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The East African : Aug 16th 2015
10 TRADEPACT Stringent rules set for sale of Ugandan sugar in Kenya to protect local industry Recent bilate≥al talks saw Kenya ag≥eed to issue pe≥mits faste≥ but st≥ictly unde≥ impo≥t quotas and only to cove≥ deficits By CHRISTABEL LIGAMI Special Correspondent be subjected to stringent rules under the Comesa Treaty, a move that is aimed at shielding Kenyan firms from unfair competition, a recent agreement to ease issuance of permits notwithstanding. The EastAfrican has learnt that, U in the recent bilateral talks led by Kenya’s President Uhuru Kenyatta and his Ugandan counterpart Yoweri Museveni in Kampala, Kenya agreed to issue sugar permits to Ugandan traders to export the commodity to Kenya within a shorter period but strictly under import quotas and only when there is a deficit in the destination country. The agreement on sugar was a solution to one of several trade disputes between the two countries contained in the framework on issues for consideration by the two presidents, which The EastAfrican has seen. The 17 issues were tackled by technocrats from the two countries ahead of the leaders’ meeting. Other areas of dispute include Kenyan beef exports to Uganda, compensation of Ugandan traders for the loss they suffered in the 2007/2008 post-election violence, export of Ugandan maize to Kenya, auctioning of Ugandan goods at the port of Mombasa and the ownership of Migingo Island. It was agreed that Kenya will expedite the issuance of permits gandan companies seeking to sell their sugar in Kenya will to Ugandan traders but sugar imports from the country will observe the safeguard regulations set by the Common Market for Eastern and Southern Africa (Comesa). Interestingly, the agreement has generated political heat in Kenya, with the opposition, led by Cord leader Raila Odinga, and legislators from the sugar belt accusing President Kenyatta of failing to put the country’s interests first. The opposition sees the move as a ploy by influential business people to bring sugar into Kenya outside the import window and says this will kill local millers, who are struggling to stay afloat. Frustrate regional trade But President Kenyatta accused his critics of trying to frustrate regional trade, arguing that allowing regulated imports from Uganda would help to balance trade between the two neighbouring countries. Kenya exports goods worth $700 million to Uganda and imports $180 million’s worth of merchandise from the landlocked country. According to Kenya’s Foreign Af- fairs and International Trade Cabinet Secretary Amina Mohamed, the sugar regime in the entire Comesa region is regulated by the Comesa Treaty and the rules have not changed. “Our ministers have been all over the region ensuring that we have safeguards protecting the country from sugar dumping,” said Ms Mo- hamed. “Those safeguards have not been removed. “They are there to ensure that our sugar industry does not suffer.” She said Kenya will continue limiting the sugar imports from Uganda. Saulo Busolo, a former Kenya Sugar Board chairman, said this was a good move but only if the Kenyan government did more to revive the industry. “The deficit in Kenya can only be met through imports,” said Mr Busolo, adding that this was important so as to bring sugar prices down as Kenya is a high-cost producer. Kenya consumes 900,000 metric tonnes of sugar per year against an annual output of 600,000 tonnes. Uganda, on the other hand, produced 438,360 tonnes of sugar last year against a demand of 403,874 tonnes. It is projected to produce 508,500 tonnes this year against a consumption of 420,966, according to the Uganda Sugar Manufacturers PROTECTION Kenya has a cap on sugar imports at 300,000 tonnes to protect local millers from competition under Comesa safeguards. It is estimated that if these safeguards were lifted, the influx of sugar from other countries would drive domestic prices down by about 25 per cent, diminishing the profits of local factories. Sugar industry regulators and tax agencies in EAC have been involved in frequent stand-offs over dumping of duty-free sugar in the region. The EastAfrican NEWS AUGUST 15-21,2015 President Uhuru Kenyatta of Kenya and his Ugandan counterpart Yoweri Museveni lead their delegations in a bilateral meeting at State House, Kampala, during the recent first state visit to Uganda by the Kenyan leader. Picture: File Association. Uganda is looking for new mar- kets for its exports after the conflict in South Sudan, its main export market, reduced demand for products. Kenya had in October 2012 banned sugar imports from Uganda on suspicion that duty-free sugar was being dumped into the country, repackaged and sold in the region disguised as a local product. This followed Uganda’s request in 2011 for an exemption to the 100 per cent common external tariff under the East Africa Customs Management Act to fill a deficit. The request was granted on condition that the sugar would only be consumed in Uganda. If re-exported to other East African Community countries, however, a levy of 100 per cent would be charged by the Kenya Revenue Authority. Strong lobbying by the USMA, which included President Musev- eni threatening retaliation, saw the ban lifted and import permits introduced. The manufacturers have since being crying foul that the permits were taking as long as three months to process under a quota system. Uganda has managed to trans- form itself from a sugar-deficit country to a surplus producer in a decade following the privatisation of its sugar mills. Cutting corners While cutting corners to evade taxes and smuggle the commodity is common, Kenya is a high-cost sugar producer because of its small-scale growing model. Small-scale farmers produce more than 95 per cent of an output, expected to stagnate at 525,000 tonnes per year, according to BMI Research, a Fitch Group company. The cost of production per tonne is $570, according to the Food and Beef impo≥t law coming as t≥ade disputes talks continue By CHRISTABEL LIGAMI Special Correspondent KENYA IS reviewing its law on importation of animal products to enable its traders to gain access to the Ugandan market. Uganda had rejected Kenyan beef and ani- mal products because Kenya did not have restrictions on imports from countries once affected by Mad Cow Disease (BSE). A Bill to review the law is in the third reading stage in the Kenyan parliament. Whereas Ugandan law prohibit importa- tion of beef and animal products from exMad Cow countries, Kenyan laws only bar imports from Europe while the port of Mombasa receives imports from all over the world. “We expect that parliament will expedite the passing into law of the Bill for our traders to start entering the market soon,” said a Kenyan government official. Kenya exports beef mainly to the Euro- pean Union. Other markets are Egypt, Malaysia, Qatar, Iran, the United Arab Emirates, Uganda, Democratic Republic of Congo, South Africa and Mauritius. At the recent bilateral trade meeting in Kampala, Kenya said it had also stepped up the fight against livestock diseases with the creation of disease-free zones so as to meet the required sanitary standards in the Laikipia-Isiolo complex and at the Coast. It has borrowed the zoning concept from Botswana, one of Africa’s leading beef exporters. Uganda banned Kenyan beef in 1997, 1997 claiming it did not meet the required standards. Earlier attempts to resolve the issue through bilateral talks had failed. The EAC Secretariat had earlier indicat- ed that the resolution of the dispute would require political goodwill owing to pressure on the Ugandan government not to open the country’s beef market to competition. Although Uganda maintains the ban is a result of disease threats, insiders say influential people with interests in the meat business are protecting their market share. However, due to the ban, Uganda experiences intermittent supply shortages. Ugandan traders also claimed that they were not permitted to export maize to Kenya because of high PH levels due to its not being dried properly. “The matter will be discussed further Year when Uganda banned Kenyan beef imports between the two authorities for free maize trade,” reads the agreement. Kenya halted maize imports from Uganda because it had high moisture content, hence was deemed unfit for human consumption as it could harbour the aflatoxin disease-causing agents. Kenya also pledged to act on claims that Ugandan tea was often held at Malaba border despite having the sanitary and phytosanitary (SPS) certificate issued in Uganda, delaying its delivery to the Mombasa tea auction. Kenyan authorities were said to instead issue plant import permits at a fee. “This is a complaint that had not been raised by the Ugandan Tea Association,” said East African Tea Trade Association managing director Edward Mudibo. Other trade disputes include the treatment of Ugandan cargo importers at the Mombasa port and restrictions by Uganda on cigarette exports.
Aug 9th 2015
Aug 22nd 2015