According to press reports in Tanzania’s Citizen newspaper, “a trade dispute between… Tanzania and Kenya may well end up strangling the Tanzanian cut flower industry.” On 10 May 2011, “Kenya banned Tanzania’s cut flowers from being exported overseas through Jomo Kenyatta (Nairobi) airport”, citing phytosanitary concerns and “demanding an official Pest Risk Analysis of one of the flower farms”. While the required analysis was undertaken and duly submitted by the Tanzanian authorities, the reports indicate that a subsequent Bilateral Quarantine Agreement (BQA) signed by the Tanzanian authorities has not yet been counter-signed by the Kenya Plant Health Inspectorate Services (KEPHIS). The ban consequently remains in place.
This dispute has led to allegations of deliberate sabotage of Tanzania’s nascent cut-flower industry, which Kenya’s Standard newspaper estimates at 6.8 billion Kenyan shillings a year. According to KEPHIS, however, although the Tanzanian authorities signed the BQA, they have “yet to comply with some of the risk analysis issues raised in a memorandum of understanding”. The Standard reports the managing director of KEPHIS as saying that the ban will be lifted as soon as these outstanding issues have been addressed.
According to the reports, the Kenyan industry exports 12 times the volume of cut flowers exported by its Tanzanian counterpart, earning some 44.5 billion Kenyan shillings a year, and Kenya’s export volumes have been growing at 20% a year since 2006.
It is reported that the Kenyan ban has affected 80% of Tanzania’s cut-flower exports and has led to termination of contracts with European importers. Prior to the Kenyan ban, a number of Tanzanian and Kenyan cut-flower farmers had been jointly exporting to the EU in order to cut down on transportation costs and broaden the mix of blooms available to importers. The Citizen adds that “the Tanzania Horticultural Association (TAHA) is now opening up talks with airliners from Qatar and Turkey, in an attempt to realize cargo freighting from Kilimanjaro International Airport as an alternative.” It is hoped that this service would deliver 40 tonnes a week and might be in place before the end of 2013.
According to the reports, the ongoing dispute is “threatening to worsen the already antagonistic trade relations between the two neighbours”. Indeed, the dispute appears to be widening, with the TAHA logistics subsidiary, Taha Fresh Handling, complaining in January of an import levy of $0.024 per kg (US$24/tonne) on fresh fruit and vegetable exports to Kenya. This levy is imposed both on produce destined for the Kenyan market and on produce in transit. While the Kenyan authorities have reportedly acknowledged that the levy should be removed, and made a commitment to do so by 2013, the levy was still in force in January 2013. This has led to some smallholder producers pulling out of production for export to Kenya, since the business is no longer seen as profitable.
The Kenyan private sector, for its part, is reported to be complaining of harsh new non-tariff barriers (NTBs) imposed by the Tanzanian authorities, including via packaging standards for edible oils and strict rules of origin requirements for tobacco products.
The continued existence of NTBs in the EAC is a matter of concern, since it hampers regional trade and investment. Currently, Kenya is the biggest beneficiary of the EAC’s integration process, as exports to the region are high compared to those to traditional partners such as the EU.
Any deliberate attempt by KEPHIS to deter foreign investment in Tanzania would be a matter of serious concern and could lead to deterioration of trade relations between the two countries, particularly as KEPHIS has been given a mandate by EAC as the Centre of Phytosanitary Excellence (COPE) and by COMESA as the Regional Reference Laboratory for Plant Health. However, as Kenyan business associations do not appear to be actively involved in the action by KEPHIS, genuine SPS concerns appear to be at stake.
This is nevertheless an area where the EAC could play a more active role in promoting full implementation of the East African Customs Union SPS Protocol, which calls for cooperation of partner state authorities on SPS measures. It would also appear to call for improvements in regional SPS infrastructure, such as testing laboratories, and in building technical capacity to conduct regionally acceptable risk analysis systems.
Concluding the regional Economic Partnership Agreement process could be helpful in this regard, since it was envisaged that the EU would provide assistance to identified priority areas, such as support for harmonisation of SPS standards, capacity building for SPS controls at both public and private sector levels, and the enhancement of necessary technical infrastructure.
There would also appear to be a need for the private sector to take a more proactive role in creating awareness about SPS requirements among stakeholders and promoting the adoption of good agricultural practices by smallholder farmers. This would improve the quality and safety of agricultural commodities for export, and minimise the incidence of SPS-related trade disputes.