Tanzania Trade Ties with Kenya Strengthen

According to a recent report by Business Daily, Tanzania trade ties with Kenya are likely to be strengthened following the signing of a bilateral trade agreement between the two governments.

The primary goal of the new agreement will be to harmonize the trade policies, tariffs and legislation between the two countries in order to fall in line with the envisaged EAC common market protocol, which will ultimately allow its members to enter into exclusive arrangements on various controversial issues.

The Kenyan high commissioner to Tanzania, Mutinda Mutiso, indicated in the Business Daily report that the purpose of the agreement was to help govern future relations between the two countries and put an end to the protectionist policies that Tanzania has been said to practice by other members of the East African community.

Mr. Mutiso went on to say that the agreement was already in the advanced stages of completion and was scheduled to be signed by Presidents Mwai Kibaki and Jakaya Kikwete next month.

“The document will be a Memorandum of Understanding that will express a convergence of business relations between us and chart a common line of action to grow trade across our border,” said Mr. Mutiso.

Prior to the presidential signing of the agreement, the ministers for trade, energy and education for both countries are scheduled to hold a consultative meeting in order to discuss any necessary final adjustments to the agreement.

According to Mr. Mutiso, this meeting is necessary as doing business in Tanzania is currently very expensive for foreign professionals such as lawyers, doctors and engineers due to the high cost of registration charges that are imposed on service providers, particularly when compared to the charges for registration in other countries in the region.

Additionally, in an effort to protect local assemblers and local EAC industries from competition, Kenya is also looking to re-introduce the 35 percent customs duty taxation for trucks that weigh between 10 and 20 tons.

Also included in the plans for harmonization between the two countries as a result of the trade agreement are policies in the cement sector.

As it stands currently, grinders in the EAC are being faced with market failure because of cheap imports and cheaper construction materials from Indonesia, Egypt and Europe.
 
“While a bag of cement manufactured in Mbeya sells at $6,” said Mr. Mutiso, “an imported bag from Indonesia is sold at $2 in the domestic market.

Mr. Mutiso went on to indicate that in order to ease distribution costs and safeguard jobs, one method that could be employed would involve the subsidizing of electricity bills and the improvement of the overall transport infrastructure.