China has announced plans to remove tariffs currently charged on Kenyan goods in a move that is set to open another market outlet for the country’s export outside the East African community.

The country’s finance ministry named Kenya among the 33 developing countries whose goods will largely be exempt from import tariffs from July 1.

China will scrap tariffs on about 60% of imports from countries on the list, opening an easy window into the 1.3 billion people market.

The effective date of this window coincides with the planned launch of the East African Common market in which Kenya expects the borders of Tanzania, Uganda, Rwanda and Burundi to open for the free movement of factors of production.

It is not immediately clear which goods will benefit under the new tariff regime but experts said China is likely to encourage importation of raw materials and other inputs that it needs to power rapid economic growth.

China imports scrap metal, fruits, nuts sisal fibre, row hides and skins, fish, black tea, coffee, and leather wares from Kenya.

Scrapping tariffs on these produce means their cost will fall in China by between three to 30% - the current range of the Asian country’s external tariffs.

Investors in Kenya are now looking at increasing production to take advantage of the Chinese market.

Official statistics indicate that while Kenya’s exports to China only grew at a snail pace from Sh1.2 billion in 2005 to Sh2.5 billion in 2009, imports have risen phenomenally to Sh74.5 billion from Sh19.4 billion in 2005.

The free trade is unlikely to address the trade imbalance unless Kenya approaches the opportunity with a keen eye on value addition.

Source: Business Daily