Nip Kenya-Uganda trade war in the bud

Tuesday, February 4th, 2020 00:00 |
KRA headquarters. Photo/File

Simmering tension between Kenya and Uganda is good reason why there is need to deepen trade relations between the East Africa Community (EAC) member countries.

While on the surface it looks like a fight over milk, it is a stark reminder that whereas we claim to have a trading bloc, we might actually be eons away from free movement of goods, services, capital and labour.

If not taken seriously, the tiff on milk tariffs could turn into a huge blow to the hopes of Common External Tariffs and indeed the Non-Trade Barriers in the region after Kenya introduced a 16 per cent value added tax on milk imports from Uganda, as part of measures to cushion the local dairy sector.

The move by Kenya Revenue Authority (KRA) to seize milk produced by Uganda’s Pearl Dairy was, however, ill advised. Uganda has now threatened to retaliate.

This could indeed be a lull before the storm. Last week, Ugandan President Yoweri Museveni said despite being pressured to hit back, he had resisted the calls.

Retaliation would take many forms, including targeting a number of Kenyan goods, such as juices, household items or building materials in a similar protectionist stance.

It is also worth noting that Uganda is among Kenya’s top trading partners and the country’s imports account for more than 25 per cent of the business at the port of Mombasa, with exports and imports passing through Mombasa increasing from and to the landlocked country.

The two governments need to look clearly at the likely impact such a move will have on regionalism and common tariffs in line with the EAC Common Market Protocol.

Unfortunately, the region has seen worse squabbles, the most memorable being Tanzania burning of 6,400 chicks from Kenya in 2017.

Coming at a time the East African Community plans to undertake a comprehensive review of the Treaty that created and governs the bloc, the two neighbours need to soul-search and ask the difficult but honest questions about regional trade impasses.

For a long time, this has been in the works but a directive has already been given by the council that we need to actually start updating business regulations.

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