A trader arranges sweets at a factory in Industrial Area, Nairobi. Last
year, Tanzania and Uganda imposed a 25 per cent import duty on Kenyan
confectionery claiming Kenya had used zero-rated industrial sugar
imports to produce them. PHOTO | PHOEBE OKALL | NMG
East Africa’s intra-regional trade is falling by the day as
trade disputes and non-tariff barriers persist, giving way to the
creation of new trade alliances by frustrated partner states.
Official
data shows that the volume of trade among the East African Community
partner states is not high enough, to prevent trading partners such as
China and India makin major inroads into the region.
According
to the EAC Secretariat, the overall intra-regional trade has been
meagre, accounting for a paltry 0.2 per cent of global trade in 2017,
compared with 0.3 per cent in 2016.
According to the EAC Trade and Investment Report 2017,
the region’s merchandise trade with the rest of the world recorded an
8.6 per cent growth to $46.9 billion in 2017, up from $43.1 billion in
2016.
Intra-EAC imports and exports accounted for only
7.7 per cent and 18.7 per cent of total imports and exports
respectively, signalling that intra-regional trade constituted a small
proportion of total EAC trade in 2017.
East Africa is
heavily dependent on imports from the Far East and Europe, with
petroleum products, machinery, electronics, motors and iron and steel
and foodstuffs such as rice and wheat being key items.
“There is a risk of falling intra-EAC trade due to existing
challenges to the trade environment at the regional and international
levels,” the EAC Secretariat says.
Hurdles
The
challenges facing intra-regional trade include persistent trade
disputes, inadequate value addition to the agricultural sector, which
has affected export prices, NTBs and a restrictive trade regime that
limits the capacity of manufacturers to enter the regional market for
products that are produced from raw materials that benefit from
exemptions and remission schemes.
Other barriers are
competition for the regional market from other producers and regional
blocs that benefit from export subsidies from their respective
governments.
The latest data compiled by the Central
Bank of Kenya shows that China has become the country’s largest trading
partner, with imports constituting 22 per cent of total imports during
the 12 months to June 2018.
These imports largely comprised machinery and transport equipment related to the construction of the standard gauge railway.
During
the period, Kenya’s imports from the European Union accounted for 12.4
per cent of total imports while the share of imports from African
countries stood at 14 per cent.
On the other hand,
Kenya’s exports to the EAC declined to 21.2 per cent in 2018 from 22.7
per cent previous year while exports to Common Market for Eastern and
Southern African (Comesa) countries declined to 24.1 per cent from 25.8
per cent.
Kenya’s exports to the rest of the world —
the UK, Netherland, US, Pakistan, United Arab Emirates, Germany, India
and Afghanistan — increased to 64.1 per cent from 61.4 per cent. Exports
to Uganda decreased to 9.9 per cent from 10.7 per cent while exports to
Tanzania and Rwanda remained unchanged at 4.9 per cent and 2.9 per cent
respectively.
Collectively, Kenya’s exports to Africa
declined to 35.9 per cent, reflecting lower exports to the EAC
particularly Uganda and the Comesa region mainly DRC.
Terms of reference
Last
year, China applied for a free trade area with the EAC after the EAC’s
Sectoral Council of Ministers of Trade, Industry, Finance and Investment
adopted the terms of reference for a comprehensive cost-benefit
analysis of the region’s trade with third parties.
EAC’s
decision to sign free trade area agreements with third-party countries
came amid falling intra-EAC trade and differences over the bloc’s trade
agreement with the EU.
Among countries that have
expressed interest negotiating an FTA with the EAC are China, Turkey,
Singapore, the United States and the European Free Trade Area, which
comprises Iceland, Liechtenstein, Norway and Switzerland.
Others are Brazil, India and the Gulf Co-operation Council made up of six Middle Eastern countries.
In
2017, Kenya was Uganda’s main intra-regional trading partner; the
latter’s imports mainly included petroleum products, cement, iron and
steel and pharmaceutical products.
Rwanda’s
intra-regional imports were dominated by imports from Uganda and Kenya
mainly composed of salt, fats, cereals, soap, iron and steel, plastics
and paper.
Tanzania’s intra-EAC imports declined by 18.6 percent to $243.2 million largely due to reduced imports from Kenya.
Tanzania’s key imports from the EAC partners included pharmaceuticals products, soap, plastic items and other consumer goods.
Burundi’s
main EAC trading partners was Tanzania and its imports mainly consisted
of chemical fertilisers, cement and textile articles.
South Sudan’s imports from the EAC grew by 15 per cent to $462.5 million in 2017 and accounted for 80 per cent of total imports.
The main trading partners were Kenya and Uganda and imports mainly consisted of maize, sugar and manufactured commodities.
However,
the EAC the region is deeply embroiled in trade disputes with each
country working hard to restrict goods from other member countries
citing various reasons.
Last year, Tanzania and Uganda
imposed a 25 per cent import duty on Kenyan confectionery such as
juices, ice cream, chocolate, sweets and chewing gums, claiming Kenya
had used zero-rated industrial sugar imports to produce them.
On
its part Kenya banned Tanzanian tour vans from accessing the Maasai
Mara game reserve, arguing that Tanzania had also banned Kenyan
operators from accessing Serengeti national park.
No comments :
Post a Comment