Kenya bags Comesa sugar safeguards for another two years, but with conditions

Saturday July 21 2018

sugar imports, comesa

Trucks at the port of Mombasa waiting to be loaded with bagged sugar imported from Thailand. A key Comesa committee has recommended that Kenya be granted a two-year extension to limit on sugar imports from the trade bloc's member States, offering relief to local millers that feared competition from cheap producers. PHOTO FILE | NMG 

ALLAN OLINGO
By ALLAN OLINGO
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Kenya has been granted a two-year extension – possibly the last – of the sugar safeguards by the Common Market for Eastern and Southern Africa (Comesa), until February 2021.

The decision, which offers relief to Kenyan millers who face competition from cheap imports, was arrived at during the 20th Comesa summit in Lusaka.

Kenya had requested an extension of the safeguard for a maximum of two years, a request that some countries supported while others felt that the possibility of extension be first considered by the Trade and Customs Committee, whose next meeting is scheduled for mid-August in Nairobi, after experts have looked into the matter.

“The Trade and Customs Committee can still discuss this matter, notwithstanding the Council’s decision to extend the safeguard,” said a statement from the meeting.

“The committee will discuss and make recommendations on whether the extension should be the very last one. The Council noted the recommendation to establish a monitoring committee made up of sugar exporting member states, the member state implementing the safeguard, and the Secretariat as an appropriate technical framework for overseeing the implementation of the safeguard.”

Protect farmers

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The Comesa Council of Ministers’ decision extends Kenya’s decade-long quest to protect sugar farmers with high tariffs as it seeks “more time” to open up fully its market to imports.

The decision will also now see a joint committee to monitor the implementation of safeguards and report back to the business bloc on the progress.

“We have successfully negotiated for a safeguard and we have been given two years extension to implement the required conditions. We hope that we shall have met all the requirements by the end of two years,” Kenya’s Trade Principal Secretary Dr Chris Kiptoo said.

Kenya’s sugar deficit is estimated to have increased from 210 tonnes to 250 tonnes which will increase the shares of sugar exporting Comesa member states.

The Kenyan delegation led by Foreign Affairs Chief administrative officer Ababu Namwamba and Dr Kiptoo presented a report on implementation of the sugar safeguard that highlighted the history, performance and importance of the country’s sugar sector.

On the implementation of the conditions for the current safeguard agreed on in February 2017, Kenya argued that it had achieved several key conditions, including amalgamation, adopting a formula and forming a Safeguard Committee.

“Privatisation is ongoing, though there are legal challenges, which have more or less been resolved,”said the Kenyan delegation. “However, stakeholder consultations are required under the Constitution of the Kenya and these are being undertaken. Co-generation and adoption of an energy policy has been substantially implemented through a number of legislations and policies adopted.”

Nairobi also said that the Sugar Research Institute has released 21 cane varieties since 2002; with testing in all the 11 operating units.

Kenya further reported that exports from Comesa states had been allowed in, and the member states had exceeded their allocated quotas in a number of cases.

“Some of the outstanding challenges include privatisation, introduction of more cane varieties and cane testing units,” the delegation said.

Last weekend’s Council of Ministers meeting pointed out that weather challenges in 2017 resulted in a huge sugar deficit on the market, and Kenya put in place measures to import significant amounts of sugar from the global market on duty- and quota-free basis.

The meeting noted that the 2017 influx of third-country sugar in Kenya impacted the Comesa sugar industry.

Monitoring

The Inter-Governmental Committee said that the safeguard has helped Kenya, but the exemptions are not in perpetuity and come with timelines.
“It is our view that the tariff rate quarter should continue and tonnage be increased. The sugar safeguard formula should continue, but administration should improve,” the committee said.

The team agreed that monitoring should be inclusive, through establishment of a monitoring sub-committee comprising sugar-exporting countries, the member state using the safeguard and the Secretariat.

“Customs duties should be maintained on sugar from third countries when imported into Kenya,” the committee said.

But Kenya’s claim that the increase in domestic sugar production over the years is one of the key milestones of the safeguards could not be further from the truth.

In 2017, Kenya imported more sugar than it produced, a time when production was at its lowest. The 2018 Economic Survey shows that Kenya’s imports almost tripled to 989,600 tonnes in 2017, compared with 376,100 tonnes in 2016.

The total domestic sugar production declined by 41.2 per cent, from 639,700 tonnes in 2016, to 376100 tonnes in 2017. The same year, the area under cane reduced to 191,200 hectares, compared with 220,800 hectares in 2016. In 2013, 22,705 hectares were under cane.

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