Tanzania-Kenya trade tiff yet to be resolved, says PS

 The Permanent Secretary in the Ministry of Industry, Trade and Investment, Prof Adolf Mkenda, said yesterday that contentious issues at the centre of the trade dispute between Tanzania and Kenya disputes are far from being resolved.

He told The Citizen that the September 2 meeting convened in Dar es Salaam left a myriad of issues unresolved for both countries and that another meeting will be held in November.

“Kenya brought 16 issues for deliberation and we Tanzania tabled 15 issues. Some were resolved others were not,” he said without going in detail.

Prof Mkenda spoke yesterday even as reports indicated that the two countries are continuing with actions that can be translated as constituting trade barriers.

According to media reports, Kenya has increased inspection fees for wheat imports from Tanzania by more than 13 times while Tanzania has blocked textiles imports from Kenya for manufacturers who are outside export processing zones.

Prof Mkenda did not want to go into details on these issues but he only saying that the increased inspection fees on wheat were increased in February this year.

“The government is making efforts to have the high fees lifted,” he told The Citizen.

Reacting further on the issue of high inspection fees on wheat the director of Corporate Affairs at Bakhresa Group, Mr Hussein Sufian, said Kenya’s decision amounted to fanning the flames of a trade war between the two countries.

“We have reported these issues to the relevant ministry. We have been working with the government for a good number of years, hopefully the two sides will reach a consensus in the near future,” he said.

Bakhressa Group and Mohamed Enterprises are among Tanzanian firms exporting large quantities of wheat and its products to Kenya.

It was reported at the weekend that Kenya has raised wheat inspection fee at the border from Ksh600 (about Sh13,000) per truck to Ksh8,000 (Sh176,000), a move that technically locked out commodity export to Kenya. Tanzania exporters have reported to the government difficulties they face in doing business.

In April, the Council of Ministers from EAC said Kenya had ignored guidelines issued by the secretariat allowing wheat products from Tanzania to enter the country duty-free under the EAC common tariff. Kenya and Tanzania do not produce sufficient wheat and rely on imports to meet demand.

Kenya is a net importer of wheat, bringing in two-thirds of the annual consumption of 900,000 tonnes against local production of 350,000 tonnes.

Meanwhile, Tanzania has blocked preferential access for Kenyan textile goods manufactured outside the Export Processing Zone (EPZ), citing unfair competition for its own manufacturers.

“This is informed by the fact that Kenya has allowed textile and apparel manufactures operating in the EPZ to off load their final textile products in the Kenyan market duty free,” Tanzania stated in a communiqué from a joint meeting on September 2 in Dar-es Salaam to iron out trade wrangles between the two countries.

“This in effect may hinder similar products from Tanzania from being competitive when sold in the Kenyan market.”

Kenya in May cleared firms operating in its EPZs to sell up to an expanded 40 per cent of their products in the local market as part of strategy to boost sales and help prop the struggling industry.

The EPZ firms were initially only allowed to sell 20 per cent of their products in the Kenyan market with the rest sold under the African Growth and Opportunity Act (Agoa) — a trade pact that allows US buyers to import goods from a number of sub-Saharan African countries without paying taxes.

Dumping products

The gesture has, however, sparked a trade spat between the two countries amid concern that the Kenya’s expanded domestic market sales quota for EPZ firms could lead to dumping of products in the Tanzanian market.

“Tanzania is not according preferential treatment to Kenya because it is now enjoying a stay of application for textiles and footwear. Moreover, 96 per cent of textile produced in Kenya is sold under AGOA market and thus the mechanism for monitoring such export is difficult” Tanzania stated in the communiqué.

According to the document, Kenya raised concern that textile and apparel goods manufactured outside its EPZs were being denied preferential access to the Tanzanian market despite provisions of Legal Notice No.84 OF 2017 by the East African Community (EAC).

Tanzania nonetheless argued that as per the Legal Notice, Kenya was granted a stay of application of the common external tariff (CET) rate on garments and leather footwear manufactured in the EPZ on the 20 per cent of the annual production allowed in the protocol to be sold within the domestic Kenyan market for one year, duty-free.

Charges

As a result the sale of these products in any of the EAC states is subject to duties, levies, and other charges provided in the CET when exported, Tanzania argued.

Kenya objected the assertions and requested Tanzania to grant access to her textile and apparel products as long as the Kenya Revenue Authority (KRA) issued a certificate of origin and a list of firms operating both within and outside the EPZ.

Tanzania stood its ground and undertook to audit Kenya’s dual tax regime to ascertain the impact on her textile sector.