Kenyan goods failed rule of origin test - sources

DAILY NEWS Reporter

KENYAN made sugar-based products were denied preferential access in Tanzania's market after the Kenyan authorities failed to prove without doubt that they were not made from duty free industrial sugar imports.

Industrial sources told the 'Daily News' that Kenyan confectionary goods, including chocolates, sweets and ice-cream were not granted preferential access to lucrative Tanzania's market because of suspicions of the use of industrial sugar which were imported duty free last year.
The Kenyan government announced in a government gazette in May 2017 that sugar and milk powder imports will be charged zero duty for three months until August 2017 due to drought and famine in parts of Kenya.
The Kenyan authorities failed to prove without doubt that the duty free sugar imports were not used in making the products and that is why they attracted a 25 per cent .
"They failed to meet EAC rule of origin criteria and that would have created unfair competition with rivals," said the source adding that they were hopeful the dispute that is making a mockery of the efforts towards regional integration would be addressed at the ministerial level.
Rules of origin are the detailed content requirements that determine whether goods are produced “locally” in order to benefit from preferential treatment.
Tanzania and Uganda denied preferential access to sugar-based products from Kenya after they failed in rule of origin criteria under the East African customs duty.
Tanzania is demanding full Common External Tariff (CET) duties of 25 per cent on the products instead of the free access granted to products that meet the EAC rule origin criteria.
It refused evidence from Kenya Revenue Authority (KRA) indicating the share of imported sugar in the Kenya- made goods was within the levels that grant the products tax-free passage to Uganda and Tanzania.
“This is an EAC-wide remission scheme that is available to all manufacturers in the region,” said Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga.
“We are not supposed to pay duty when we sell in the region because our competitors in the region also rely on industrial sugar imported under the same remission scheme.
” KRA has come to the defence of Kenyan firms saying confectionery products made of industrial sugar imported under the EAC duty remission scheme should not be subjected to customs taxes.
KRA’s officer in charge of exports Julius Kihara said the firms should be safe from taxes as long as the trade volume falls within the 20,000 metric regional quota.
KAM said the move by the Tanzania government to deny preferential treatment to the Kenyan goods has impacted negatively on the bilateral trade between the two countries and led to severe losses to businesses in the value chain due to lack of goods.
Tanzania is Kenya’s second most important market in the East African region while different studies show the volume of trade between the two states constitutes over 45 per cent of the entire EAC regional trade.