12 September 2017

Kenya: Tough Times for Exporters as Trade Disputes With Neighbours Escalate

Kenyan exporters are facing lean times as trade disputes with its neighbours put pressure on their exports and incomes.

The trade wrangles, which put to question the countries' commitment to regional integration, have left traders contemplating alternative markets for their produce.

Last week, a Kenyan trade delegation led by Trade Principal Secretary Chris Kiptoo held a meeting in Dar es Salaam with Tanzanian authorities.

The meeting was to find a solution to the ban on Kenyan cigarettes in the Tanzanian market.

The two countries are embroiled in trade disputes that have led to import bans on select commodities. A concrete agreement on trade of these products is yet to be reached, despite an earlier truce announced in July.

The Dar meeting, which took place from September 6 to 8, aimed to resolve disputes on cigarettes and wheat flour, and delays while clearing cargo at border points.

"The biggest item is the cigarettes issue," said Adan Mohamed, Kenya's Cabinet Secretary for Industry, Investment and Trade told The EastAfrican.

Apart from Tanzania, Kenya is also facing trade disputes with Zambia and South Africa over palm oil, milk and avocado exports.

Ban

Zambia banned Kenya's palm oil and milk from its markets some 13 years ago, while South Africa has restricted Kenya's avocados for the past seven years.

Zambia argues that Kenya's milk has high levels of bacteria. While Zambia allows in milk with a total bacteria count of 200,000, Kenya follows the international benchmark of one million.

Zambia also has a problem with Kenya's palm oil because of the rules of origin. Kenya does not produce its own edible oil; the country imports and processes palm oil and exports the surplus.

The Common Market for Eastern and Southern Africa (Comesa) Secretary General Sindiso Ngwenya told The EastAfrican that the trade dispute between Kenya and Zambia is yet to be resolved and discussions are still going on.

"This matter is still under discussion. It might be resolved during our next council of ministers meeting in October or November," said Mr Ngwenya.

South Africa banned Kenya's avocados in 2010. The market restriction was imposed after Kenya's avocados were found to be infested with fruit fly.

Despite talks in May indicating that the ban would be lifted, South Africa has refused to reopen the market.

Kenya has implemented a pest management plan including creating a pest-free area to reduce the number of insects attacking the avocado crop. It is estimated that before the ban was imposed, the avocado trade with South Africa was earning Kenyan farmers $1.2 million per annum.

This past week, Kenya's long standing milk export standoff with Zambia took a positive turn when Comesa sought intervention from the Food and Agriculture Organisation and the Zambian government to resolve the stalemate.

Comesa director for trade customs and monetary affairs Francis Mangeni said that experts from FAO, the ministries of Commerce, Trade and Industry and Agriculture from both countries will hold a meeting.

"It's about time the issue was finally resolved as it has been ongoing for the past 13 years. As Comesa, we plan to engage international experts to meet with the Zambian government to find possible ways to resolve the conflicts that blocked Kenya export milk and milk products to Zambia," Dr Mangeni said.

Under Article 61 of the Comesa Treaty, domestic industries can be protected against international competition until they become mature and stable.

"If Zambia does not want to import milk and milk products from Kenya, the Zambian government is free to ask for a safeguard from Comesa to protect and limit the importation of the commodities to ensure that the local milk producers and suppliers are not suppressed," he said.

Common regulations

Mr Kiptoo said the lack of common regional regulations to guide the imports and exports across borders is the reason for the stalemate between Kenya and Zambia.

"A Comesa standard would help producers come up with uniform products that can sell across the borders in the region, and beyond. This gap has left member states to use their own standards, which are in inconsistent with their trading partner states," he said.

Mr Mohamed said Kenya plans to hold meetings with Tanzania, Zambia and South Africa this year to resolve the trade disputes.

"We will continue to engage with these countries because this issue is a trade-off, a give and take. This is an agenda for us because these countries have put non-tariff barriers on our products," he said.

"This is a key issue of concern particularly from the point of view of a free trade area."

Kenya is also facing issues with its EAC counterparts who have refused to sign the Economic Partnership Agreement that provides for duty- and quota-free access for Kenyan and EAC products to the European Union market.

Kenya has signed and ratified the agreement, but Tanzania, Uganda and Burundi have not. Rwanda has also signed the agreement but is yet to ratify it. The trade deal requires that all EAC states commit to it for it to take effect.

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