The ongoing Kenya-Uganda trade dispute on milk tariffs could deal a blow to hopes of Common External Tariffs (CETs) and Non-Trade Barriers(NTBs).
The differences between the two neighbours started in December when Kenya introduced a 16 per cent value added tax (VAT) on milk imports from Uganda as part of measures cushion the local dairy sector.
This was later followed by the seizure of Lato milk produced by Uganda’s Pearl Dairy by Kenyan authorities. Uganda has threatened to retaliate.
The country’s minister for East Africa Community Affairs Julius Muganda told the New Vision newspaper that Uganda will retaliate by targeting a number of Kenyan goods, key among them packed juices, assorted household items and roofing materials in a similar protectionist move.
This comes just ten days after Uganda’s Ministry of Foreign Affair wrote a protest letter to Kenya, demanding immediate and unconditional release of 23 tonnes of Lato milk impounded starting late December.
“Cease any operations specifically targeting Ugandan made milk exported to Kenya. Refrain from any actions against Uganda’s exports to Kenya be it milk or any other products that contravene the EAC customs union and common market protocol,” the protest letter read.
It further asked Kenya to take responsibility for any spoilage of products seized and losses suffered.
Kenya, Uganda said should address any trade concerns within the EAC and bilateral frameworks instead of resorting to arbitrary means that could jeopardise trade relations.
Kenyan officials did not respond calls or messages on the position taken by Uganda.
The simmering hostility Kenya and Uganda could be part of the agenda at the 21st Ordinary EAC Heads of State Summit slated for February 22 in Entebbe.
The ongoing dispute is a replica of persistent squabbles between Kenya and Tanzania that have seen blockage of goods at the Namanga border despite being signatories to the EAC Common Market Protocol, which grants free movement of goods, services, capital and labour within the bloc.
In June last year, the trade tension was flared up by Kenya’s Starehe legislator Charles Njagua who suggested that Tanzanian traders in his constituency be evicted over ‘unfair competition’.
Tanzania authorities had earlier burnt poultry imports into the country.
Tanzania’s refusal to sign a new trade deal between the East African Community (EAC) and the European Union (EU) in 2016 also cultivated a love-hate relationship with her neighbours especially Kenya, whose trade with EU depended on the pact.
Tanzania has been unhappy about the trade pact, arguing that the agreement will have serious consequences on its revenues and the growth of its industries.
Perennial political tension between Rwanda and Burundi has hampered trade between the two neighbour states, further complicating the elusive trade freedom in the region.