East Africa: Kenya, Ethiopia to Sign Special Trade Pact

3/4/2012 Nairobi — Kenya and Ethiopia have agreed to enter into a special status trade arrangement that will eliminate the barriers faced by their respective business communities and increase trade between them.

Ethiopia's Prime Minister Meles Zenawi who was on a visit to Kenya said that the bilateral trade pact would address the specific challenges that hinder the growth of trade between the two states.

"We need a pact that addresses specific Kenyan and Ethiopian issues. We are not worried about the pact favouring either country. We are open to ideas on how to develop trade between the two countries," the premier said.

Although Kenya and Ethiopia have over the years enjoyed cordial relations, this gesture has not been extended in the trade realm as the two governments continue to largely employ protectionist measures to safeguard their industries.

In 2010, Kenyan exports to Ethiopia stood at $43.1 million, while her imports were worth $2.4 million.

But in a matter of fact way, Zenawi termed the measly volumes as a 'scandal' that need to be fixed.

"In the last six months, our top three export destinations were Somalia, China and Sudan. Kenya should surely have been on that list so we need to correct this anomaly," he stressed.

The pact, he pointed out, would be one of the ways to address the situation for the neighbours who share a lot in common.

His Kenyan counterpart Raila Odinga, concurred adding that once implemented the accord would minimise the handicaps faced by the private sector and significantly boost trade volumes.

"We need to come up with mechanisms that can mutually benefit our two countries and enable us to exploit the huge potential that remains untapped," Odinga added.

Speaking at a consultative business forum, the Premier however observed that the two could only strengthen their economies if they diversify them and embark on value addition.

With processed goods, he noted, these countries can make good use of the infrastructure, such as the Sh2 trillion Lamu project that are being laid.

Zenawi was in the country for the official launch of the ambitious project that entails the construction of major highways, oil pipeline and a new port in Kenya, Ethiopia and South Sudan and which is expected to open up trade in the region.

During an all inclusive forum, Kenya's business leaders highlighted some of the obstacles such as foreign exchange controls, equity restrictions and Intellectual Property Rights that they face while operating in Ethiopia and appealed to PM Zenawi to intervene.

And in keeping with the desire to facilitate trade between the two countries, the Ethiopian government pledged to look into some of those restrictions with the aim of relaxing them.(source..AllAfrica.com)