area where technology and knowledge base can equip developing countries to leap frog with their enhanced abilities. The Doha Round results will give greater assurance of market stability and growth, providing larger opportunities for service industries to take off. This would be very important for Kenya too, which has significant potential in this area.

(d) Other areas

Work continues on a number of other areas also, with varying levels of progress in the negotiations. These include the areas related to Trade and Environment, Trade Facilitation, Anti-Dumping, Subsidies and Countervailing Measures, Fishery Subsidies, certain IPR issues, and Special and Differential Treatment. Kenya has interests in these issues and is active though various groups in the negotiations, including through proposals it had submitted for taking the process forward while meeting its own objectives. Significant progress has been made in many of these areas, but some such as Fishery subsidies need to achieve much more tangible progress.

We see from my examples that Kenya has crucial interests in the Doha negotiations and similar to others, it will benefit in several ways from a successful Round.

In addition to the benefits which I have indicated through specific examples, one can also see studies which analyse the impact of Doha Round. A recent large study by Carnegie Foundation, UNECA, and KIPRA on “The Impact of the Doha Round on Kenya”, was released in November 2009. This study shows that for Kenya, the Doha Round will lead to:

• increasing the demand for low skilled workers — Kenya’s most abundant resource — in rural and urban areas;

• reducing the incidence of poverty; and

• improving income distribution in rural areas.

These results should be seen keeping in mind that studies are unable to adequately capture the effects of systemic improvements through better rules and stable regimes, or the benefits in areas such as services. Thus such studies tend to under-estimate the positive effects of the Round.

Ongoing Work in the Doha Round

The benefits I have mentioned are likely to increase also as work on several issues concludes. Ongoing active movement in negations is taking place in various areas. Examples include those areas where Kenya has made recent submissions on behalf of the African Group, as I have mentioned today. Likewise, work on clarifying the templates for scheduling continues with serious engagement, requests on market access have been exchanged by some larger markets to consider the way ahead to solve specific concerns on additional market access, and various Members are meeting in different combinations to examine options that would take the process ahead.

However, much more serious engagement is needed for a final push, and this requires active participation of countries such as Kenya, which has several areas of interest and benefits from the negotiations. Inability to close the remaining gaps would mean a major loss for all concerned, especially developing countries such as Kenya.

An important factor in the minds of all developing countries when major changes are taking place or important potential benefits are within reach, is to upgrade its capacity. In the WTO context, we can have several ways of addressing them, both through the larger scope of Aid for Trade and through specific technical assistance activities.

Aid For Trade

Aid for Trade is an initiative co-ordinated by WTO to help implement demand driven projects for enhancing capacities and addressing domestic supply constraints to efficiently engage in international trade. Kenya is active in Aid for Trade, and a national workshop on this topic was held in Nairobi in April this year. Some concrete results from the workshop include decision on greater private sector participation, developing priorities and identifying capacity related gaps. Kenya also participated in the EAC High-Level workshop in Dar es Salaam in mid-June this year, which developed a list of priorities for building strategy for Aid for Trade.

At WTO, today i.e. 19th July, an evaluation framework developed by WTO and OECD is being presented to help assess the impact of Aid for Trade. This will set the groundwork for the 3rd Global Review of Aid for Trade in 2011. Kenya should participate actively in this Review by developing case stories of initiatives in this area, including for example the contribution of technical assistance to the horticultural sector.

Specific Technical Assistance

At WTO, we recognise the importance of Technical Assistance and Training Activities as core elements of the development dimension of the Multilateral Trading System. Based on the needs identified by WTO Members, the WTO has developed integrated and coherent approaches to capacity building, while maintaining flexibility to incorporate best practices. These activities contribute to building sustainable trade related national capacities, improving the knowledge and skills of participants in areas identified by the beneficiary country concerned. We organise a wide variety of such activities at national, regional, and global levels, and Kenya has actively engaged in all categories of activities.

For instance, over the last three years, Kenya has benefited from six national activities covering NAMA, trade negotiation skills; agriculture; TRIPS and Public Health; a national seminar on DDA negotiations; and a briefing for parliamentarians. At the regional level, Kenya was invited to participate in more than 30 seminars/workshops covering twelve distinct technical subjects, including for example Dispute Settlement, Trade Negotiations Skills, SPS, Technical Barriers to Trade, Anti-Dumping and Government Procurement. Kenya has also benefited from several Short Trade Policy Courses organised by WTO in Geneva. The WTO has also helped with internship programmes in Geneva. Therefore, you can see that Kenya emphasises Technical Assistance activities on a wide range of issues, and the WTO has responded.

The WTO Chair programme is part of the technical assistance and training programme that the WTO delivers with a view to enhancing the quality and level of participation of developing countries in the multilateral trading system. This will help disseminate and strengthen analytical capacities for formulating sound trade and economic policies based on empirical evidence. The role of academic institutions is essential in creating capacity at home through local academic and training programmes.

The WTO Chairs Programme (WCP) aims at supporting academic institutions and associated individual scholars from developing countries in course preparation, teaching, research and outreach activities. Financial support is provided for a period of four years to beneficiary institutions, and facilitates continuous interaction between such institutions and other think-tanks around the world. The process will involve students, civil society and other stakeholders to develop a deeper understanding of trade policy issues, disseminate research and information, promote discussion on international trade and trade cooperation, and provide analytical input into the formulation and implementation of trade policy.

It is through transferring the ownership of knowledge based analysis to national universities, such as the University of Nairobi, that the population at large can access academic education, and that specialized training for trade officials in particular, can be effectively provided. We at the WTO want to promote research on WTO-related issues among young economists, and to reinforce the relationship between the WTO and the academic community both at the national and regional level. Through your analytical input into the formulation and implementation of trade policy, this Chair will contribute to enhance the participation of Kenya into the international trading environment.

Therefore, I have great pleasure to award a WTO Chair to the University of Nairobi. I would also like to take this opportunity to warmly congratulate Vice-Chancellor, Prof. George Magoha, and in particular the WTO Chair holder, Professor Jasper Okelo, who has been instrumental in the long-standing academic cooperation relationship which exists between the WTO and the University of Nairobi.