Leisure Lodge and Golf Resort is a five-star luxury hotel in Mombasa, on the south coast of Kenya. It is part of the holiday paradise known as Diani Beach, which lies on a coral reef 10 meters above sea level. Into these idyllic surroundings trade ministers from 33 nations were flown at the beginning of March for one of a series of World Trade Organization meetings in the run up to a deal in 2006 to “free up” global commerce. The ministers arrived in Diani from the Maasai Mara Game Reserve, located in the traditional land of the Maasai people. The reserve is famous for the migration of millions of wildebeest, which move north from the vast Serengeti Plain in July and August in search of lush grass, and return south in October before the rainy season. But in March the treat for visitors is the opportunity to see the big cats—lions, cheetahs and leopards—as well as elephants, buffalo, zebras, hippos, topi, impalas and hartebeest.
The beauty of the venue notwithstanding, the three-day ministerial meeting was fated to be contentious. High on the developing countries’ wish list was abolition of farm subsidies in the United States and European Union—estimated to be worth $400 billion annually—and access to agricultural markets in developed countries, including Japan. Farm subsidies and high tariffs on agricultural imports distort prices in the world agriculture market. The World Bank says more than 300 million people, most of them in Africa, would be lifted from poverty if the developed countries abolished export tariffs and farm subsidies.
At the same time, developed nations were determined to push their “Singapore” issues—trade liberalization, especially in services; competition; transparency in procurement; and investment—so named because they were elbowed into the agenda at the 1996 meeting in Singapore. Service industries are important to the economies of developed countries. In the U.S., they account for 80 percent of total employment and 63 percent of the gross domestic product. The value of U.S. services exports increased by more than 70 percent in the last 10 years, from $199 billion in 1994 to $340 billion in 2004. Developing countries oppose the rapid liberalization of this sector, fearing inundation by service companies from developed countries.
In the streets of Mombasa, meanwhile, protesters clamored for a greater participation of African countries in the meeting (only six participated) and the reduction of agricultural subsidies. And they shouted down the notion of a drastic reduction of tariffs on manufactured goods, saying it would mean a serious loss of government revenue for African countries.
WTO negotiations last years. Since the current series kicked off in Doha, Qatar, at the end of 2001, developing countries have refused to cooperate on liberalizing the multilateral trade system before rich countries eliminate farm subsidies. They argue that the rich countries developed their industries through protection, and they should be able to do the same. Although the 148 WTO members agreed in Doha that export subsidies should be phased out and domestic support to farmers substantially reduced, no such thing has happened.
The power play was fierce at Diani Beach. The architects of the Singapore issues had the heaviest of their heavyweights on hand. Delegates told reporters that it got ugly when Brazil lashed out about farm reforms being neglected while the rich countries carried on about removing barriers to trade in services. “The atmosphere was bad,” a senior Swiss negotiator was quoted as saying.
While all of this was taking place, 23 Japanese professors from Tokyo Metropolitan University arrived in Mombasa and gleefully checked in at Nyali Beach Hotel for a week. They had been making the trip to Kenya since 1969, studying the coral reef and “the unique natural world” of the Tsavo National Park and Lamu areas. From the coast they would visit the Yatta Plateau, the Rift Valley and the Lake Victoria basin.
With the WTO folks and tourists like the Japanese professors in town, Diani Beach was, for the moment, a tourism bonanza. Local craft and artifacts traders reportedly more than doubled their prices. The WTO conference had given a seal of approval to Kenya as a safe tourism destination. For sure, the more than 300 delegates and foreign journalists who had attended the talks would market the country once they returned to their countries. Kenya’s tourism officials, hoteliers and innkeepers no doubt beamed the whole time. What did it matter that the economic vibrancy of so many countries was being mauled inside the Leisure Lodge?