Kenya has retained Pakistan''s rice consignments due to low quality, and officials in Mombassa are trying to resolve the issue diplomatically, sources told Business Recorder.
They said that Kenya Bureau of Standards, an institution which certifies the consignments before clearing, is neither satisfied with the rice quality nor ready to release the consignment. Pakistan''s High Commissioner in Kenya is pursuing the matter with the officials but the issue has not yet been resolved.
However, it is not clear how many consignments had been retained and for how long, sources said, adding that the High Commissioner did not send any details while asking the government to invite Kenyan Vice President to Islamabad to resolve the issue.
An official said this might be a retaliatory measure on the part of the Kenyan government, which feels that its tea share to Pakistani market is being curtailed. He was of the view that Commerce Minister Humayun Akhtar was likely to contact his Kenyan counterpart to resolve the issue.
Some time back, Kenya had raised tariff on rice imports from 35 percent to 75 percent, in line with the rates fixed by new East African Community (EAC) customs union launched in January 2005 as Uganda had insisted to increase tariff on rice to protect and boost its rice production, hoping to increase exports to its EAC partners ie Kenya and Tanzania.
Pakistan government was bitter on the increase in tariff and demanded of Kenyan government to reduce the tariff, or face unspecified retaliatory measures. Pakistan has long complained about the trade imbalance with Kenya, which is currently heavily in favour of Kenya, and had been pushing for a free trade agreement with East Africa to increase exports of rice and pharmaceutical products to Kenya.
Kenyan tea traders say that they are already finding it difficult to ship tea to Karachi due to serious delays by Pakistan embassy officials to clear relevant export documents.
This case highlights the inherent problems implicit in harmonising regional trade agreements with the multilateral trading system. Kenya is obliged under the EAC customs union to take measures it has taken in case of rice. Such action, though necessary for the implementation of the EAC Treaty, has given rise to a potentially explosive dispute with Pakistan.
Importantly, Kenya considered that Pakistan''s action was a violation of the latter''s obligations under the WTO Agreements. It did, however, file a formal complaint with the WTO to resolve the issue under the WTO DSS. After several rounds of bilateral consultations, normalcy returned, though the exporters still cite reduced volume of tea export to Pakistan.
Kenya is a leading tea exporter with her market share being estimated at about 15 percent of world''s tea trade. Kenya''s major markets for tea are United Kingdom, Pakistan, Egypt and Sudan. Upcoming markets for Kenyan tea include central and Eastern Europe, Middle East, Far East, S. Africa, West Africa and Northern African countries (Tunisia, Algeria, Morocco and Egypt).
Kenyan tea industry is now making efforts to increase the level of exports of value-added tea. But persistent trade wrangles with major buyers and the entry of a new tea-trading centre in Dubai is worrying Kenya''s tea traders. Kenya is currently embroiled in a serious trade dispute with its number one tea market, Pakistan, over tariffs. Pakistan buys almost a third of Kenya''s total annual tea sales.