TRADE DEAL

Kenya eyes duty-free access to South Korea market

This is mainly on coffee and agricultural produces.

In Summary

•The two countries have opened talks after Kenya's maiden appearance at the four-day 10th Coffee Expo 2021 in Seoul, last month.

•Currently, Kenyan exports attract a duty of eight per cent.

Kenya is engaging South Korea for a trade deal that will see reduction or complete removal of duty on exports to the Asian country. https://bit.ly/3mlJCMa

Kenya is engaging South Korea for a trade deal that will see reduction or complete removal of duty on exports to the Asian country.

Targeted is coffee, the current leading export alongside tea, mate and spices, which attract an eight per cent duty.

Trade, Industrialization and Enterprise Development CS Betty Maina said the duty  disadvantages Kenya's exports, which compete with Least Developed Countries (LDCS) that enjoy duty-free access.

The talks come after Kenya's maiden appearance at the four-day 10th Coffee Expo 2021 in Seoul, South Korea in July and are expected to give way to a deal similar to the Economic Partnership Agreement (EPA) with the UK, which gives Kenyan exports duty and quota free market access.

Uganda, and Ethiopia are among countries enjoying duty free access to the South Korean market as LDCs.

Kenya has renewed the cordial bi-lateral relations with South Korea which will now facilitate for negotiation of tariffs reduction especially on our coffee. It is a conversation we have started with the Korean government,” CS Maina told a media briefing in Nairobi, yesterday.

The two countries have also agreed to fast-track pending issues on market access of Kenyan produce including fresh avocados into the South Korean market  with a solution expected before year end.

A deal will be a major boost to trade which is currently in favour of South Korea as it continues to pick up.

According to the trade ministry the value of trade increased from Sh8.47 billion in 2008 to Sh22.82 billion in 2020, a 169.42 per cent growth in 13 years.

The balance of trade has favoured South Korea standing at about Sh18.1 billion in 2020.

Kenya imports mainly iron and steel, plastic, organic chemical, man-made staple fibres, machinery, nuclear reactors, boilers, electrical and electronic equipment from South Korea.

Apart from coffee and tea, Kenya also exports copper, live trees, plants, cut flowers, aluminium, furniture, wood and articles of wood, precious stones, metals, coins and articles of apparel.

The government is keen to increase export of agricultural products to the South Korean market, mainly fresh produces, by ensuring adherence to international standards.

There has been concerns over some farmers harvesting produce before maturity, leading to intervention or recall of exports in the international markets.

Last year, officers from the Agriculture Foods Authority intercepted three containers with 75 tonnes of suspected immature avocados at the Port of Mombasa.

Some producers also spray crops a few days before they are exported, according to government.

Key export markets such as China, the EU and US have strict sanitary and phytosanitary (SPS) standards.

The Trade ministry is closely working with the Agriculture, Livestock, Fisheries and Co-operatives ministry to “curb unethical practices”, the CS said.

It targets to use coffee as the benchmark in growing its share of the Korean market.

In 2018, Kenya exported 12 per cent of her coffee to South Korea.

“We shall continue to expose the Korean coffee roasters to our coffee to increase uptake of our produce,” CS Maina said.

South Korean companies have expressed interest in investing in Kenya, the CS said, with a focus on information technology.

Meanwhile, the CS has called for building of local content and increased intra-regional trade to reduce vulnerability when international trade is disrupted.

Such is the Covid-19 pandemic which has had an impact on industries and trade, leading to a global vessel and container shortage, currently being felt in Kenya.

The shortage which started in April has affected Kenya's imports and exports, pushing up the cost of doing business and finished goods. It has led to an increase in freight charges by up to 25 per cent.

Local manufacturers and exporters say they are not accessing the key units to load their goods.

“This has impacted on the cost of doing business due to increased freight charges as a result of the high demand vis-a-vis low supply of containers within the region,” the Kenya Association of Manufacturers CEO Phyllis Wakiaga told the Star.

During the pandemic, the country has recorded increased uptake of local products and trade with her EAC member state peers, mainly Uganda and Tanzania.