Kenya has for months been feuding with Tanzania and Uganda over the treatment of its confectionery products in the regional market. The bone of contention has been a 25 per cent tax that the two East African Community partners have been imposing on products with industrial sugar.

And with every indication that the community’s trade dispute resolution structures may not rule in its favour, Kenya has threatened Tanzania and Uganda with retaliatory action should the standoff persist beyond July 1. The two neighbours have dared Nairobi to make good its threat.

We wish to state that such kind of grandstanding is unnecessary among countries that belong to a single regional market. The East African Community integration, as revived 18 years ago, has clear laws that all members must obey to keep it alive. Playing by the community’s rules is the only way out of the current crisis. Otherwise the game of musical chairs can play forever. Lest we forget, Kenya has always asked for a stay of the remission scheme on industrial sugar on the understanding that products such as biscuits, chocolate, ice cream and sweets would be priced competitively for export market.

That’s how the East African Customs Management Act (EACMA) states it. When such goods are diverted into any of the five six integrating countries – which EACMA regards as a single customs territory – such products are deemed to have come from outside EAC, and as such attract 25 per cent import duty.

According to EACMA, similar treatment must be meted out on all products enjoying tax incentives such as Export Processing Zones.

The issue of the industrial sugar has been one of the region’s longest standing disputes. At some point, when the EAC tried to close the window altogether, Kenya bargained to be allowed to ship in raw sugar from Brazil so that its own industries could refine it internally. What followed was a string of accusations and counterclaims as partners accused well connected Kenyans of diverting the supposed raw materials into table sugar.

In short, the firms which want to produce confectionery products for East Africa should either pay 10 per cent on input (industrial sugar) or get it duty free and pay 25 per cent on the finished product.

Source: Business Daily