Trade Security in Kenya: Capitalizing Upon Opportunities

Trade Security in Kenya: Capitalizing Upon Opportunities

Remarks
Simon Limage
Deputy Assistant Secretary for Nonproliferation Programs , Bureau of International Security and Nonproliferation
Nairobi, Kenya
September 20, 2011

Remarks at the Promoting Regional Security And Development With International Security Assistance: A Legal-Regulatory Workshop

Ambassador Adala, distinguished guests, ladies and gentlemen, Good afternoon!

It is my pleasure to be here today to discuss how international security assistance can help support the dual goals of sustainable economic development and nonproliferation in this important part of the world. I want to begin by thanking the Center for International Security and Nonproliferation at the University of Georgia and the Stimson Center for organizing this workshop.

I am pleased to have this opportunity to discuss how strategic trade controls can support development and security and how programs run by my department in the Bureau of International Security and Nonproliferation at the US. Department of State, can assist countries in East Africa.

You have heard during today’s presentations about the security challenges facing East Africa, and you have heard about the global and regional nuclear proliferation challenges we are grappling with here and around the world. You have also heard a discussion about the opportunities surrounding UN Security Council Resolution 1540, and the potential for “dual-benefit” assistance that can address both security and development capacity-building objectives.

In this regard, I should stress that nowhere in the world is the nexus between security and development more complex than in East Africa. East African nations contend with a host of socio-economic and humanitarian problems, while simultaneously striving to overcome a variety of challenges to governance, development, defense, and security. While there is increasing global competition for Africa's resources and markets, competitive integration with the global economy would offer East Africa economic and technological opportunities to address many of these critical issues. Trade security is a pre-requisite for being able to compete more effectively in the global economy. For the next few minutes, I would like to share with you my views on how enhancing trade security can help Kenya reach its economic development and national security objectives and also meet its international nonproliferation obligations.

Kenya is the region’s transportation and financial hub. It is a keystone of regional prosperity and economic growth. The landlocked countries of the Great Lakes region depend upon Kenyan infrastructure links for vital trade routes. For instance, Kenya’s Port of Mombasa is the largest seaport serving East and part of Central Africa, currently handling nearly 80% of the region’s maritime trade. Since maritime trade is crucial for regional food-stocks and economic development, efficiency and security of operations at the Port of Mombasa are of vital importance, not only to Kenya, but to the whole region.

To meet growing consumer demand, Kenya plans to increase the Port of Mombasa’s transshipment capacity through the expansion of container terminals in order to ease congestion and meet a projected 10-12% growth in cargo traffic. It is important to keep in mind, though, that Kenya’s geostrategic location and expanding economy make it a potentially attractive target for smuggling and proliferation networks that seek out liberal trading environments to circumvent existing trade restrictions. Kenya’s current security threats already include illicit weapons smuggling from the neighboring conflict zones in Ethiopia, Somalia, and Sudan. And the Kenyan Government’s first report to the 1540 Committee noted incidents of nuclear smuggling, and underscored the risk that Kenya’s territory might be used for the illicit transfer or transit of WMD-related materials.

Kenya’s porous coastline, with hundreds of small islands, presents a perfect entry point for smugglers of illicit goods, but the government’s trade monitoring and interdiction capacity is currently under-resourced to meet this threat. Furthermore, Kenya is not a member of any multilateral export control regimes and has no explicit controls for the import, export, or transit of technologies, equipment, or dual-use products that may be used in the development of WMD.

These regulatory gaps have a detrimental effect on the development of indigenous institutional and technical capacity to combat proliferation threats. These gaps also increase the risk that strategic goods and especially, sensitive technologies may be illegally transited through or transferred from Kenya to non-state actors and countries of proliferation concern.

The threat of WMD and weapons smuggling is greatly exacerbated by the presence of al-Qaeda affiliates within Kenyan territory. As was grimly illustrated by the recent bombings in Kampala in July 2010, and again in Nairobi in December 2010, international terrorist organizations like al Shabab and al Qaeda are active in East Africa. They continue to exploit a permissive operating environment, porous borders, unresolved conflicts, lax financial systems, and the wide availability of weapons that expand and strengthen their networks. These networks make no secret of their interest to gain access to the world’s most dangerous weapons. Most importantly, we know that they will not hesitate to use them.

In short, the proliferation of weapons of mass destruction (WMD), including their means of delivery, as well as advanced conventional weapons, is among the gravest threats to global security and regional stability. President Obama said as much in Prague when he shared his vision for a world without nuclear weapons two years ago. Kenya’s ability to control its borders and regulate trade flows is critical to regional stability and to international nonproliferation efforts. Security challenges confronting Kenya necessitate adoption of a comprehensive strategic trade control system. This system should be capable of facilitating the efficient and secure movements of legitimate goods and services, while effectively combating cross-border security threats, including organized crime and illicit trafficking networks.

A comprehensive strategic trade control system is designed to answer four fundamental questions, the four “Ws” of strategic trade controls:

* What are the dual-use or munitions goods being imported, exported, transited or transshipped through this territory?
* Where is the transfer coming from, and where is it going?
* Who is the end-user?
* Why is this item acquired, and a related question: How will it be used?

If responses to any of these questions raise proliferation concerns, then we advise countries to develop a comprehensive strategic trade control system. This system enables countries to intercept such transfers before sensitive technologies fall into the wrong hands.

A comprehensive strategic trade control system rests on several key principles. One is the establishment of a transparent and interagency-coordinated legal and regulatory system that identifies controlled dual-use and munitions items and comprehensively regulates their export, re-export, transit and transshipment in line with the guidelines and lists of the four multilateral regimes and relevant Security Council Resolutions.

Another key principle of a comprehensive strategic trade control system is effective enforcement, including means to detect, identify, interdict, seize and dispose of proliferation sensitive cargo. Enforcement should also include capabilities to successfully investigate customs and border security violations and prosecute the offenders.

The third principle of comprehensive strategic trade controls is a robust government-industry partnership, including government efforts to educate industry about its obligations and incentivize compliance.

Finally, the fourth key pillar of an effective strategic trade control system is cooperation and information exchange with international partners to ensure a timely and coordinated response to transnational proliferation threats.

I recognize that calling for adoption of a comprehensive strategic trade control system in a region struggling to meet pressing social and economic needs of citizens, may seem to be a tall order. Yet I would like to stress that implementation of effective strategic trade controls is complementary to economic development and trade diversification efforts already undertaken by the Kenyan government.

For instance, Kenya’s ability to attract foreign investment to underwrite the expansion at the Port of Mombasa is contingent on introducing effective best practices for transshipment and the introduction of modern scanning and detection equipment into port operations. Measures proposed to enhance cargo security at the Port of Mombasa include installation of a new integrated security system, which will incorporate security management software, a real-time inspection monitoring system, a luggage screening system for the cruise ship terminal, and the installation of security command and control centers.

Kenya’s plans to privatize port operations, including cargo handling and multi-modal transportation services, are also important positive steps, but they need to be well-managed. All of these measures will allow Kenya to meet the International Maritime Organization's ship and port facility security standards and create a safe trading environment through enhanced port and border security. In addition, greater transparency and efficiency of port operations will reduce operational losses associated with diversion and theft of legitimate consignments. And enhanced detection and interdiction capacity will enable the Kenyan government to aggressively combat illicit smuggling efforts.

Finally, in conjunction with heightened port and security measures, The Kenya Anti-Corruption Commission together with the Kenya Revenue Authority (KRA) have stepped up efforts to investigate and prosecute customs control and border security violations involving the diversion of transit goods.

As I mentioned earlier, International cooperation with mutual assistance on customs and border security issues is a key element of an effective strategic trade control system. As part of the East Africa Trade and Transport Facilitation project, the Kenyan government is taking steps to improve transportation infrastructure and streamline customs transit procedures with neighboring countries.

These upgrades incorporate the concept of a “One Stop Border Post” to allow customs officers from neighboring countries to undertake customs clearance concurrently. This will facilitate harmonization of customs clearance procedures and processes and increase efficiency and transparency of cross-border trade. A pilot one-stop-border post facility on the Kenyan border with Uganda at Malaba has helped reduce average customs clearance time from two days to two hours. I applaud Kenyan plans to erect five additional “One Stop Border Posts” in the next 18 months.

Finally, in 2008, the Kenyan Government established the Authorized Economic Operator (AEO) program to cultivate a partnership with domestic industry and grant special trading incentives to trusted traders. Today, approximately 30 companies representing importers, exporters, and clearing agents have been admitted to the AEO program. The Kenyan Government is in the process of expanding the program to include shippers, freight forwarders, and warehouse operators. These measures show Kenya’s commitment to re-energize the economy by eradicating corruption, streamlining customs procedures, and offering incentives to responsible traders. As I mentioned, industry-government partnership is a key component of a comprehensive strategic trade control system.

These efforts are very timely, as Kenya is well-positioned to expand and diversify its economy through development of knowledge-based industries. Since the early 1990’s, the Kenyan government has pursued opportunities for export-driven, knowledge-based growth. A government initiative to transform the economy by attracting foreign direct investment, expanding and diversifying exports, and facilitating employment called the Export Development Program (EDP) has resulted in the establishment of over 40 Export Processing Zones (EPZ) in Kenya. Today, these zones host production facilities for over 80 international companies, employ close to 40,000 workers, and contribute 10.7 % of national exports.

Recently, Kenya has taken steps to revitalize its exports by converting these zones into special economic zones focused on knowledge-based and innovative technologies. I understand that the Special Economic Zones Bill, which will further streamline the administrative processes and lower the cost of conducting business in the zones, is now awaiting enactment in Parliament. The passage of this legislation will create unique opportunities for export-driven, knowledge-based growth that will greatly boost regional economies. Adoption of comprehensive strategic trade controls will ensure that Kenya can fully benefit from responsible high-technology transfers that will help diversify its economy and create new employment opportunities, while also helping Kenya comply with international nonproliferation obligations.

I am confident that adoption of strategic trade control measures will foster economic development and help Kenya attain its development objectives by increasing the confidence of Kenya’s trading partners, foreign investors, and domestic industry. By harmonizing customs clearance procedures among neighboring states, reducing customs clearance times, improving infrastructure, creating a safe and transparent trading environment, and cutting the cost of doing business, these measures will strengthen the region’s capacity to trade, which is a basic prerequisite to economic growth.

East Africa offers tremendous opportunities as a trading partner. By embracing comprehensive strategic trade controls, Kenya and its regional partners will create a favorable environment for the emergence of high-value added industries and stronger, more competitive private industry. These conditions are key to the reduction of poverty, job creation, and sustainable economic development in East Africa.

My colleagues and I at the United States Department of State are prepared to provide substantive technical assistance in support of the Kenyan Government’s domestic nonproliferation efforts.

In this regard, and in closing, I would like to say a few words about the Department of State’s Export Control and Related Border Security Program – otherwise known as EXBS and the sponsor of today’s workshop. EXBS takes a development-based approach in East Africa and around the world in order to help partner governments establish, strengthen, and enforce border security and responsible strategic trade management systems that are consistent with international norms. EXBS works with foreign governments to establish independent capabilities to detect, interdict, investigate, and prosecute illicit transfers of WMD, WMD-related items, and advanced conventional arms.

This approach is also useful in tackling Africa’s number one weapons-related threat: small arms and light weapons. Establishing a comprehensive strategic trade control system develops skills that can also help prevent the irresponsible transfer of small arms and light weapons to terrorists or countries of concern. For example in Kosovo, EXBS recently trained border enforcement officers on vehicle inspection techniques. In the first month after their training, the Kosovars stopped a private vehicle and found 17,000 rounds of AK-47 ammunition hidden in the door panels and in other cavities in the car.

The EXBS program has just recently begun engagement with the Governments of Kenya and Tanzania to develop a legal and regulatory framework, provide export licensing and enforcement training, and assist these countries with meeting UN Security Council Resolution 1540 benchmarks. The EXBS program also plans to work regionally with the East African Community to promote a regional approach to border security and strategic trade controls.

I have not had time to delve into the details of all that is involved in the establishment of a comprehensive, strategic trade control system. Nor do I have time to describe all our assistance programs. I trust, though, that over the next two days, there will be more opportunities to exchange views on the complex interplay of proliferation, security, and development issues in the region. I hope that we can explore how comprehensive strategic trade controls can help create a framework for addressing Kenya’s security and development needs. I also hope this workshop will help us begin to design effective and sustainable assistance programs. Thank you!

ENDS

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