Tanzania has refused to grant preferential tariff treatment to Kenyan made confectionery after faulting the report of the industrial sugar verification by Kenya.
Instead, President Samia Suluhu’s administration has demanded another verification to determine the taxable status of Kenyan made confectionery.
This comes even as the two East African neighbours work on a new beginning of mutual co-operation after years of tit-for-tat trade and diplomatic relations.
In 2018, Tanzania imposed a 25 per cent import duty on Kenyan confectionery, including juice, ice cream, chocolate, sweets and chewing gum, claiming Kenya had used zero-rated industrial sugar imports to produce them, in contravention of the East African Community (EAC) Rules of Origin.
The EastAfrican has learnt that Tanzania presented its case about the glaring anomalies in the verification report during the fifth bilateral meeting between the two countries in Arusha last month (May).
The meeting followed a directive by the countries’ Heads of State earlier in May, requiring ministers of Trade and EAC Affairs from both countries to address and resolve non-tariff barriers (NTBs) and other obstacles affecting trade and investment between them.
According to a section of the report on the deliberations, and seen by The EastAfrica, both Kenya and Tanzania have agreed to carry out another verification on Kenya’s industrial sugar within a month and the EAC Secretariat to communicate the findings of the verification within a week of conclusion.
The findings of the verification mission will help Tanzania decide whether to abolish the 25 percent import duty it imposed on Kenyan made confectionery in 2018.
“Moreover Tanzania noted that the verification report had some contradicting information in which on some areas it indicates that Kenya did not import industrial sugar while on other areas figure of importation are indicated,” according to the report.
“In addition, the report is silent on the recommendation to whether the confectionaries enjoyed duty free sugar or not. Therefore the Tanzania government is of the view that verification should be redone to address the inconsistency in the report.”
Kenya informed the meeting that EAC conducted a verification mission which Tanzania was a part of, and as a result of the verification, it was noted that industrial sugar was not used for manufacturing.
During the EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) meeting held in November 2018, Tanzania raised reservations about the outcomes of Kenya’s industrial sugar verification report arguing that there were discrepancies in the findings.
As a result Tanzania prepared another verification exercise for avoidance of doubt. Then Kenya clarified that its annual demand of industrial sugar is 160,000 metric tonnes and “we have never exceeded this,” and that all industrial sugar imported in 2017/2018 was fully utilised.
Kenya also argued that the 4,050 tonnes flagged in the verification report was imported by the United Nations World Food Programme for relief purposes.
During the bilateral meeting in May, Kenya urged Tanzania to allow its confectionery products into its market because these products did not enjoy duty free sugar.
Kenya’s Trade and Industry Principal Secretary Johnson Weru told The EastAfrican last week the political will to remove the duty on Kenyan made confectionery is there, but “when it comes to fiscal issues they are not instantaneous.”
Kenya and Tanzania are pushing to resolve trade disputes, which have slowed down the flow of goods across common borders.
During the bilateral meeting co-chaired by Tanzanian minister for Industry and Trade Prof Kitila Mkumbo and his Kenyan counterpart Betty Maina, the trade officials resolved 30 out of the 64 contentious issues and made decisions on how to handle the remaining 34 issues.
Among issues resolved on the side of Tanzania are facilitating clearance of soft drinks such as juices and removal of inspection fees for processed products with standardization mark including wheat flour.
The parties also agreed to facilitate maize entry into Kenya as well as to waive the Excise duty for glass products from Tanzania. The parties agreed to grant Kenyan cement products preferential treatment.
According to the joint communique released after the meeting the parties also agreed to meet in the next three months to assess the level of implementation.
This story was first published in The EastAfrican print version on June 5.