KNOWLEDGE SHARING ON TRADE AND INVESTMENT GOOD PRACTICES

KNOWLEDGE SHARING ON TRADE AND INVESTMENT “GOOD PRACTICES” Managing unfair trade practices in compliance with WTO provisions and Regional Commitments PRESENTER: Mr. Geoffrey Mwenda.

What is unfair trade practices. UTP broadly refers to any fraudulent, deceptive or dishonest trade practice which is prohibited by a statute or has been recognized as actionable under law by a judgment of the court. v These practices may be in form of: v I. III. IV. dumping, subsidization of imported products into a country, Import surges, Others like Counterfeits, Non Tarriff Barriers in regional markets, Influx of illicit goods and Transhipment of products through countries benefiting from preferential market access.

WTO TRADE REMEDIES v The WTO agreement allows governments to act against unfair trade practices where there is genuine (“material”) injury to the competing domestic industry. v Binding tariffs and applying them equally to all trading partners are key to the smooth flow of trade in goods.

The WTO agreements exceptions: Ø actions taken against dumping Ø subsidies and special “countervailing” duties to offset the subsidies Ø emergency measures to limit imports temporarily, designed to “safeguard” domestic industries.

Kenya’s affected companies § Eveready East Africa, Colgate Palmolive, Reckitt Benckiser, Cadbury Kenya, Bridgestone, Devki Steel, and Procter & Gamble. v In order to remedy the problem, Trade Remedies Act was enacted in June 2017 to create a Trade Remedies Agency. (Ke. TRA) v This will help Kenya to minimise the levels of unfair trade practices especially at this time where Af. CFTA is operational.

Mandates of Ke. TRA I. III. IV. V. Investigate and evaluate allegations of dumping and subsidization of imports; Investigate and evaluate requests for application of safeguard measures on any imported product; Initiate and conduct public awareness and the training of stakeholders on its functions and on trade remedies; Publish and disseminate manuals, codes, guidelines, and decisions relating to its functions; Perform such other functions as the Cabinet Secretary may assign to it.

Tradecomii program OUTPUTS v Through were: EU’s support; Trade. Com 11 Outputs v. To strengthen KETRA’s institutional capacity for managing unfair trade practices v. To conduct situational analyses of the state of unfair trade practices facing the manufacturing sector in Kenya.

CASE STUDIES OF KENYAN PRODUCT S SUBJECT TO UNFAIR TRADE PRACTICES

CASE STUDIES OF KENYAN PRODUCTS continued…… v ● Globally traded products which are subject to unfair trade practices, some of which Kenya imports include: Oil ● Natural Gas ● Coffee ● Gold ● Wheat ● Cotton Sugar ● Silver ● Copper.

COMPARISON OF PRODUCTION WITH DEMAND OF SELECT PRODUCTS KENYA PRODUCTION, DEMAND DATA FOR SELECT PRODUCTS, 2017 (000 TONNES) Product Milk Production Imports Exports Stocks Demand 3, 855 87 5 -815 4, 752 Sugar 413 1, 002 18 685 712 Wheat 165 1, 879 20 35 1, 989 54 646 1 3 696 3, 186 1, 374 6 -654 5, 208 724 1 10 -125 840 6, 163 15 388 0 5, 789 Rice (milled) Maize Meat Cement

COMPARISON OF PRODUCTION WITH DEMAND OF SELECT PRODUCTS continued…… v The effect of unfair trade practices can be established with level of stockpiles in the domestic industry. v In 2017, there appears to be dumping of sugar while there was consistent run down of stocks in milk, maize and meat in the above table. v There were no stockpiles in cement.

Comparison of Import and domestic prices for different products Commodity Unit Wheat unmiled Tonne Rice Tonne Maize unmilled Tonne Wheat flour Tonne * * * * * Year 2013 2014 2015 2016 2017 2013 2014 Import price 29, 223 27, 601 25, 083 21, 201 22, 858 34, 453 33, 331 30, 198 27, 953 26, 713 24, 506 20, 283 17, 098 24, 480 30, 321 60, 925 51, 590 55, 294 48, 143 44, 313 60, 642 52, 478 Domestic price 37, 449 34, 953 35, 616 37, 184 31, 980 35, 335 34, 833 47, 290 45, 227 42, 841 31, 332 33, 185 28, 701 29, 688 39, 873 63, 660 62, 946 59, 208 54, 317 54, 892 81, 547 67, 626 Import/do mestic price 0. 78 0. 79 0. 70 0. 66 0. 71 0. 97 0. 96 0. 64 0. 62 0. 78 0. 62 0. 60 0. 82 0. 76 0. 96 0. 82 0. 93 0. 87 0. 81 0. 74 0. 78

Continued…. . v All import prices are below domestic prices, an indication of either competitiveness or potential benefit of some elements of unfair trade practices in the exporting markets. For example: i. Wheat import prices on average are below domestic prices by about 20 -30%; ii. The price differentials in favor of import is in the order of 5 -40% of domestic prices of rice;

Output 1: To strengthen KETRA’s institutional capacity for managing unfair trade practices v WTO sectors identified to be affected by unfair trade practices are products ie Oil, Coffee, Natural Gas, Gold, Wheat, Cotton, Sugar, Silver Copper. v Identification of global products benefitting from unfair trade practices v Implication of imports on domestic production v Different analysis to establish sectors/products that may be subject to unfair trade practices.

Output 2: To conduct situational analyses of the state of unfair trade practices facing the manufacturing sector in Kenya v v v Formulation of tool for field study Identification of Public sector policy and coordinating agencies Identification of a sample of 30 firms to participate in the pilot study Sensitisation sessions held and Sensitisation materials including PPTs and reference reports printed. training session and validation of findings from study A strategy for operationalisation of KETRA Law was done

Recommendations for possible additional support interventions v Capacity building the Ke. TRA Staff through trainings. v Undertaking public sector sensitizations across the country and Regionally. v Foreign benchmarking and exchange missions for Ke. TRA staff in countries with established Trade Remedies Agencies. v Infrastructural support such as Trade Analysis SYSTEMS and Office Equipment

THANK YOU…. . questions.