Jul 30, 2008
General
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Kenya could lose its right to control duty-free sugar imports after a trading bloc sharply protested the handling of the commodity.
Kenya could lose its right to control duty-free sugar imports after a trading bloc sharply protested the handling of the commodity.

The Common Market of Eastern and Southern Africa Secretariat has termed the ban on importation of sugar a barrier to trade that could result in the withdrawal of the right to control the amount of duty-free sugar coming in.

In a letter dated July 24, and addressed to Agriculture minister William Ruto, Comesa said it understood there were concerns regarding the methods of importation and declaration, which may have resulted into loss of government revenue.

But it added: “While noting and supporting your government in this concern, we wish to advise that bans of imports as well as administrative measures such as lengthy import licensing procedures may constitute non-tariff barriers which are prohibited under Article 49 of the Comesa Treaty,” wrote Comesa secretary general Sindiso Ngwenya.

Mr Ruto has denied seeing Mr Ngwenya’s letter although a high-placed official in government said the letter was hand-delivered to the minister’s office two days ago.

“If he has not seen it then he has not been in his office for the last two days,” the official told the Nation on Wednesday.

On July 4, Mr Ruto scrapped licences of all 55 sugar importers saying they had misused them and were evaded taxes while hurting local farmers. The minister had promised to publish new licensing rules quickly but he is yet to do so.

On Tuesday Mr Ruto defended his decision saying it was based on sound technical advice.

He added the ban had enabled local millers sell their sugar stock which had been piling up in their warehouses.

Comesa further said that the regulations that the minister intends to publish to govern importation of sugar could be against Comesa rules.

“We are informed that your ministry intends to sign into law regulations to govern the importation of sugar into Kenya which may be contrary to the provisions of the Comesa Council Directives of November 2007,” Mr Ngwenya said.

Last year the Trade ministry vehemently lobbied Comesa to allow Kenya to continue regulating the amount of Comesa sugar that comes in duty free, under what is known as a safeguard.

The quantitative restrictions have been in place since 2000. This safeguard allows the government to limit duty-free sugar imports from Comesa to 200,000 tonnes annually.

In December Comesa gave Kenya four more years to continue implementing the safeguard, which expires in 2012, after when sugar from Comesa would flood in duty-free.

The extension was given on condition that the extended safeguard measure would not be more restrictive than it was at the end of the initial period and the safeguard measure would be applied on a non-discriminatory basis.

Also, new administrative measures, which may act as non-tariff barriers, such as licensing, and which did not exist before the granting of the initial period of the safeguards should not be introduced.

“Honourable minister, you may wish to note that the council directives were intended to ensure that the previous problems that had been encountered regarding Comesa sugar imports into Kenya were eliminated,” Mr Ngwenya said.

“Hence, any unilateral action by your government has the potential of making the Council review the issue of derogation [safeguard].”

Last week, a senior Trade ministry official told the Sunday Nation that Mr Ruto’s action would be discussed in the forthcoming meeting of the Council of Ministers, Comesa’s policymaking body, with a possible cancellation of the safeguard extension.
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