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3.1 Tariff and tariff administrative measures

3.1.1 Tariff peak

The overall tariff level in Kenya is quite high. Existing commonly in all sectors, tariff peaks are mainly focused on farm products, textiles and clothing, and chemical products. High tariff rates between 35 percent and 100 percent exist in certain sectors, and the highest tariff is imposed on farm products (with a rate of 100 percent or 200 U.S. dollars per ton, whichever is higher). Tariff rates on certain fabrics, clothing, and bedding are as high as 50 percent.

3.1.2 Tariff escalation

The current Kenya Customs tariffs show that tariff escalation exists in almost all categories of products. However, tariff escalation is comparatively prominent in textiles and clothing. Take cotton textile material and textile products as an example. There is a zero import tariff rate on cotton, 10 percent on cotton yarn, 25 percent on cotton fabrics and as high as 50 percent on certain cotton fabrics.

3.2 Barriers to customs procedures

3.2.1 Customs procedures

Customs procedures for imports are time-consuming. Generally, over 10 steps are required for a typical import clearance transaction. Besides, the trade facilitation institutions are not in one place, which makes the clearance more complicated. The Kenya Customs requires more than 20 copies of bills of documents to be passed from one officer to another. The documents are not only processed slowly, but also sometimes subject to repeated examination. Similar procedures are also applied on paying of tax refunds and obtaining tax waivers and rebates on imports used for manufacture.

To inspect imports, the Kenyan Customs opens almost every container, the practice of which not only dela ys the goods from passing the Customs, but also increases the likelihood of breakage.

3.2.2 Customs valuation

Though Kenya has implemented the Agreement on Customs Valuation since 2001, customs officials constantly uplift the declared valuation of goods instead of using the c.i.f. value provided or the supplier's invoice, which usually results in a completely higher tax liability. Information on custom valuation methods and tariffs are not disclosed. Additionally, importers are hard to question the tax liability, because the clearance process will be delayed when a dispute of valuation occurs and the high demurrage costs arising therefrom exert a heavy burden on the importer.

3.2.3 Pre-shipment inspection

As from June 30, 2005, pre-inspection certification is required for goods to be imported into Kenya. All goods must demonstrate compliance with Kenya Standards or approved equivalents by evidence of a "Test Report or Certificate" from an ISO/IEC17025 accredited laboratory or recognized by the International Laboratory Accreditation Cooperation (ILAC) or the International Federation of Inspection Agencies (IFIA). Goods imported without the above mentioned certificates or reports would be held at the port of entry at the importer's expense until their quality is determined.

The new regulation has significantly affected the export of Chinese products to Kenya in the following two aspects. First, the quality certification has led to a substantial increase in the export cost. According to this regulation, all products to be exported to Kenya must obtain test reports or certificates from approved organizations. However, the Kenyan market requires a small quantity of a great variety of goods and products. If every product needs a test report, then the cost will be greatly increased. Second, the Kenya Bureau of Standards has assigned the certification of Chinese products to Intertek Testing Services, a company that monopolizes product testing and is known for its low efficiency.

In order to facilitate the pre-shipment certification of Chinese products, the Chinese government has initiated talks with the Kenya Bureau of Standards. In August of 2005, the General Administration of Quality Supervision, Inspection and Quarantine of China signed a cooperation treaty framework with the Kenya Bureau of Standards during Kenyan President Mwai Kibaki's visit to China, which has laid a good foundation for Kenya to accept product certificates issued by Chinese product testing agencies.

3.3 Technical barriers to trade

In Kenya, trade-related technical regulations are not complete and there are no specific technical standards. Where there are technical standards and regulations, some of these are not in conformity with the international standards. Furthermore, there has been a lack of transparency in the work of such organizations as the Kenya Bureau of Standards and the Kenya Customs. As a result, Chinese exporters are not able to get timely information about technical standards and quality test procedures from relevant authorities. In the case of cements, since Chinese exporters are not specifically informed of the relevant technical standards, Chinese cements exported to Kenya are constantly held up at the port. Hence Chinese enterprises have suffered economic losses.

On August 17, 2005, the Memorandum of Understanding on Cooperation in Quality Inspection was signed between the General Administration of Quality Supervision, Inspection and Quarantine of China and the Kenya Bureau of Standards.

3.4 Export Restrictions

Apart from export restrictions on a few items for reasons of public food safety and animal, plant and resource protection, Kenya also requires that warehoused goods, goods under duty drawback, and transhipped goods shall not be exported in vessels of less than two hundred and fifty tons register. The regulation has set an unnecessary obstacle to normal export transportation.

3.5 Inadequate intellectual property right protection

Kenya is a member of and a signatory to a series of international organizations and conventions suc h as the World Intellectual Property Organization (WIPO), Paris Convention, and the Berne Convention. Although the Kenyan Government has made laws governing IPR such as the Trademark Act, the Copyright Act and the Industrial Property Act on IPR protection, the enforcement of such laws and the punishment on piracy is insufficient. The main Chinese products exported to Kenya are often pirated in Kenya, such as medicine, footwear and headwear, textile products, batteries, office supplies and detergent. The Chinese side is very concerned about this issue.

3.6 Other barriers

On March 21, 2005, the Kenyan government issued a new regulation regarding obtaining work permits and identification cards, and passports administration. The new regulation requires applicants for passports, citizen cards, work permits and identification cards go to the relevant departments to apply in person. The Kenyan government no longer issues such certificates to those who apply by proxy.

The new regulation sets strict restrictions on the issuing of work permits. A foreign applicant can obtain a work visa unless no Kenyan citizen can fill the position offered to him and he has exceptional skills. If a local employer has already hired foreigners with work permits, once these positions can be filled by local people, their permit will not be renewed upon expiration. The Chinese side hopes that Kenya will consider reducing some restrictions on work permits.