VJEL Staff Editor: Bridget Scott-Shupe

Faculty Member: Ruthie Lazenby

Kenya’s Petrochemical Problem: Negotiating the U.S.-Kenya Free Trade Agreement

 

Kenya has fought against plastic pollution for years, but the world’s largest chemical and oil companies are trying to influence the United States’ trade negotiations with Kenya to reverse its environmental protection laws. Why? To profit from the production and distribution of plastics throughout Africa and to prop up the global sales of plastics by ensuring that the global waste trade continues to facilitate the mass transfer of plastic trash from the United States to Kenya.

 

The Global Waste Trade

 

Plastic waste pollution is a devastating result of the plastic waste trade. Wealthy countries ship their plastic waste to developing nations for recycling, but only about 9% of that plastic is ever recycled. Most of it is burned or tossed in a landfill, which in turn, pollutes the air, land, and sea. When plastic clogs rivers and sewers it can increase flooding as well as the transmission of vector-borne diseases. Just as landfills and incinerators are disproportionately sited in poor communities throughout the United States, the global waste trade oversees a transfer of waste from rich to poor nations. The free flow of waste, like the free flow of goods, sometimes comes into conflict with the nations’ interest in protecting their environment.

 

In recent years, Kenya has become a global leader in its response to plastic waste. In 2017, Kenya enacted a banon the “use, manufacture and importation of all plastic bags used for commercial and household packaging.” The language of Kenya’s plastic bag ban is clear: no one can use, manufacture, or import plastic bags. Bans like this have the potential to serve as barriers to the staggering 34.5 million tons of plastic waste the U.S. exports annually. America sends shipping containers of plastic scrap to countries including Kenya, leaving trash-pickers to sort out what is recyclable and what is not. The U.S. does not consistently sort its plastic waste, but rather, commingles it and ships it in bulk. In some cases, the waste is not only bulk-shipped, but also illegally mislabeled “virgin” plastic, the cleanest type of plastic waste, which passes through customs more easily because it is regulated differently than standard plastic scrap.

 

A New Bilateral Free Trade Agreement

 

A new bilateral Free Trade Agreement (FTA) with the United States has the potential to jeopardize the groundbreaking work of Kenyan environmentalists to protect Kenya from the harms of the plastic waste trade. Free Trade Agreements are intended to accomplish several goals, including: 1) eliminating tariffs on goods; 2) prohibiting monopolistic industry behavior; 3) establishing dispute resolution mechanisms between parties, and; 4) navigating any technical barriers to trade (TBTs). TBTs can include rules, procedures, standards, laws, and regulations that make trade more difficult. In this case, Kenya’s strict plastic waste laws are at risk as the petrochemical industry seeks to expand its reach in Kenya. The oil industry has set its sights on Kenya as the next big petrochemical hub of Africa. Because Kenya is geographically well-situated as a coastal country and is one of the largest economies in Africa, oil lobbyists see potential to easily import plastic and chemicals to Kenya and gain access to markets across Africa, at the same time.

 

This isn’t the first time a nation in the developing world has faced pushback to its efforts to reduce the use and impact of plastics. United States oil lobbyists, like the American Chemistry Council (ACC), fought against an international agreement under the Basel Convention to monitor and reduce plastic waste flowing into developing nations. Members of the ACC include oil giants like Shell, Exxon, and Chevron, who play a major role in the global production and distribution of plastics. In line with its domestic plastics regulations, Kenya is a party to the Basel Convention—the United States, however, was one of the few countries not to sign on.

 

The ACC is also largely behind the push for including plastic importation and distribution in the U.S.-Kenya FTA negotiations as well. In a public comment to the Office of the United States Trade Representative, the ACC argued that “Kenya could serve in the future as a hub for supplying U.S.-made chemicals and plastics to other markets in Africa through this trade agreement.” As the oil industry falters amidst growing public anxiety around climate change, the ACC is seeking favorable terms to facilitate its shift from oil production to making and profiting from plastics. The ACC argues that it wants to help Kenya reach its “social, economic, and environmental goals,” and that it has no intention of forcing Kenya to strike its domestic environmental protections. However, an FTA that forces Kenya to accept plastic waste imports would conflict with Kenya’s domestic law under its Environmental Management and Coordination Act (EMCA). It would also undermine Kenya’s obligations under the Basel Convention.

 

Potential Impacts of the Proposed FTA

 

The environmental impact of an FTA of this nature could be enormous. A version of the FTA with industry-supported provisions could pave the way for significant growth of production and distribution of plastics in Kenya in direct opposition of Kenya’s existing domestic environmental laws. Fears of Kenya becoming a “dumping ground for plastics” are supported by how other countries under similar conditions have fared. Additionally, this FTA could impact the distribution of plastics to other African nations if Kenya does indeed become a regional plastics hub.

 

To allow for the development of the proposed plastics hub in Kenya, the trade deal would need to prevent Kenya from creating or enforcing laws that limit plastic use or creation, and force Kenya to remain open to the plastics trade. These demands would undermine Kenya’s pioneering work to reduce plastic consumption and pollution over the last few decades. The ACC cannot reasonably claim that the proposed FTA would leave Kenya’s laws untouched while also pushing for increased plastic waste exports to Kenya. This FTA would be the first the U.S. has forged in sub-Saharan Africa and could become a model for future bilateral agreements  between the U.S. and other nations in the region.

 

How can a group of private companies like Shell, Exxon, and Mobile exert enough influence to force a sovereign nation to change its democratically enacted laws? The dispute settlement provisions in FTAs can pressure nations in several ways, including by imposing sanctions. The specific dispute settlement provisions in the U.S.-Kenya FTA are still being negotiated, however, common mechanisms in FTAs include resolution at the World Trade Organization when multilateral obligations are at play or, less frequently, through a U.S. FTA dispute settlement panel. Many disputes are also resolved through consultation and do not go to a formal panel. Additionally, an FTA with industry-favored provisions could leave Kenya vulnerable to an investor-state dispute settlement suit. In an investor-state dispute, a foreign business (the U.S. oil companies who own the petrochemical hub, for example) can sue the host country (Kenya) for discriminating against them or treating them unfairly. International courts such as the International Center for Settlement of Investment Disputes (ICSID) hear these cases in front of a panel of experts, professors, judges, and lawyers. Kenya’s chances of winning outright would likely be relatively low: of the six hundred some investor-state disputes ICSID has administered, defendant countries have only won outright in about one -third of the cases. When defendant countries lose, they can be forced to compensate the company for its expenses. In a similar case brought against Venezuela, the compensation for the foreign company came to $1.2 billion dollars plus interest—a devastating blow for a developing nation.

 

In the United States, a trade negotiation system called “Fast Track” also impacts FTAs by insulating them from democratic accountability. The Fast Track system allows the executive branch to identify countries to trade with, negotiate trade deals, draft agreements, and sign the deals, all without congressional input. Once the deal is struck, all Congress can do is vote “yes” or “no,” without the ability to debate or amend the deal. Additionally, while trade negotiations often involve public notice and comment, trade agreements are highly technical and complex and therefore, more accessible to corporate actors than to individual people.

 

Negotiations on the FTA between the United States and Kenya are ongoing, but because of the oil lobby’s influence, Kenya may stand to lose its footing in their war on plastics. The oil industry stands to gain by wedging open the African market and ensuring the continued free flow of plastic waste, as it pivots away from oil and towards plastic production. Negotiations between Kenya and the Trump administration were scheduled to conclude in early 2021 but it remains to be seen how the incoming administration will approach the FTA. If it continues the Kenya trade negotiations, the Biden administration could be more susceptible to public pressure from environmental and environmental justice groups regarding the plastics provisions. Regardless of the outcome of the US-Kenya FTA, it will be worth keeping an eye on the impact of the oil industry’s progressive shift from fossil fuels to plastic production in trade agreements and in the global trade in plastic waste.