WORLD TRADE
ORGANIZATIONWT/TPR/M/64
29 February 2000
(00-0749)
Trade Policy Review Body
26 and 28 January 2000
TRADE POLICY REVIEW
KENYA
Minutes of Meeting
Chairperson:  H.E. Mr. Jean-Marie Noirfalisse (Belgium)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF KENYA 4
III. STATEMENT BY THE DISCUSSANT 7IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY
REVIEW BODY 9
V. REPLIES BY THE REPRESENTATIVE OF KENYA AND
ADDITIONAL COMMENTS 15
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 19
ANNEX I ADVANCE WRITTEN QUESTIONS 21ANNEX II RESPONSES BY THEGOVERNMENT OF KENYA
TO ADVANCE WRITTEN QUESTIONS 42WT/TPR/M/64
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The second Trade Policy Review of Kenya was held on 26 and 28 January 2000.  The
Chairperson welcomed the delegation of Kenya, le d by Ambassador Dr. Kipkorir Aly Azad Rana, and
the discussant, Mr. Peter Jenkins (United Kingdom).  As usual, the discussant would speak in his
personal capacity and not as representative of his country.  In accordance with the established
procedures, the discussant had made available, in advance, an outline of the main issues he intended
to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting.  The report by the Government of Kenya was contained in document
WT/TPR/G/64 and that of the WTO Secretariat in document WT/TPR/S/64;  the main issues to be
raised by the discussant were contained in doc ument WT/TPR/D/44.  Copies of written questions,
submitted by eight delegations (Thailand; Hong Kong, China; Canada; Japan; Switzerland; theEuropean Union; the Republic of Korea; and the United States) had been transmitted to the delegation
of Kenya.  These are reproduced in Annex I.WT/TPR/M/64
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF KENYA
3. The representative of Kenya stated that his country was pleased to participate in the Trade
Policy Review exercise whose main purpose was to provide greater transparency and understanding
of the trade policies and practices of member countries.
4. Kenya paid great attention to liberalization and globalization and continued to participate
effectively in formulating and implementing policies geared towards these objectives.  It appreciated
the role played by the WTO in advocating for a rule-based, fairer, transparent and predictableinternational trading environment.
5. The principal objectives of Kenya's  trade and economic policies were poverty alleviation and
employment generation, with a view to improving the quality of life of the Kenyan people.  To
achieve these objectives, the economy had to grow at a faster rate than population growth.  It was in
this respect that the Government of Kenya had recognized the importance of the private sector as theengine of growth for the economy and had direct ed its efforts towards implementing the following
policy measures:
(i) enhancing investment opportunities by maintaining a stable macroeconomic
environment;
(ii) a continued pursuit of reforms;
(iii) upgrading, rehabilitating and expanding the infrastructure; and
(iv) participating in various regional integration initiatives, principally within the Eastern
and Southern Africa sub-region.
6. Kenya considered the above measures as part of an appropriate strategy, which would help
resume growth and achieve sustained economic and social development.   Parts of this vision had
already been articulated in a number of policy documents, inter alia , Sessional Paper No. 1 of 1986
on Economic Management for Renewed Growth, which set the pace for trade and economic reforms;
Sessional Paper No. 2 of 1997, on the Industrial Transformation to the year 2020; and more recentlythe National Poverty Eradication Plan.
7. Since the last Trade Policy Review, Kenya had undergone a significant metamorphosis.  A
number of initiatives had been undertaken over the last few years that portrayed a fundamental
paradigm shift as evidenced by, among others:
- liberalization of the economy and reliance on market forces;
- liberalization of foreign exchange and freeing of interest rates;
- decontrol of prices;
- emphasis on export-led strategy and shift away from protection of local manufactures
in order to allow competition and stimulate the economy;
- encouragement of non-traditional exports, e.g. horticulture, fish and fish products;
- diversification and privatization of non-strategic public enterprises; and
- implementation of Article VII of GATT 1994 (Customs Valuation).
8. In the trade sector, Kenya had undertaken necessary reforms in order to integrate its economy
into the multilateral trading system.  Key among these were:WT/TPR/M/64
Page 5
- the continued lowering of tariffs, on an MFN basis, leading to the current maximum
tariff rate of 25%, and reducing the number of tariff bands to five with the aim of
attaining a lower average trade weighted tariff;
- the reduction of tariffs for all products originating from the COMESA region by 90%
of MFN rates.  This was a good example of open regionalism at work that Kenyabelieve should serve as a model for all regional integration arrangements;
- the introduction of a single entry document aimed at simplifying customs procedures
and hence, reducing clearance time;
- progressive liberalization in trade in services such as financial services, basic
telecommunication, energy sector, transport, and tourism;
- full liberalization of the foreign exchange regime since December 1995.
Consequently, there were no limits on amounts the investors could repatriate, so long
as they met their tax obligations.
9. In order to underpin the various policy measures aimed at reforming the financial sector, the
Kenya Government participated in and undertook commitments under the financial services protocol
of the GATS.  The ratification process was under way.
10. The Kenya Government recognized the potential contribution of the capital markets in its
efforts to mobilize domestic resources and encouraged public participation in the economy through
ownership of shares.  To this end, the Capital Markets Authority was established to regulate this mode
of resource mobilization.
11. At the beginning of the last decade, there were only a few market players meeting in one of
the players board rooms;  today, the Nairobi Stock Exchange was equipped with ultra modernfacilities.  The stock exchange had adopted an "open-cry" system and the current players comprised
58 listed companies, 20 stock brokers, 20 investment advisors, and 5 depositories.  It was  a good
vehicle for the on-going privatization process a nd the economic empowerment of the populace, a
recent example was the privatization process of Kenya Airways.
12. In order to modernize and develop the capital market, the Government allowed foreign
brokerage and funds management firms to participate in this market.
13. The representative noted that the following policy measures had been implemented in the
banking sector:
(a) interest rates were now determined by market forces;
(b) autonomy had been granted to the Central Bank of Kenya in the management of the
country's monetary policy.  Moreover, the government borrowing from the CentralBank had now been limited to 5% of government revenue.
14. Kenya was a member of the Multilateral Investment Guarantee Agency and the International
Centre for the Settlement of Investment Disputes .  The Investment Promotion Centre Act had been
amended to reduce the number of days for processing an application for investment from 90 to
30 days.  A one-stop office for investment approvals had been established under the Investment
Promotion Centre to speed up the approval process.  In the near future, an investment code would be
introduced to regulate the legal rights and obligations for both foreign and local investors.
15. Regarding flexibility in the labour market, employers were no longer required to seek
approval from the Minister for Labour before they could declare their employees redundant.WT/TPR/M/64
Page 6
However, such employers were expected to hold meaningful discussions with the respective trade
unions and Ministry of Labour on the terms of redundancy, prior to declaring their employeesredundant.
16. On the issue of immigration, residence and employment, government policy was based on the
needs of the national economy.  The Government allowed investors to hire expatriate staff to occupy
key management positions or to fill vacancies where local skills were not available.
17. In order to implement Kenya's obligations under the WTO, a National Committee on World
Trade Organization (NCWTO) was formed in 1995.  Among other issues, the National Committee
had focused its attention on identifying domestic laws that were inconsistent with the WTO
Agreements, with a view to advising the Government on the necessary measures to ensure conformity
with Kenya's multilateral obligations.
18. In the area of capacity building, both at the institutional and human resource level, Kenya had
received technical assistance under the Joint Integrated Technical Assistance Programme (JITAP).
He thanked the WTO, UNCTAD and ITC and the various bilateral donors that had contributed
generously towards the Trust Fund.
19. Since the last Review, Kenya had conducted its second multiparty elections in 1997.  This
demonstrated a commitment to democracy and the rule of law as a basis for attaining political stabilitywithout which no economic advancement could be realized.
20. The Kenya Government fully realized that labour stability was an essential pre-requisite for
any rapid socio-economic development.  In fact, Kenya had ratified and fully implemented four out of
the ILO's seven internationally recognized core labour standards.
21. In this respect, he pointed out that Kenya had not had any crippling strikes in the recent past.
In the public sector, however, there had been wage -related strikes by teachers, doctors, and nurses,
which had been resolved amicably through mutual negotiations between the parties  concerned.
22. As part of the democratization process, Kenya had witnessed the mushrooming of a vibrant
civil society and free press, which had put the Government on its toes on all aspects of governance,
whether political or economic.  In addition, the Ke nya Parliament had been made autonomous through
the establishment of an independent Parliamentary Service Commission.
23. On economic management, Kenya's macroeconomic policies were aimed at controlling
inflation and lowering interest rates with a view to creating an enabling environment for domestic and
foreign investment.  As a result, the inflation rate was reduced to a single digit from the previous high
rate reported in the last Review.  Furthermore, a team from the IMF was currently in Nairobi holding
discussions on the resumption of financial support to the country.  As a result, during the last month,
the Kenya Shilling had appreciated by 13% against major currencies.
24. To conclude, he reiterated that, Kenya as a developing country with a free market economy
would continue to encourage and stimulate the private sector to play a pivotal role in the realization of
economic growth and social development objectives.
25. As a member of the WTO, and in recognition of the opportunities availed by the multilateral
trading system,  Kenya called upon its trading partners to rapidly and significantly remove distortions,barriers, and other obstacles to trade in order to ensure that the benefits from the system accrued to all
and marginalized none.WT/TPR/M/64
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III. STATEMENT BY THE DISCUSSANT
26. The discussant (Mr. Peter Jenkins) wondered how it was possible that a country which
appeared to have genuine comparative advantages in several sectors – principally in tea, tourism and
various horticultural products – and whose Government had taken a number of courageous and wise
policy decisions, had not enjoyed higher rates of growth and a stronger export performance since
1996.  He would not attempt to answer this question but believed that it could usefully serve as a way
of structuring the points he would make.
27. He noted that the following courageous and wise policy decisions had been taken by the
Government:
- to abandon import substitution and pursue outward-oriented policies;
- to launch the Public Enterprise Restructuring Programme in 1992;
- to dismantle quantitative import restrictions and price controls on major products;- rationalization of the tariff structure into five bands, with a maximum rate of 25%;
- abolition of export duties and taxes on all products other than timber and fish;
- elimination of export subsidies;
- avoidance of any temptation that might have arisen to apply contingency trade
measures like anti-dumping;
- a disciplined approach to public expenditure, which had limited any deficit since
1993 to 1% of GDP and, with help from tight monetary policies, had held consumer
price inflation at levels that many devel oping countries would envy (not to mention
quite a lot of developed countries, until very recently at least);
- to hold the public external debt at levels which were manageable.
28. Nevertheless, after having grown well in 1994 and strongly in 1995 and 1996, the economy
seemed to have slowed down in 1997 and 1998;  export growth, strong between 1993 and 1996,
appeared to have tailed off since 1996;  and services earnings had been in decline since 1994.  There
could be many reasons for this performance, but he was tempted to think that inadequate investment
had been a major factor.  Kenya's domestic savings rate (14% of GDP in 1997, according to the
Secretariat Report) was low, so attracting FDI was of considerable importance.  Yet there had been adownward trend in FDI since 1995, and the FDI stock had increased by less than 25% between 1990
and 1997 when it stood at only US$742 million.
29. The Secretariat Report suggested a number of causes for this disappointing investment picture
on which it would be inappropriate to dwell in a Trade Policy Review, e.g:
- concerns about security and governance;
- labour unrest;
- inadequacies in the business infrastructure;
- flaws in the legal system and judicial procedures;
- investment licensing requirements which had proved to be a restraint;
- a financial structure which was in need of strengthening;  and- setbacks and lack of progress in implementing the privatization programme.
30. However, a few of the causes fell squarely within the remit of this Body.  Chief among these,
he believed, was the suspended duty system, which he considered the biggest single shortcoming in
Kenya's trade policy regime, since it pushed up the effective rate of duty on some imports to figuresclose to 100%, and since its implementation was reportedly subject to a degree of arbitrariness.  Other
trade policy-related causes included:WT/TPR/M/64
Page 8
- the authorities' failure to enact WTO Agreements into local legislation, which meant
that they could not be invoked in Kenyan courts;
- a low rate of tariff bindings:  only 15% of tariff  lines were bound;
- a provision that allowed for exemptions from otherwise compulsory standards;
- the continuing existence of marketing boards in many agricultural sectors;
- state intervention in various services sectors;  and
- the relative modesty of the number of commitments that Kenya had  made under the
GATS.
31. Almost all these causes had one thing in common.  They increased the unpredictability of
Kenya as an operating environment for private investors.  One of the lessons that emerged most
clearly from countless studies was that investors welcome predictability.  The volunteering ofcommitments under the GATT and the GATS, and a demonstrable determination to adhere to WTO
rules, enhanced predictability and thus generated investor confidence.
32. This led to a number of questions.  Did the Kenyan Government have plans to
review/dismantle the suspended duty system?  Was the Government seeking advice from the IMF or
bilateral donors on how it might increase revenue flows from non-trade sources, so as to reduce itsdependence on border revenues which currently accounted for 54% of total government revenues?
Was the incorporation of WTO Agreements into Kenyan law, so that their provisions could be
invoked in Kenyan courts, seen as a priority?  Did the Government recognize that a higher rate of
tariff bindings and a wider range of commitments under the GATS could be expected to have a
beneficial impact on investor confidence?
33. Regarding investment and trade, he noted that Chapter IV, paras. 69-70 of the
Secretariat Report described the ambitious industrial development policy adopted by the Kenyanauthorities in 1997.  This policy provided for a two-phase approach, and set long-term goals across a
large range of industrial sectors.  It seemed arguable that in a globalizing world economy, Kenya
would be better advised to focus on becoming a highly successful global player in certain specific
niches rather than on trying to attain competitiven ess in industrial sectors in which other players were
already well established.  The obvious niches would be those in which Kenya's comparativeadvantages had already been proven, e.g. tea, horticultural products, and tourism.  To these, Kenya
might try to add a new comparative advantage in some  cutting-edge internet-related activity, thereby
leap-frogging over a whole range of obsolescent indu strial technologies.  A niche focus of that sort
would make it possible to concentrate investment on expanding output, e.g. through improved
infrastructure and production capacity enhancement, in sectors where Kenya's competitiveness wasnot in doubt.  While noting that this was just a possible way of looking at the challenge of economic
development, and no doubt there were good arguments against it,  he was interested to know Kenya's
opinion on this idea.
34. Finally, he referred to Kenya's experience as an exporter.  He was struck by paragraph 60 of
the Kenyan Government Report, which lamented the very high level of tariffs on the agriculturalproducts of developing countries like Kenya resu lting from post-Uruguay Round tariffication.  This
seemed at odds with the Secretariat Report, which suggested that Kenya's main agricultural and
horticultural exports received preferential treatm ent under the GSP or the Lomé Convention in all the
major developed country markets.  He wondered whether tariffs applied under GSP and Lomé were
much higher than he realized?  He was also interested in hearing more about non-tariff barriers thatconstrained Kenyan exports, e.g. in the sanitary and phytosanitary field.WT/TPR/M/64
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
35. Members commended Kenya for its efforts to promote economic development through trade
policy instruments and for the progress it had made since its last Trade Policy Review regarding trade
liberalization.  Members understood the problems Kenya was facing in solving the problems inherent
in any developing country’s economy and wished the Government of Kenya every success in these
efforts.  They encouraged Kenya to pursue further liberalization of its trade regime and to fully
integrate into the multilateral system.  Several Members had developed a number of technicalquestions based on the Secretariat's and Government's Reports and looked forward to receiving
answers from the Government of Kenya and discussing in detail Kenya's record and future progress in
trade and investment liberalization.
36. The representative of Hong Kong, China noted that Kenya had dismantled non-tariff
restrictions and rationalized its tariff, and encouraged Kenya to continue simplifying its tariff regime,
for instance, by abolishing "suspended duties" and by converting mixed and specific duties into,
ad valorem duties.  The number of tariff lines bound was low and there were substantial differences
between applied and bound tariff rates.  She hoped that Kenya would increase the coverage of its
tariff bindings and narrow the gap between bound and applied rates, which would enhance the
predictability of Kenya's tariff regime.
37. The representative of Canada acknowledged that Kenya had faced considerable economic
challenges since the last Review in 1993.  However, Kenya remained one of the economic pillars of
Africa and had worked with resolve to address its domestic problems, to promote peace and stability
in East Africa, and to achieve its goal of creating a prosperous outward-oriented economy,
functioning within the global trading regime.
38. Canada appreciated Kenya's commitment to the liberalization of its economy, which should
continue.  He also appreciated and had supported, the recent efforts by Kenya to embark on an"economic recovery programme."  The efforts of Dr. Richard Leakey and his team were to be
commended.  Kenya's economic future depended on the success of these efforts, and the
implementation of the reforms, which would creat e a culture of good economic governance in the
country.  Kenya had faced certain impediments to attracting foreign investment, which had been
beyond its control, but by continuing to effectively address domestic challenges, such as corruption, itwould remove important factors that inhibited investment.
39. Canada had a number of specific questions concerning such issues as customs procedures,
government procurement, competition policy, and services and looked forward to the responses.
40. The representative of Japan commended Kenya's privatization efforts in sectors such as
telecommunications and energy, and hoped that the process could be continued in other areas such as
ports and railways.  Efforts taken by the Government against corruption and smuggling were also
much appreciated and their continuation could improve Kenya's investment environment.
41. Japan welcomed Kenya's reduction in taxes, aimed at supporting private companies' activities
and at expanding consumption.  Nevertheless, further improvements in the investment field were
expected.  He referred to a limitation on foreign capital participation for stocks listed on the Nairobistock market.
42. With regard to customs tariffs, Japan was concerned about Kenya's low coverage of tariff
bindings.  Notably, Kenya bound only a limited number of non-agricultural products.  Japan urged
Kenya to improve its binding ratio in order to improve transparency in its trade regime.WT/TPR/M/64
Page 10
43. Referring to the various regional arrangements in which Kenya participated, he noted that
these should be consistent with the WTO Agreement.
44. The representative of Switzerland joined other members in commending Kenya on its
progress regarding trade liberalization.  However, she noted that certain weaknesses were evident in
the structural reforms, in particular in the public sector.  She welcomed Kenya's participation in the
financial sector negotiations but wondered why Kenya had been unable to ratify the Fifth Protocol to
the GATS.
45. The representative of the European Union welcomed the active role played by Kenya in the
different integration initiatives and as a peace keeper in the region.  She appreciated the
implementation of macroeconomic policies  that had brought inflation down and the external debt to
manageable levels.  Nevertheless, there had been problems in this area since 1997 and this was a
source of concern.  During 1995-96 the economy grew at  5%, followed by slowdown since 1997,
while population had grown at a faster rate, this indicated decreasing income per capita and increasing
poverty.  While this situation could be partially attributed to El Niño, poor political and economic
management, had been the main contributing factor.
46. Moreover, as a result of the lack of governance the IMF had stopped ESAF negotiations.  The
donors were working to turn this situation around, and Kenya had already taken steps in this regard.Recently, reforms of the public sector, including changes in the tendering process, were started in
Kenya.  Regarding political reforms, she noted that constitutional reform was of particular concern to
the donors; the risk of violence would harm the economy, especially the tourism sector.  The political
uncertainty caused by the constitutional reform should stop.
47. It was important for Kenya to continue its trade liberalization to complete the transition to an
outward-oriented economy; this could contribute to modernization, and help to dynamize trade and
attract foreign investment.
48. She listed a number of aspects of Kenya's trade policy where the level of commitment needed
to be increased, the transparency and predictability  of legislation improved or enforcement pursued in
a more efficient manner.  These included the level of tariff bindings and the application of "stand-by
duties";  implementation of the Customs Valuation Agreement as of 1 January 2000;  enforcement of
intellectual property protection;  increasing the scope of international competitive biddings;privatization and reactivation of the parastatal reform programme;  trade facilitation;  and streamlining
and simplification of the various investment incentives and promotion schemes.
49. She recognized that the efforts required from Kenya were daunting.  Nevertheless, she was
confident that with a sufficient degree of political will, significant improvement could rapidly beachieved by Kenya.
50. The representative of the Republic of Korea expressed appreciation for Kenya's endeavours to
undertake structural reforms and to shift its fo cus from import-substitution to outward-oriented
policies.  Kenya had a number of comparative advantages that could be further exploited.  Persistence
by the Kenyan authorities in opening Kenya's economy would not only make the country a moreimportant trading partner but also make it an example to other African countries.  Korea believed that
its bilateral trade with Kenya could be further expanded.
51. Certain trade policy issue were of concern to Korea.  With respect to suspended duties, he
asked whether the ceilings set by the Act were equivalent to bound rates, whether they could exceed
bound rates, and whether the Kenyan authorities had any plans to lower these ceilings.WT/TPR/M/64
Page 11
52. The Secretariat Report mentioned that investment incentives had been rationalized.  However,
it appeared that some important limitations were stil l in force, such as an obligation to hire local
people, and limits on the ownership of stocks.  As these measures limited competitiveness, Korea
wondered whether these measures would be abolished or reduced.
53. Regarding COMESA, he enquired about the conformity of the FTA with the WTO  rules and
principles, and if COMESA had been notified t o, and approved by, the WTO.  If not, Korea was
concerned that the tariff reductions among FTA members, implemented since October 1996, could bea violation of the MFN principle.
54. It had been reported recently that the Kenyan Ministry of Commerce would reinforce
technical regulations for imported goods with a view to protecting consumers and domestic industries.
He requested further details about these and about the measures that Kenya would take to ensure
universality and impartiality of the regulations.
55. The representative of the United States applauded Kenya's simplification of its trade regime
by reducing tariffs on most products; and efforts to dismantle import licensing and most quantitative
restrictions on imports.  Broad based private sector participation in a competitive economy was
another mechanism that fostered growth, therefor e, it was encouraging that the Government had
identified over 200 parastatals for privatization and another 33 for restructuring.  The United Statedlooked forward to hearing about the status of the privatization programme.
56. There were many additional measures that should be considered to complement Kenya's
initial accomplishments in liberalization and economic development, including additional
improvements in market access.  The Secretariat Report noted that the lack of investor interest in
Kenya was caused, in part, by the high cost of doing business in Kenya, lack of transparency, and an
uncertainty over rules and enforcement.  The Gove rnment's strategy to reinvigorate the economy and
reduce unemployment hinged on solving these problems to attract the investment it needed.
57. Crucial to this effort was the government's ability to carry through on its privatization
programme, promote greater domestic competition, re duce the cost of doing business in Kenya, limit
discretionary powers of the Government, and improve transparency in commercial regulation.  A
critical component of transparency was to update and notify the WTO of trade laws, regulations and
programmes.  The United States looked forward to receiving a detailed description of Kenya's effortsto meet its notification obligations, and, in this regarded, welcomed a description of any need for
technical assistance.  The United States was con cerned over the status of Kenya's formal adoption,
through domestic legislation, of its WTO commitments, and compliance with deadlines under the
WTO Customs Valuation Agreement and TRIPS;  she requested an update regarding implementation
of these Agreements.
58. She was pleased that Kenya had improved its commitments in banking, securities, and other
financial services during the 1997 WTO financial services negotiations and that it was continuing to
take steps to strengthen its financial sector.  Broader market access would aid in strengthening
Kenya's financial sector further since it would help attract investment and enhance competition.
59. The Secretariat Report noted economic setbacks in the services sector, including tourism, due
to a deterioration of infrastructure and mismanagement of state-owned enterprises supplying services.
In addition, Kenya had included relatively few sectors in its GATS commitments.  While
complimenting Kenya on the steps taken in financial services and telecom, she encouraged Kenya to
consider the use of new GATS commitments to demonstrate its intention to promote competition in its
services sector.WT/TPR/M/64
Page 12
60. Finally, the United States was encouraged by the Government's reform measures introduced
since July 1999, including the appointment of a specia l team to spearhead governance reform efforts.
Issues of governance and the rule of law continued to be important for Kenya;  she hoped that the new
special team would be able to fully address these issues.
61. The representative of India noted that since its last Trade Policy Review Kenya had
implemented structural and macroeconomic reforms, and switched from an import substitution regime
to an outward-oriented regime, this was commendable.  Kenya' s major export markets were Europeand East Africa; exports comprised mainly food products.  In this regard he considered that the
measures taken by Kenya to invigorate growth in services exports would be a key aspect of Kenya's
economic recovery.
62. He congratulated Kenya on its efforts to reduce protection, especially through the lowering of
tariffs; in addition, export taxes had been abolished, and contingency trade remedies had not beenused.  Kenya served as an example of restraint being exercised by a developing country even in
adverse economic conditions.  Kenya's steps to implement the WTO Agreements deserved
encouragement and support.
63. The representative of Morocco mentioned that Kenya was actively involved in various
regional initiatives.  It applied MFN treatment to all trading partners and granted national treatment to
all investors.  It was encouraging that Kenya had resisted the use of anti-dumping, countervailing, and
safeguard measures.
64. Trade between Morocco and Kenya was insignificant, and Morocco intended to make further
efforts to strengthen bilateral relations.  She congratulated Kenya for the reforms undertaken, despite
numerous difficulties, highlighting, inter alia , the elimination of quantitative restrictions, price
controls and subsidies, and the rationalization of  tariffs.  She encouraged Kenya to continue the
opening up of its economy since positive results had already been achieved.  Morocco and Kenya hadencountered similar market-access difficulties, mainly due to strict standards applied to certain
products;  she called for the lifting of those obstacles.
65. The representative of the Czech Republic appreciated the continuation of Kenyan economic
reforms and noted that Kenya benefited from the Czech system of customs preferences, and mutual
relations were complemented by the bilateral trade agreement signed between the former Czech andSlovak Federal Republic and Kenya.  This agreement had proven its value and remained in force.  It
appeared that products shipped directly from the Czech Republic received different treatment on the
Kenyan market than Czech products shipped from a preferential market;  he asked for comments on
this situation.  In addition, he asked for an explanation for the recent increase in import duties and
proliferation of suspended duties.
66. The representative of Mauritius noted that despite the difference in size, Kenya and Mauritius
shared close relations, both belonging to the Eastern African region and being members of COMESA
and the Indian Ocean Rim.  Trade between Kenya and Mauritius had grown over the years
particularly through COMESA mechanisms.
67. The services sector in Kenya, contributed some 54% to the country’s real GDP, twice as
much as agriculture.  Kenya was a net exporter of services, of which tourism remained a major part.
She was convinced that there was scope for further diversification and development in the services
sector; for instance there was potential for the further development of telecommunications services.
Kenya seemed to be fully conscious of this, and thus it had already taken steps to re-structure some of
its financial sector institutions.  Despite these efforts however, net receipts from trade in services hadbeen declining since 1992.  She sought an explanation from the Kenyan delegation.  She also referredWT/TPR/M/64
Page 13
to state intervention and wondered whether the limited competition had affected the development of
services.
68. Agriculture, which was linked to Kenya’s tourism sector, remained a leading sector.  Kenya’s
strong agricultural performance was laudable consid ering that about 80% of Kenya’s land surface was
either arid or semi-arid and only part of its territory could be intensively cultivated.  In this regard she
noted the high dependence of agricultural output on weather conditions.  El Niño had had its effects in
Kenya as elsewhere in the region;  yet Kenya remained the world’s leading supplier of bixa andaccounted for some 70%-80% of world production of pyrethrum flowers.
69. Kenya had since 1993 curbed inflation and turned around its fiscal deficit.  She commended
Kenya's efforts in this direction.  Kenya had also undertaken a number of steps towards further
liberalization through the dismantling of quantitative import restrictions and import controls and the
rationalization of its tariff structure and incentive scheme.  She highlighted Kenya’s decision toabolish export duties and taxes on all production ex cepting fish and timber and asked whether these
exceptions were guided by self-sufficiency or other reasons.
70. Although Kenya had rationalized its incentive scheme,  it still provided certain incentives to
industrialists.  She emphasized that for many countries (including hers) where size, infra-structural
weakness, etc. remained strong constraints, incentives were necessary to attract investment.  Yet,despite such incentives, investments had not been forthcoming to Kenya.  In this regard, she referred
to the unpredictability of Kenya as an operating environment for private investors.  She asked if
Kenya shared this perception and if so, what measures it would envisage to restore investor-
confidence.
71. Liberalization did not only bring benefits as could be observed by the negative impact on
Kenya’s manufacturing sector, particularly textiles.  Kenya’s textile sector had suffered significantly
over the years although it was not certain whether the collapse of a number of textile firms could beattributed simply to the removal of high tariff protection or whether other reasons outside Kenya’s
control contributed to this collapse.  She was inte rested to know how Kenya saw the future of its
textile industry, bearing in mind the current preferential arrangements from which it benefited and the
potential opportunity that the final version of the Africa Bill could provide.
72. The movement from state ownership to privatization was not easy;  Kenya had undertaken to
re-structure certain parastatal bodies in this direction although the progress had been slow.  State
trading enterprises (STEs) played an important role  in small economies in providing food security and
in ensuring efficient marketing for small producers.   She sought Kenya's views regarding the role of
STEs in its own economy.
73. The Secretariat Report noted that counterfeiting was a problem in Kenya.  This was not
exclusive to Kenya and was common both in developed and developing countries.  Kenya had
relevant intellectual property legislation to prevent counterfeiting and the problem was really one of
enforcement.  She did not condone counterfeiting and was conscious of the WTO obligations in this
regard;  however, it was a question of how much of a developing country’s limited resources could be
absorbed in combatting counterfeiting.
74. The representative of Pakistan sought clarification regarding the imposition of the suspended
duty regime.  The discretionary nature of this regime was a little disturbing and he enquired about the
rationale for imposing a discretionary regime, which had the potential of harming the trade interests of
Kenya's trading partners.WT/TPR/M/64
Page 14
75. The representative of Uruguay referred to the progress and reforms undertaken by Kenya
since its last Trade Policy Review.  Uruguay shared Kenya's concerns regarding trade in agriculture,
noted in para. 70 of the Government Report.  Given the importance of agriculture, he considered that
one of the main objectives in the process of reform ing international trade rules should be that trade in
agriculture was ruled by the same norms and disciplines as trade in other goods.
76. The representative of Kenya noted that this Review had been a useful exercise to evaluate
Kenya's progress in trade policy and to assess how far Kenya had gone.  He clarified that the private
sector was the main engine of growth in Kenya and that investment would take place only where
returns were positive.  He ensured the Members that Kenya was and would continue to take advantage
of the use of information technology.
77. He explained why Kenya had not grown in 1997 and 1998.  First, the El Niño rains had
devastated infrastructure, sweeping away roads and bridges.  These rains were followed by La Niña,which had brought drought, thus affecting agriculture.  Second, the instability in the region was a
great burden to Kenya.  Two of Kenya's neighbours were fighting civil wars,  hence the influx of
refugees and of illegal arms into Kenya.  Third, Kenya held the second multi-party elections in 1997.
Politics in this case was taken seriously, and campaigning had begun two years prior to the elections,
entailing high costs.  Thus, Kenya was unable to co mply with the IMF's conditionality, leading to the
break up with the IMF.  This rupture resulted in a decrease in FDI as foreign investors lost confidence
in the country's macroeconomic stability.
78. He considered that Kenya's main problem was poverty, and hoped that growth would resume
in order to alleviate poverty.WT/TPR/M/64
Page 15
V. REPLIES BY THE REPRESENTATIVE OF KENYA AND ADDITIONAL
COMMENTS
79. The representative of Kenya thanked Member countries that had commended Kenya on its
trade liberalization reforms.  He gave an overview of the detailed responses prepared by his
delegation and distributed to all participants.  Three topics had emerged from the 128 questions asked
in the first-day's session:  (1) economic environment;  (2) trade policies by measure;  and (3) sectoral
policies.
(1) Economic environment
80. The representative of Kenya reiterated the commitment of his Government to pursue prudent
macroeconomic management to ensure accelerated economic growth and an enabling environment for
an efficient private sector to thrive, and to maintain price stability.  The Government's long-term
objective was to eliminate budget deficit in order to stabilize domestic prices, interest rates andexchange rates of the Kenya shilling.  Kenya was k een to maintain the rate of expansion of money
supply consistent with the growth of economic activity and sustainable balance of payments.  The
Kenya Revenue Authority had enhanced and expanded its revenue collection to reduce domestic
borrowing and hence stabilize interest rates.
81. Given that the trade liberalization reforms had exposed the poor to severe economic
hardships, the Government had introduced social safety nets to promote effective poverty relief
through targeted interventions.  Most state trading enterprises had been privatized and public
monopolies phased out, with a view to allowing the private sector to play its pivotal role in the
development of Kenya.  The long-term plan of the Government was to pull out of the commercial
sector completely.  However, some of the state trading enterprises (e.g. in tea, coffee and sugar) were
being converted into regulatory bodies in order to protect small-scale farmers from unscrupulous
businessmen.  The competition law was being further reviewed and some of its sections would berealigned to fit in with the curren t international trading environment.
82. Kenya was committed to increasing transparency and stability in its investment regime.  The
Investment Promotion Centre had established a we bsite to provide investment information;  the
processing time for applications to invest and conduct business in Kenya had been substantially
reduced.  Infrastructure and utilities issues were being addressed with a view to reducing the cost ofdoing business in Kenya.
83. Kenya's comparative advantages should not be restricted to marketing commodities such as
tea, coffee and horticulture in primary form.  Given that tariff escalation impeded any attempt to add
value to these products, Kenya wished that this type of trade barrier, as well as sanitary and
phytosanitary measures and technical barriers to trade, could be removed by its trading partners toallow it to make a few more strides towards industrialization.  The cases of exports of fish to the EU
and of flowers to Japan were examples of market access problems faced by Kenya.  In order to
overcome problems related to the implementation of WTO Agreements, there was a need for trading
partners to consider extending technical assistance to Kenya by contributing to the Trust Fund through
Window II, under which financing had not been forthcoming.
84. Kenya was an active member of several regional trading arrangements;  chief among them
was COMESA, which was notified to the WTO by Zambia on 4 May 1995.  COMESA met the
requirements of Articles XXIV of GATT 1994 and V of GATS.  Kenya looked forward to a speedy
processing of COMESA's application for observer status to the WTO.WT/TPR/M/64
Page 16
85. The discussant thanked the Kenyan delegation for its replies.  While he welcomed Kenya's
plan to eliminate public deficit, he expressed concern about the share of border taxes in government
revenue and encourage it to seek assistance from the IMF or foreign governments to reduce such a
dependence.  He commended Kenya on social safety nets that had been introduced and on the
enforcement of its Competition Law, and sought information about the number of public enterprises
already privatized and those still in operation.  He understood Kenya's concerns about tariff escalation
and technical barriers faced by its exports, but noted that consumers safety was also importantalthough it should not be used to raise additional barriers to trade.  He encouraged Members to
contribute to funding under Window II of JITAP but warned that the Geneva trade agencies had far
less trade-related technical assistance funding at their disposal than the World Bank.
86. The representative of Japan requested clarification on areas exempted from the provisions of
the Competition Law and stated that this meeting was not to discuss on Kenyan exports of flowers to
Japan.
87. The representative of Kenya replied that the share of border taxes in public revenue had been
reduced since the previous TPR and would be lowered before the next review;  the corporate tax had
been reduced and the rates of duty were on a downward path.  He noticed that this trend might not be
coherent with the recommendations of the IMF regarding public revenue.  He added that there was noissue of concern with Japan, which was a good trading partner of Kenya.  Regarding competition law,
this was about ten years old and had been reviewed before the liberalization reforms;  the exemptions
were detailed in the replies.
(2) Trade policies by measure
88. The representative of Kenya recalled the foundat ions of Kenya's trade and investment regimes
and said that there was no fee payable on licences.  The single-entry document introduced by the
Kenya Revenue Authority since January 2000 had reduced the clearance time to a maximum of twodays if all documents were in order;  goods might be cleared within hours in the chief ports of
Mombasa and Nairobi.  Inland container depots had also been opened to reduce piling of cargo in
Mombasa.  Moreover, Kenya was implementing all the provisions of the Agreement on the
Implementation of Article VII of GATT 1994.
89. After having recalled the simplification of the tariff structure, he stated that his delegation
would report to its authorities the issues raised by participants regarding extension of the scope of
Kenya's tariff bindings.  The suspended duties were imposed as a trade remedial measure to assist
domestic industries, such as textile industries, whic h had almost all closed down within the first two
years of liberalization, to adjust to the new trading environment.  As the domestic economy adapted to
the realities of a liberal market, the Government would consider converting suspended duties intotariffs;  however, it reserved its rights under the WTO Agreements.
90. The Customs and Excise Act had been amended in 1997 to incorporate the WTO rules on
anti-dumping, safeguard and countervailing measures .  The WTO would be notified of the rules and
regulations – they were in their final stages – that were to govern the implementation of the Act.  The
representative recalled that technical standards applied to local and imported products and the KenyaBureau of Standards (KBS) had already been notified to the WTO.  KBS had received support from
the African Regional Standards Organization a nd from the WTO, UNCTAD and ITC under the aegis
of JITAP;  additional assistance for modernization would be welcome.  Kenya's participation in any of
the Plurilateral Agreements was not an immediate priority since it was still grappling with meeting its
WTO obligations, for which capacity building remained the priority.WT/TPR/M/64
Page 17
91. Kenya was among the developing countries that did not align domestic regulation with the
TRIPS Agreement by 1 January 2000, and was among the WTO Members that had pressed for anextension of the transition period.  Kenya was expecting the General Council to make a decision on
this matter in February 2000, as agreed on 17 December 1999.  He announced that Kenya had become
a member of the UPOV on 13 May 1999.
92. The discussant took note of the replies provided by the Kenyan delegation and encouraged
Kenya to eliminate the gap between applied and bound tariff rates, convert its few tariff lines bearing
non-ad valorem  duties into ad valorem  rates, and abolish the suspended-duty system, which was
unpredictable.  He requested clarification on exemptions granted on compulsory standards and on
technical assistance (if any) received by Kenya in the implementation of the TRIPS Agreement.
Although the Plurilateral Agreement on Government Procurement was not Kenya's priority, foreign
suppliers would benefit from its membership, which might also reduce the cost of its publicprocurement.
93. The representative of the European Union requested clarification on labelling requirements
(including the names of importers) imposed on imported whisky, and on the duration of the process of
customs procedures and valuation in the light of the establishment of a single-entry document.  He
expressed concerns about the unpredictable nature of suspended duties, which looked like anti-dumping duties and should accordingly be implem ented under the relevant WTO Agreement.  He
added that the questions asked by the EU on TRIPS, including on geographical indications, were not
answered.
94. The representative of Kenya replied that his Government would reflect on its participation in
the Plurilateral Agreement on Government Procurement.  Kenya had received assistance from WIPO
and other donors for the implementation of the TRIPS Agreement.  The information provided on
whisky in the replies was a typographical error.  He raised some of the difficulties encountered in thereview process and indicated that the answers to the questions on TRIPS were contained in the
preliminary version of the replies distributed to participants.  The time of clearance (excluding the
IDF procedures) was two days;  clearance took some hours at the airport.
(3) Sectoral policies
95. The representative of Kenya reminded participants of the performance of the agricultural
sector, its importance for the economy, and the notification made to the WTO that it did not subsidize
individual products but offered green-box type support to areas such as education, extension services
and training.  The Government had allowed the private sector to compete alongside marketing boards
that had hitherto held monopoly positions;  progress had been made towards converting most of the
boards into regulatory bodies to ensure a level playing field for consumers and producers.
96. Kenya would focus on improving the necessary infrastructure in order to reduce costs related
to transport, energy and other utilities.  Coupled with  a simplified and faster investment process, this
should help to attract more industries.  Kenya's location at the centre of eastern and southern Africa
also allowed investors quick access to the region's markets.  The restructuring of the civil service
would reduce public expenditure, improve service delivery, and restore investor confidence.  Thesemeasures, together with the lowering of the cost of finance and of certain production inputs would
also be important in generating supply response.  He reiterated Kenya's determination to succeed.
97. The discussant queried the past and current roles of the marketing boards in trade in
agricultural products, following their conversion into regulatory bodies.  He took note of the reply
regarding Kenya's non-ratification of the Fifth Protocol to the GATS and on its comparativeadvantages in the manufacturing sector, and encouraged Kenya to create a facilitating environment forWT/TPR/M/64
Page 18
private investment.  The representative of Japan welcomed Kenya's interest in electronic commerce,
and enquired about Kenya's policy on promoting and regulating electronic commerce.
98. The representative of Kenya gave a chronological account of the boards' evolution and
indicated that agricultural branches such as fish and horticultural products, had taken off because their
boards were playing only regulatory functions;  other branches under monopoly of boards had also
been opened to competition.  Kenya had substantially reduced duties on imports of information
technology equipment (e.g. computers and software), from 15% to 5%, and like certain WTOMembers, it had suspended collection of duties on electronic commerce.  Moreover, Kenya's taskforce
on electronic commerce played a crucial role in the regional seminar on information technology and
electronic commerce organized by UNCTAD in Nairobi.  He looked forward to the expansion of the
network by other internet partners.WT/TPR/M/64
Page 19
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
99. We have had a comprehensive and very interesting review of Kenya's trade policies, which
provided valuable insight into the significant trade reforms and structural adjustment undertaken since
the previous Review, with a view to achieving Kenya's orientation to competitive markets.  This was
made possible both by the detailed information provided by Ambassador Rana and his delegation on
recent and ongoing reforms, and by the high quality of comments made by the discussant and the
participants in this TPRB.  The large number of questions and comments reflected the widespreadinterest of Members in recent developments in Kenya as well as the importance they attached to
Kenya's role in the region and in the WTO.
100. Members were unanimous in congratulating Kenya for the actions undertaken towards trade
liberalization, particularly as Kenya is an important player in the region.  These steps included the
progressive dismantling of quantitative restrictions, the rationalization of the tariff structure, and thelowering of the average tariff rate.  Members recognized the social impact of these reforms and, it is
my impression, were appreciative of Kenya's efforts in this regard, in particular the introduction of
social safety nets.  In this regard and on a more general level, some Members noted the importance of
coherence both in policies and in the work of international organizations, particularly the WTO and
the IMF.  They congratulated Kenya for fully implementing the WTO Agreement on CustomsValuation and for its determination to implement all WTO obligations.
101. On the other hand, most Members expressed concern over recent tariff increases for some
agricultural products.  They also noted that "suspended duties" made the tariff regime more distortive
and less transparent.  They encouraged Kenya to consider elimination of such duties and to pursue
further trade policy reforms, as well as to accelerate the privatization programme to enhance its
macroeconomic stability and facilitate foreign invest ment inflows.  They further encouraged Kenya to
increase the coverage of its tariff bindings, and bring the bound rates into line with applied rates witha view to increasing tariff predictability for trading partners.
102. At the same time, Members recognized the large number of legislative changes already
implemented to improve transparency and accountability.  Members expressed particular interest in
areas where WTO-related technical assistance might be useful.
103. Members also asked for details in a number of more specific areas including:
- plans to incorporate WTO Agreements into Kenyan law;
- customs valuation, transparency and predictability of customs procedures, and plans
to facilitate customs clearance;
- conditions for granting exemptions to compulsory standards;
- main provisions of the new anti-dumping and countervailing legislation;- legislation on government procurement and any plans to become a signatory to the
WTO Agreement on Government Procurement;
- recent progress on amendments to intellectual property legislation, including its
coverage and enforcement activities;
- implementation of competition policy, including number of appeals, and transborder
anti-competitive behaviour;WT/TPR/M/64
Page 20
- ratification of the Fifth Protocol to the GATS, and further liberalization and
privatization of the telecommunications sector;
- progress in regional trade liberalization under COMESA and the EAC, as well as the
impact of such agreements on economic growth and public revenue;
- foreign investment legislation, efforts to increase transparency and stability of the
investment regime, in particular criteria for approval of investment projects, any
discrimination in the granting of incentives, and bilateral investment treaties;
- marketing boards in the agricultural sector;
- the industrialization strategy, as well as the situation of the textiles and clothing
sector; and
- access to export markets for Kenyan products.
104. Members appreciated the frank and comprehensive responses provided by the Kenyan
delegation, noting in particular the assurance that ongoing reforms were designed to reduce barriers to
foreign participation in the Kenyan economy, based on the belief that an open trade and investment
regime contributed to sustainable development, and thereby to the reduction of poverty;  the reform
programme, which would not be relaxed, should add further transparency, public accountability and
predictability to the business environment.
105. In conclusion, it is my feeling that this has been a most successful Review of Kenya's trade
policies.  Members appreciate Kenya's determined efforts to improve its economic environment, and
the central role of trade policy in this respect, so as to be fully able to benefit from its favourable
resource base and achieve sustainable growth to the benefit of all its people, alleviating poverty.
Kenya's active participation in the WTO seems to me to be central to this effort and I urge all
Members to support Kenya in its ongoing efforts.  In this respect, I think we should pay particular
attention to Kenya's request to the Membership for technical assistance and for improved access tomarkets.WT/TPR/M/64
Page 21
ANNEX I
ADVANCE WRITTEN QUESTIONS
THAILAND
In order to strengthen the trade relations between Thailand and Kenya, the Royal Thai
Government would like to submit the following que stions and comments to the Government of Kenya
(GOK).
Safeguard measures (WT/TPR/S/64, p. 38, para. 43)
The Secretariat report notes that Kenya retained the right to use the transitional safeguard
mechanism of Article 6.1 of the WTO Agreement on Textiles and Clothing, but so far the GOK has
not yet notified the lists of products.
What is the intention of the GOK with regard to the notification of the lists of products?Could Kenya also provide the details of the products?
Tariffs, other levies and charges  (WT/TPR/S/64, p. 35, para. 29)
According to VAT exempt system, unprocessed agricultural products and processed
foodstuffs are exempt from VAT.
We would like to know that such an exemption system is applied to both local and import
products?
The report notes that the VAT can also be waived by the Minister of Finance under specific
programme conditions which detailed in the Value-Added Tax Act.
Could the GOK kindly explain more detail on such programme?
Customs procedures  (WT/TPR/S/64, p. 29, para. 12)
Comment:
The Royal Thai Government is pleased to know that the custom clearance is normally
completed within two days, given all documents are in order.  This will encourage and strengthentrade relations between Thailand and Kenya.  Based on our own sources, the custom clearance takes
longer than two days.  In our experience, it took  us one to two weeks on the custom clearance at the
port of entry.  It would be grateful if the GOK could provide us with detailed information of this
concern.  Can the GOK also confirm that the custom clearance is transparent and predictable?
H
ONG KONG, CHINA
Registration and documentation (WT/TPR/S/64, p. 27, para. 6)WT/TPR/M/64
Page 22
It is noted that under the 1968 Trade Licensing Act, as revised, foreigners are not allowed to
conduct businesses in certain places or in specified goods.  We would like to know the details of themeasure, and whether the Kenyan authorities have any plan to remove such restrictions.
Standards and other technical requirements  (WT/TPR/S/64, p. 38, para. 47)
We  note that compulsory standards apply equally to imports and locally produced goods.
Exemption from compliance with a compulsory standard may be granted by the Minister of Industrial
Development on a case-by-case basis.  We are interested to know under what circumstances such
exemptions will be granted, and if there are any published guidelines on exemptions.  In seeking the
exemption, will imported products be treated differently from locally produced goods?
Trade-related aspects of intellectual property rights (TRIPS) (WT/TPR/G/64, p. 14, para. 58)
It is reported that Kenya was in the process of amending its intellectual property legislation
with a view to conforming it to the TRIPS Agr eement by 1 January 2000.  it also stated that the
industrial property amendment bill has been presented to Parliament for debate and approval.  Couldthe Kenyan authorities inform us the latest progress of its legislative amendment work?
Financial services (WT/TPR/S/64, p. 72, para. 79)
Kenya has participated in the WTO financial services negotiations and made improved
commitments in the sector.  However, it is mentioned that Kenya has not yet ratified the Fifth
Protocol to the GATS, which entered into force on 1 March 1999.  We would like to know thetimetable for its ratification.
Telecommunications  (WT/TPR/S/64, p. 77, para. 98)
It is noted that telecommunications services are provided by state-owned corporations, which
retains a monopoly until 2003.   Besides, foreign ownership in that sector is restricted to a maximum
of 30%.  Does the Kenya Government have any plan for further liberalization of the sector?
C
ANADA
III.  Trade Policies and Practices by Measure,  (2) Measures Directory Affecting Imports,
(ii) Customs procedures  (WT/TPR/S/64, paras. 9 and 10)
According to the report, imports into Kenya with an f.o.b. value of US$5,000 or more
(US$10,000 for goods airlifted by courier services) are subject to pre-shipment inspection by one ofthree companies appointed by the Government, each of which has been allocated an exporting
(foreign) region.  The  report also noted that a non-negotiable report of findings is issued by the
inspecting office in instances where there are unresolved problems regarding quantity, price, etc.  Are
the findings of such a report considered final or can a review of the findings be requested?
III.  Trade Polices and Practices by Measure, (2) Measures Directly Affecting Imports,
(ii) Customs procedures  (WT/TPR/S/64, para. 12)
According to the report, prior to the release of imported goods from Customs, all documents
must be presented to Customs, goods must undergo physical verification by Customs, and duties must
be paid.  Provided all documents are in order, such customs clearance is normally completed withinWT/TPR/M/64
Page 23
two days.  Does Kenya intend in the future to facilitate customs clearance through such means as risk
assessment or post-entry audit?
III.  Trade Policies and Practices by Measure,  (2) Measures Directly Affecting Imports,
(x) Government procurement  (WT/TPR/S/64, para. 96)
What are Kenya's intentions with respect to becoming a signatory to the WTO Agreement on
Government Procurement or an observer to the Agreement?
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(iii) Competition policy  (WT/TPR/S/64, para 96)
Can the Government of Kenya provide information on its enforcement priorities over the past
five years?  What has been the enforcement record of the Monopolies and Price Commission over the
same period?
How many appeals has the Restrictive Trade Pr actices Tribunal heard over the past five
years?  Are the deliberations of the Tribunal made public?
What has been the budget of the Commission, and how many people have been employed by
the Commission over the past five years?
Does the Act allow the Commission to engage in independent advocacy efforts to ensure pro-
competitive reform of state-owned enterprises and monopolies?
VIII.  Kenya and the Multilateral Trading Syst em, (1) Implementation of the WTO Agreements
and Challenges Faced, (iii) Changes in legislation, (b) Customs valuation  (WT/TPR/G/64,
para 57)
With respect to customs valuation, [also noted in the Secretariat Report, Section III(2)(ii),
para. 8] the Kenyan Customs and Excise Department  still applied the Brussels Definition of Value
system, with Kenya having submitted to the WTO a notification for delayed application of the WTO
customs valuation system until the year 2000.  However, technical assistance had been sought and
received from the World Customs Organization and it was expected that the new valuation method
would be in force by January 2000.  Has Kenya implemented the WTO Customs Valuation
Agreement and is the new valuation system now in force?
II.  Trade Policy Regime:  Framework and Objectives, (2) Trade Agreements and
Arrangements, (1) World Trade Organization, para 16:
According to the report, Kenya's accession to the WTO was ratified on December 23, 1994
and Kenya became a member of the WTO on January 1, 1995.  The footnote to paragraph 16 states
that in Kenya, international treaties and agreements have to be adopted through a domestic law.  What
domestic legislation has been passed to allow the adoption of the General Agreement on Trade inServices (GATS) into Kenyan law?
II.  Trade Policy Regime:  Framework and Objectives, (2) Trade Agreements and
Arrangements, (ii) Regional Agreements, paras 24 and 31:
According to the report, Kenya is a signatory to the Common Market for Eastern and
Southern Africa (COMESA) treaty and that COMESA members have agreed to create a Free-tradearea (FTA) by October 31, 2000.  The report also states that Kenya is a member of the permanentWT/TPR/M/64
Page 24
tripartite commission for East African Cooperation (EAC) and that the treaty establishing the EAC
was expected to be signed by the end of 1999.  Both agreements have as an objective the liberalizationof trade via the free movement of people.  What progress has been made to date towards reaching this
objective under these regional agreements?
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(iv) Protection of Intellectual Property Rights, para 107:
The report states that Kenya is a member of the World Intellectual Property Organization
(WIPO) and various other international organizations governing intellectual property.  Kenya has
agreed to bring its intellectual property legislation into conformity with the WTO Agreement on
Trade-related  Aspects of Intellectual Property Rights (TRIPS), and has proposed certain amendmentsto its legislation.  Recognizing that the TRIPS Agreement imposes obligations on parties concerning
geographical indications (G.I.s), integrated circuits, layout designs, and undisclosed information, can
the Government of Kenya indicate if these elements will be protected as a result of the legislative
amendments?
IV.  Trade Policies By Sector, (5) Services, (i)  Overview, para 79:
According to the report, Kenya has participated in the financial services negotiations;
however, Kenya has not yet ratified the Fifth Protocol to the GATS, which entered into force on
March 1, 1999.  What progress has been attained towards ratification of the Fifth Protocol to the
GATS?
J
APAN
Customs tariffs
Please explain the present situation with regar5d to modifying Kenya's Schedule in order to
introduce HS96.  When is the modification expected to be completed?  (WT/TPR/S/64, p. 29,
para. 16).
Kenya has introduced an additional import duty and has raised the rate of its import duty on
certain agricultural and textile products.  Are these measures consistent with the WTO Agreement?  If
so, please explain the rationale.
Customs valuation
According to the Secretariat Report, the transaction value will be applied from
1 January 2000, i.e. at the end of the period granted to developing countries under the agreement's
provisions (WT/TPR/S/64, p. 28, para. 8).  Has Kenya already introduced the valuation method based
on the transaction value?
Investment
Please indicate the efforts made by Kenya for increasing the transparency and stability of
investment regime.   Has Kenya established an enquiry point enabling information on its investment
regime to be obtained?  When introducing new laws, or amending existing laws, are these made
public well in advance?WT/TPR/M/64
Page 25
It is reported that the Investment Promotion Centre (IPC) processes all the applications for
any new investments and forwards it recommendations to the Ministry of Finance and Planning forapproval by the Minister (WT/TPR/G/64, p. 11, para. 43).
Please explain the criteria for being recommended by the IPC.In what kind of cases does the IPC recommend that an application is not appropriate for
approval?
Please also explain the criteria necessary for an approval of investment by the Ministry of
Finance and Planning.  Which laws provide such criteria?
Are there any procedures which allow applicants who have been refused to file an objection?
It is reported that Kenya offers various investment incentives, although the effectiveness of
such is minimized due to certain factors, which include the existence of widespread controls and
bureaucratic red-tape (WT/TPR/S/64, p. 26, para 50).  Please explain the measures taken by theKenyan Government to improve such "widespread controls and bureaucratic red-tape?
It is reported that Kenya has signed bilateral investment treaties for the promotion and
protection of foreign direct investment with ce rtain countries (WT/TPR/S/64, p. 26, para. 52).  Please
explain how the treatment differs between those comp anies originating in countries having signed a
bilateral investment treaty with Kenya and those or iginating in a country not having concluded such a
treaty.
TRIPS
According to the Government Report, the industrial property amendment bill has been
presented to Parliament for debate and approval .  In addition a copyright rights and neighbouring
rights bill, which is compliant with the TRIPS Agreement, has also been drafted and will soon be
presented in Parliament (WT/TPR/G/64, p. 14, paras. 58-59).
Has the amendment of these bills been completed?  If not, please explain when the
amendment is expected to be completed.
Please explain the contents of the bills, especially in the light of the obligations under the
TRIPS Agreement.
According to the Government Report, para. 59, Kenya's intellectual property legislation does
not provide any protection for geographical indication, layout designs and integrated circuits and
undisclosed information.  Please explain what is prospect for legislation with regard to the protection
of these rights.
According to the Government Report (p. 16, para. 68), Kenya has noted instances where the
ambiguity of the text of the TRIPS Agreement allows for both different and controversial
interpretations, as exemplified in Article 27.3(b) of the Agreement.
Please explain concretely Kenya's view on the instances where it notes that ambiguity of the
text exists, including regarding Article 27.3(b).
Please also explain which provisions in Kenya's legislation exist regarding to the above
instances.WT/TPR/M/64
Page 26
Competition policy
Please explain how the Kenyan Government copes with transborder anti-competitive
behaviour.  Does the Kenyan Government co-operate with governments from other countries to
control such behaviour?
It is reported that predatory trade practices to repress competition, collusive bidding at auction
sales and collusive tendering are prohibited under the 1988 Restrictive Trade Practices, Monopolies
and Price Control Act.  However, trade practices,  "directly and necessarily" associated with the
exercise of exclusive or preferential trading privileges legally conferred, or with the licensing of
participants in certain trades and professions, are exempted from the provisions of the Act
(WT/TPR/S/64, p. 46, para. 94).
Please provide concrete examples of cases where such exemption has been granted.Does Kenya have any plan to review such exemption?
Agriculture
The Government Report (pp. 16-17, para. 70), states that, "The forthcoming negotiations on
Agriculture, established under Article 20 of the Agreement, are a priority for Kenya for entrenching
the process of reform in international Agricultural trade.  The main objective of this reform process
should consist of subjecting Agricultural trade to the same rules and disciplines as are applied to trade
in other goods, in view of the fact that agricultur e has not been prioritized in the multilateral trade
negotiations".  The view expressed by Kenya that "this reform process should consist of subjecting
Agricultural trade to the same rules and disciplines as are applied to trade in other goods" is not based
on Article 20 of the Agreement on Agriculture, though Japan is of the view that agricultural
negotiations in the WTO should be based on Article 20 of the Agreement.  Please explain what
exactly means the view that "agriculture has not been prioritized in the multilateral tradenegotiations".  Please also explain why Kenya has come to have such an opinion?
It is reported that the introduction of, and research on, genetically modified organisms are
strictly regulated under the Science and Technology Act  (WT/TPR/S/64, p. 54, para. 13).  Please
explain in detail how such introduction and research is regulated under the Act.
According to the Secretariat Report (p. 53, para 10 and p. 55, para. 18), food security (defined
as self-sufficiency in basic  foods) is indicated as  one of the objectives of the agricultural policy in
Kenya.  it is also reported that maize, the predominant food crop, provides nearly half of the calories
and useable protein available to Kenyans and that, for food security purposes, Kenya's agriculturalpolicy emphasizes supply of maize.   However, because of changes in weather conditions, maize
production has fluctuated between 1.8 million and 3.1 million tonnes.  Please explain the measures
taken, or to be taken, by the Kenyan Government to improve the self-sufficiency ratio of staple food.
Textiles and clothing
Please explain the current situation of the integration process by Kenya under Article 2 of the
ATC.
Services
It is reported that not less than one third of the paid-up capital of an insurance company shall
be owned by Kenyan citizens or by the Govern ment (WT/TPR/S/64, p. 76, para. 94).  It is alsoWT/TPR/M/64
Page 27
reported that, in telecommunications services, even after the privatization of Telkom Kenya Ltd.,
restrictions on foreign ownership will remain limiting foreign investment to 30% maximum(WT/TPR/S/64, p. 77, para. 98).  Please explain the reason for maintaining foreign ownership
restrictions in these fields.
Government procurement
Kenya is neither a signatory, nor an observer to the GPA (WT/TPR/S/64, p. 41, para. 59).
Does Kenya have any intention to accede to the GPA?
Please provide an outline of the Government Procurement Act which is being drafted
(WT/TPR/S/64, p. 41, para. 59).
Standards and other technical requirements
It is reported that an exemption from compliance with a compulsory standard may be granted
by the Minister of Industrial Development on a case-by-case basis (WT/TPR/S/64, p. 38, para. 47).
Please provide concrete examples of cases where such exemption is granted.Please provide the ratio between an exemption granted to imported goods and that granted to
locally produced goods.
S
WITZERLAND
Recently, Kenya's economy has shown strengths and weaknesses, illustrating both the
government's successes in economic policy-making and its failures in widening the range of policies.
This is well demonstrated in the Secretariat's report on trade.  On the one hand, a poor export
performance coupled with a deterioration of the terms of trade brought a large trade deficit in 1998.
Moreover, Kenya's recent economic performance was assessed as weak by the IMF in December of
last year .  Both these results can be attributed to a lack of determined action towards structural
reforms, especially in the "para-state" sector.  In the trade-related fields, a withdrawal of state
intervention in the commodity sectors (through the Commodity Boards) would be efficient in that it
would allow the allocation of resources according to needs and comparative advantages.
On the other hand, we would like to commend the Kenyan Authorities for the actions that
have been taken towards, especially, trade liberalization, making Kenya an important trade player in
the region.  The dismantling of quantitative restrictions, the rationalizing of the tariff structure, thelowering of the average rate to 20% approximately all go in the right direction.
However, the increases, in the 1999/2000 budget, in import duties on agricultural products and the
proliferation of suspended duties reversed in part these progresses in trade liberalization.  Hence, our
questions:
- Don't the Kenyan Authorities share our belief that such reversal of action is quite distressing
and not conducive to a needed increase in foreign investments?
- Do not they further share our belief that suspended duties make the regime more distortive,
less transparent and even create opportunities for rent seeking?WT/TPR/M/64
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- What are the Authorities' thoughts on these issues, and plans for the near future?
On the regional front, we are putting strong hopes in the initiatives currently under way, more
precisely the COMESA building of a Free-trade ar ea (FTA) among its 21 member countries (due to
enter into force on Oct 31 of this year) and the EAC Treaty signed on Nov 30 of last year.  In both
these initiatives, Kenya has played a leading role:  it belonged to the three countries in COMESA that
have already lowered their internal tariff by 90%, in EAC, it is a forerunner in the creation of a tradeunion.
Our following questions relate to these regional initiatives:- The IMF has conducted studies on the effects of the FTA on government revenues in the
COMESA countries; such a study on Zambia concluded that the benefits of free trade far outweigh its
costs.  Has such a study on Kenya been conducted (as it should have, according to the COMESA web
site) and what have been its conclusions towards Kenya's revenues and economic growth prospects?
- The Secretariat's Report states that, as of May last year, Kenya had not implemented the
Automated System for Customs Data and Management (ASYCUDA).  Has this now been done? If
not, could the Authorities tell us the reasons for not doing so?
- Finally, what is the status of the Monetary  Harmonization Program aiming at creating a
monetary union within COMESA, a program th at was re-launched in Nairobi in May 1999?
EUROPEAN UNION
Report by the GovernmentEconomic Outlook
- Investment and Saving: Please indicate, which measures the Kenyan Government is planning
to undertake to stop the steady decline in investment.
Kenya's Trade Policy
- Agriculture: Please explain more specifically the new policy framework concerning domestic
and export trade.
- Manufacturing Industry: Please indicate for which products import licensing is still required
and on which grounds respectively.
- Trade Policy Implementation: Please explain more specifically who the process of trade
policy implementation proceeds and which institutions are participating in it.
Investment Policy
- Could you please provide more information on how and to what extent import tariffs have
been rationalised and reduced?
- Foreign Investment Protection Act: Please explain more specifically under which
circumstances an expropriation of foreign owners is possible for security or public interest.WT/TPR/M/64
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- Export Processing Zones Authority: Please indicate which competences this institution has
exactly.
Kenya and the Multilateral Trading System
- National Committee on World Trade Organisation: Please explain more specifically how this
committee works and to what extent it possesses decision-making rights.
- Anti-dumping and countervailing duties: What will the major provisions of the new anti-
dumping and countervailing duty law contain?
- Trade-related Aspects of Intellectual Property Rights: Did Kenya manage to bring its
legislation into conformity with the TRIPS Agreement by the 1st January 2000?
- Copyright Act: Is Kenya planning to implement any legislation to protect geographical
indications, layout designs, integrated circuits and undisclosed information?
- Agreement on Customs Valuation: How is Kenya going to deal with the problems found in
the implementation of the Agreement on Customs Valuation?
Report by the Secretariat
Summary Observations
- Paragraph 2: Does Kenya consider any further trade policy reforms, e.g. a removal of
quantitative restrictions, to achieve a stable macro-economic environment?
- Paragraphs 11 & 13: It is stated that Kenya uses “stand by” duties and “mixed duties”. What
is the justification for this? The use of import duties also increases the uncertainty of Kenya’s
trade regime. Will the Kenyan authorities consider increasing the coverage of their tariff
bindings, and bringing the bound rates into line with the applied rates to increase tariff
predictability for trading partners?
- Paragraphs 19 & 22: We note that Kenya has introduced a number of recent policies to
promote her manufacturing sector, particularly the two phase Industrialisation Strategy, which
focuses on the export of primary products and capital intensive industries. Given that Kenya’s
comparative advantage is reported to lie within the services sector, we are concerned that the
promotion of manufacturing is to the exclusion of other sectors. Could the Kenyans confirmthe basis and rationale behind the decision to promote manufacturing ahead of services? What
plans are in place to liberalise the services and utilities sectors?
- Paragraph 20: Could the Kenyan authorities clarify how their aim to promote trade with
developed countries (such as Europe, Japan and US) can be reconciled with their trade policyregime as it stands, whereby trade flows are increased by pursuing preferential trade
agreements?
Institutional Framework
- Paragraph 8: Is Kenya planning to modify its legal system in order to allow provisions of the
WTO Agreements to be invoked before national courts?WT/TPR/M/64
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- Paragraph 8: Is Kenya considering becoming a signatory to the plurilateral agreements on
Government Procurement and Trade in Civil Aircraft?
- Paragraph 8: When will Kenya have concluded the process of bringing its legislation on anti-
dumping, countervailing and intellectual property in line with the WTO Agreements?
- Paragraph 9: Please provide a list of the business activities which are not currently open to
foreigners and indicate the reasons for such restrictions.
- Paragraph 9: Which steps is Kenya planning to take to reduce the investment problems
referred to in this paragraph?
- Paragraph 10: Could you please provide a list of the remaining non-tariff restrictions and
indicate the reasons for such restrictions?
- Paragraph 10: Are there any plans to convert the existing mixed or specific duties on
agricultural and petroleum products into ad valorem rates in the near future?
- Paragraph 13: Please indicate in which areas of Kenya’s economy state-owned companies
still hold monopolies or exercise exclusive rights.
- Paragraph 14: Did Kenya manage to base its customs valuation method on the transaction
value as from January 2000 as it was planned?
- Paragraph 15: Could you please provide the draft of the future legislation on government
procurement if there is already one?
Economic Environment
- Paragraph 6: Considering the fact that the slowdown of the privatisation programme has
resulted in low levels of investment, is Kenya planning on accelerating this process again and
by which means?
Trade Policy Regime
- Paragraph 13: Considering the fact that the import and export licensing procedures stipulated
in the Imports, Exports and Essential Supplies Act are no longer followed, will the act be
abolished soon?
- Paragraph 15: When does Kenya plan to incorporate WTO Agreements into domestic law?
- Paragraph 16: Are there any plans or negotiations going on for Kenya to become signatory to
any of the plurilateral Agreements between the WTO-members?
- Paragraph 20: Since Kenya has raised the need for enhanced technical assistance in the area
of intellectual property; could you please explain more specifically what type of assistance
exactly is required and which form it should take?
- Paragraph 26: When is Kenya going to implement the ASYCUDA/EUROTRACE System?- Paragraph 44: Under which circumstances is a foreign investment considered to be likely to
benefit the Kenyan economy?WT/TPR/M/64
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- Paragraph 47: Can a change from the current prohibition of foreign ownership of agricultural
land and small-scale retail operations be foreseen in the near future?
- Paragraph 50: What exactly is the investment incentive effect of the Export Processing Zones
(EPZ)?
Trade Policies and Practices by Measures
- Paragraph 8: Can Kenya confirm that it will henceforth apply the transaction value for
customs valuation purposes as provided in Art. VII of GATT 1994?
- Paragraph 26: What is the 2.75% import declaration fee based on? How does it comply with
GATT Article VIII?
- Is the 1% additional fee on agricultural imports to support the Kenya Plant Health
Inspectorate Service also applied to domestic agricultural goods? If not, when will this systembe brought into conformity with GATT Article III?
- Paragraph 27: Why is the excise tax on imported goods based on the import value while the
excise tax on domestic products is based on the ex-factory price? From our point of view, this
could lead to a factual discrimination against imported goods. Could you explain the reasons
for this distinction?
- Paragraph 47: The Secretariat reports that exemptions from compliance with a compulsory
standard may be granted by the minister of Industrial Development on a case-by-case basis.
Could you please indicate, under which circumstances these exemptions are likely to be
applied?
- Paragraph 57: What is the justification for the recent requirement by the KBS (Kenyan
Bureau of Standards) for all whisky imports to be labelled with the name of the local
importer?
- Paragraphs 46-58: Does Kenya have an enquiry point as required under WTO TBT
Agreement Article 10? Are there any particular problems faced by Kenya in establishing such
enquiry point?
- Paragraph 59: Is Kenya planning on becoming  a signatory or an observer to the WTO
Plurilateral Agreement on Government Procurement?
- Could you if possible please provide the draft of the Government Procurement Act or indicate
when it will be available?
- Could the Kenyan authorities provide further details on their plans to reform the procurement
legislation?
- Paragraph 64: For which reasons is there a price preference of 10 % granted to local
tenderers?
- Paragraph 65: The Secretariat reports that the highest appeal body in Government
Procurement is the Permanent Secretary of the Treasury. Can you provide closer informationon how the appeal system works below that level?WT/TPR/M/64
Page 32
- Paragraph 79/80: Do foreign firms have the possibility to become members of the EPZ and
which requirements do they have to meet to that effect?
- Paragraph 88: Is Kenya planning to introduce legislation to fight the still existing export
cartels?
- Paragraph 99: The Secretariat reports that the parastatal reform programme has slowed since
1996 and that several state owned companies still exercise monopoly powers. Does Kenya
intend to reactivate the parastatal reform programme and what measures will take to that
effect?
- Paragraph 101: Can you please provide some examples of inventions that are considered to be
contrary to public order, morality etc. and therefore not eligible for receiving intellectual
property protection in Kenya?
- Can you also please provide some examples of inventions that may be declared non-
patentable?
- Paragraphs 101-103: We note that the duration of rights granted for patents, trade marks and
designs is inadequate, with protection initially granted respectively for seven, five and seven
years – whilst the WTO Agreement calls for twenty, ten and ten years respectively. What
plans do the Kenyan authorities have for bringing patent, trade marks and design protection in
line with TRIPS requirements?
- Paragraph 104: Does Kenya intend to become a member of the Union for the Protection of
New Varieties of Plants (UPOV)?
- Paragraph 105: It seems that there also exist a 1995 revision of the 1983 Copyright Act. Can
Kenya confirm this information?
- Paragraph 106: What measures are planned to alleviate the problem of piracy in particular and
to improve the enforcement of intellectual property rights in general?
- Paragraph 107: Did Kenya manage to bring its legislation into confor mity with the TRIPS
Agreement by 1 January 2000 as required?
- Intellectual Property in General: We consider that the protection of intellectual property rights
in Kenya not in line with the minimum standards of the TRIPs Agreement. Since January
2000 was the deadline for the implementation of the Agreement, all major discrepanciesshould have been eliminated by now. The patent legislation in particular does not appear to be
in line with the TRIPs Agreement. Requirements of local working as a pre-condition for
patentability and the introduction of broad exclusions from patentability are not allowed
under the TRIPs Agreement and should therefore be removed from any future patent
legislation. The same applies for the right to prevent unauthorised imports into Kenya.Furthermore, there is no protection of geographical indications, layout-designs of integrated
circuits and undisclosed information.
- Is Kenya willing and able to improve its patent legislation in general and in particular with
respect to the above mentioned aspects? Will this be done in due time?WT/TPR/M/64
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Trade Policies by Sector
- Paragraph 3: Which measures is Kenya planning to strengthen the competitiveness of the
manufacturing sector?
- Could Kenya provide further details of the improvements which are currently being made to
harmonise the fish trade and quality restrictions?
- Paragraph 66: Is Kenya planning any measures to reduce interest rates, as their current level is
reported as a factor hampering the deve lopment of Kenya’s manufacturing sector?
- Paragraph 76: Can Kenya already provide a draft of a time schedule for the planned
privatisation of the Kenya Telkom Company and the Kenya Railways?
- Paragraph 77: Does Kenya require an approval of the government for any employment of
foreign natural persons? Are there any possible exemptions?
- Paragraph 79: What are the reasons for Kenya still not having ratified the Fifth Protocol of the
GATS which entered into force on 1 March 1999? When is Kenya going to ratify it?
- Paragraph 91: When will the process of reconstituting the Kenya Reinsurance Company into a
public limited liability company be concluded?
- Paragraph 93: Which requirements have to be met to receive the license insurers, brokers,
agents and others have to apply for to operate in Kenya?
- Paragraph 113: It is reported that the Kenya Government plans to offer concessions for the
operation of port facilities. Will foreign tenders be able to receive these concessions and what
requirements will they have to fulfil?
- Paragraph 127: The licensing system in the tourist sector referred to in this paragraph seems
not very clear. Can you please provide more detailed information on the conditions of this
licensing?
REPUBLIC OF KOREA
1.  Price Liberalization
The Secretariat's Report stipulates in paragraph 9 of page 3 that price controls were
dismantled on major products.  Which products are still under price controls?  Does the Kenyan
government envisage further price liberalization?
2.  Customs Valuation
Pages 28 and 29 of the Secretariat's Report refer to Kenyan customs valuation.
Paragraph 9 says "that imports into Kenya of an f.o.b. value of US $5,000 or more (…) are
subject to a compulsory quality and quantity inspection, and price comparison".  What is the portion
of total import subject to inspection in terms of value and quantity?WT/TPR/M/64
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According to paragraph 10 of page 28, "a penalty of 15% (25% for motor vehicles) of the
f.o.b. value applies in case of merchandise normally subject to PSI that is shipped without inspection".Why is the penalty for motor vehicle higher than for other items?
3.  Suspended Duties
Paragraph 18 in page 300 of the Secretariat's Report refer to "suspended duties", stipulating
that "On the request of a domestic industry, The Minister of Finance may, on a discretionary basis,
impose a suspended duty on a product of the list" and that "the applied rate must not exceed the
ceilings set by the Act".  Are these ceilings equivalent to bound rates?  Or can such ceilings go higher
than bound rates – insofar as these rates are bound in Kenya's schedule?  Do Kenyan authorities have
any plan to lower these ceilings?
4.  Investment Barriers
Paragraph 67 page 69 mentions that investment incentives have been rationalized.  however,
it appears that some important limitations are still in force such as obligation to hire local people and
limits on ownership of stocks especially in life insurance companies and fund management firms.
Furthermore, foreign firms that hire their own nati onals must report to the Kenyan authorities their
"plan to reduce non-Kenyan workforce".
Will these above-mentioned measures be abolished or reduced as they limit the
competitiveness of FDI companies, given that competitive foreign firms could boost the
competitiveness of Kenyan industry?
5.  Regional Agreements
The Secretariat's Report, from paragraph 24 through 27 of pages 20 and 21, describes the
Common Market of Eastern and Southern Africa (C OMESA);  COMESA members agreed to create a
FTA by 31 October 2000.  All members were supposed to have reduced tariffs by 80% as of
October 1996.
What are the measures to be taken by Kenya to ensure conformity of the FTA with the WTO
rules and principles?  Will rules of origin be applied on some products?
6  Technical Regulations
It was recently reported that the Kenyan Ministry of Commerce will reinforce technical
regulations for imported goods with a view to protecting consumers and domestic industries.  Whatmeasures will the Kenyan authorities take to ensure universality and impartiality of these technical
regulations?  Please explain the Kenyan technical regulation system.
UNITED STATES
CHAPTER I: THE ECONOMIC ENVIRONMENT
(1) Major Features of the Economy
Comment:  Paragraph 6 discusses the structural adjustment programs implemented by Kenya since
1993 which have contributed to a reduction in government intervention in economic activities, butWT/TPR/M/64
Page 35
also notes that the slowdown in the privatization program has resulted in low levels of investment and
has hampered full exploitation of Kenya's comparative advantages.
Questions:- Does the slowing of the privatization program indicate a shift of government priorities?
- How does the government plan to reinvigorate the privatization process?
CHAPTER II: POLICY FRAMEWORK AND OBJECTIVES
(1)(i) Trade Policy Objectives
Comment: The report notes in Paragraph 15 that the legal environment appears to lack efficiency,
transparency, and adequate legal recourse.  Measures taken so far to address these issues include
establishing accountability and transparency with respect to financial infractions, safeguarding theindependence of the Kenya Revenue Authority, establishing an independent Kenya Anti Corruption
Authority, and addressing new procurement legislation.
Question:- Please clarify how the measures taken so far address the broad systemic concerns listed in
Paragraph 15.
- Please explain any additional initiatives Kenya has under development to further address
these issues.
(1)(iii), Trade Policy Formulation
- Please indicate when Kenya intends to notify the WTO regarding the tax rebates for exported
goods as mentioned in paragraph 12.  We would appreciate a detailed description of this
program, including title(s), purpose, duration, amount of funds, and eligible recipients.
(1)(iv), Trade Laws and Regulations
- Please explain why the Import, Exports, and Essential Supplies Act is no longer followed in
practice.  Please provide full details of the program(s) that replaced this Act, including title,
purpose, duration, amount of funds and eligible recipients.  When will Kenya providenotification regarding the replacement program(s)?
(2) Trade Agreements and Arrangements, Paragraph 16-18, Table II.2
Comment: The report states that international treati es and agreements have to be adopted through a
domestic law; in case of conflict, national law prevails.  In 1995, Kenya became a signatory to the
WTO under the Treaty of Marakesh; however, none of the Agreements have been incorporated into
Kenyan law.
Questions:- Please explain Kenya’s approach to its WTO commitments, and when it plans to incorporate
its WTO Agreements into Kenyan law.WT/TPR/M/64
Page 36
- Kenya’s obligations for notification, as presented in Table II.2, show a troubling pattern of
tardiness.  Please explain what measures Kenya intends to undertake to provide propernotification of its various trade and commercial laws and programs as required under the
WTO.
- In particular, we would appreciate a detailed summary of the following laws and programs
that are mentioned the Government’s Report, including a schedule for notification to theWTO:
a. The Restrictive Trade Policies, Monopolies and Price Control Act (described in
Section V(2) of the Government’s Report), including amount of funds and eligible
recipients.
b. The Investment Promotion Center and Investment Incentives, the Manufacturing
Under Bond Program and the Export Processing Zone program (described in Section
VII (Investment Policy) of the Government’s Report).  Please include a description of
the duration, amount of funds and eligible recipients.
- Has Kenya considered or requested technical assistance from the WTO or elsewhere in order
to deal with notification issues?
(2) (ii) Regional Agreements
Questions:
- What is the status of Kenya's implementation of the COMESA tariff reduction program,
which envisions a COMESA free-trade area by October 31, 2000?
- When does Kenya expect to implement the Automated System for Customs Data and
Management and EUROTRACE?
- What is the current EAC schedule for harmonizing tariffs and customs regimes, introducing
the free movement of people, and improving regional infrastructure?
(3) Foreign Investment Regime (i) Regulatory Framework, Paragraphs 42, 46, 47, and 49
Questions:
- Paragraph 42 notes that the Foreign Invest ment Protection Act of 1981, the Investment
Promotion Centre Act of 1986 (amended 1992), and the Trade Licensing Act of 1967 (revised
1990) are being consolidated into a single Legal Code.  What is the status of this
consolidation and when does the government expect it will be completed?
- What are the key provisions of the proposed Legal Code?- Even if interim approval of a business license is granted, as stated in Paragraph 46, investors
and bankers are reluctant to make funds available until all licenses are obtained. What is the
average time for a business to acquire necessary business licenses in the various sectors?  Has
Kenya identified measures to shorten and simplify this process?
- Why is co-ownership with Kenyans required of foreign investors in the telecommunications
and insurance services sectors?WT/TPR/M/64
Page 37
- The report notes that foreign ownership of agricultural land and small scale retail operations
is prohibited.  In addition, there may be restrictions on business activity to what is termed a
general business area.  Please explain the intention of these restrictions.
(3)(ii) Investment Incentives and Promotion, Paragraph 50.
Questions:
- Please explain in detail the distinctions, if any, that are made between domestic and foreign
investment entities in terms of qualifying for the Investment Promotion Centre (IPC) and
other major investment incentives.
CHAPTER III:  TRADE POLICIES AND PRACTICES BY MEASURE
(2) Measures Directly Affecting Imports (i), Registration and Documentation
Questions:
- In reference to Paragraph 5, in which markets or places are foreigners not allowed to conduct
business?
- Are licensing fees prohibitive to small businesses?
(2)(ii) Customs Procedures, Paragraph 8, 9
Questions:
- Kenya indicates that transaction value will be applied from the year 2000.  We welcome
Kenya’s application of the WTO Agreement on Customs Valuation as of 1/1/2000.  In this
regard, when is Kenya expected to notify its legislation and regulations? Has this been done?
- Will pre-shipment inspection be required?
- The import declaration fee of 2.75% along with an additional 1% for agricultural goods seems
excessive and unrelated to the cost of any services rendered, as required under Article VIII of
the GATT.   Please describe your efforts to develop an alternative system that provides a
minimum/maximum amount and a fee for service formula.
- How does Kenya view the 1% surcharge for agriculture in light of the transparency
requirements of Article II:1(b) and its bindings?
(2)( iii) Tariffs, Other Levies and Charges
Comment: Despite Kenya's simplification and the reduction in tariff charges, Paragraph 16 of the
Report notes that Kenya still depends upon border charges for 54% of its total tax revenue.  While this
seems to include the collection of a 15% VAT as well as excise taxes, this percentage still is quite
high.WT/TPR/M/64
Page 38
Questions:
- Has this dependency on border revenue increased or decreased since the time of the last
review in 1993?
- Has the Kenyan government examined the relationship between continued reductions in
tariffs vis-a-vis the government’s industrialization and investment goals?  If so, pleasedescribe your findings.
(2) (iii), Paragraph 18, Suspended Duties
Question:
- Please explain the origin and application of "suspended" duties.  What duties have been
suspended?  Are they applied on an MFN basis?
- The suspended duties appear to be an arbitrary application of duties on selected products.
What are the guidelines used by the Ministry of Finance in imposing or eliminating suchduties?  How frequently are such duties applied?   It would be useful if Kenya would supply a
list, at the eight-digit level, of the 1,011 tariff lines subject to suspended duties and the rates
of duty applicable to each.
- Does the government have plans to limit the application of suspended duties with a view to
eventually eliminating or folding them into ad valorem duties?
(2) (iii) Paragraph 22
Comment: According to Paragraph 22, Kenya’s tariff bindings in the WTO cover 15.1% of all tariff
lines.  In addition, the bound rates are almost all over the maximum tariff rate of 25%.  Bound rates
are much higher than the current applied rates.  We would encourage Kenya to act on the Report’ssuggestion to increase the coverage of its tariff bindings and to narrow the existing gap between
bound and applied rates.
Question:
- Does Kenya plan to close the gap between applied and bound rates?
(2) (iv) Import Prohibitions , Paragraph 36.
Question:- When will Kenya apply the provisions of subparagraphs (a)(ii) and (a)(iii) of Article 2 of the
WTO Agreement on Import Licensing Procedures?
(2)(vi) Contingency Trade Remedies, Paragraph 41
Question: 
- What is the status of Kenya’s efforts to bring its anti-dumping and countervailing duty laws
into conformity with WTO rules?WT/TPR/M/64
Page 39
- We applaud Kenya’s initiative to request technical assistance from the WTO with respect to
amending its anti-dumping and countervailing measures to ensure conformity with WTOrules.  Are there other areas where WTO-related technical assistance might be useful?
(2)(ix) Standards and Other Technical Requirements
Paragraph 52
Comment:  Kenya's regulatory seed approval process for maize and other seeds includes a lengthy
four year approval process that includes a domestic production requirement, which does not appear
consistent with Kenya's obligations under the SPS agreement.
Questions:
- Please explain the procedures and basis for Kenya’s regulatory regime and approval process
regarding maize seed?
- Please explain how Kenya’s domestic production requirements  for approved maize seed
varieties are justified under Kenya's national treatment and market access obligations under
GATT Articles III and IX, as well as Article 4.2 of the Agreement on Agriculture?
Paragraph 56
Question:
- On what basis might the Kenya Standards Board set a size standard for the importation of a
commodity product, for example changing 500kg bales to 50kg bales as in the case of
recycled clothes?
(2)(x)Government Procurement, Paragraph 59
Comment:  We commend the government for its efforts, as reported in paragraph 59, to draft a
Government Procurement Act, as well as in the steps it has taken to increase transparency and
accountability in the procurement process.  The government has also established an appeals board fortender decisions (which appears to make the information in Paragraph 65 incorrect).
Question:- When will the Government Procurement Act become law and what are the major provisions
of the Act?
(4)(iii) Competition Policy, (b) Restructuring State Assets, Paragraphs 97, 98, 99
Comment: The report notes that the government plans to maintain 33 “strategic” parastatals.  Of those
listed are banking, sugar production, supermarket retail, transport, fuel refining and pipeline, and
marketing boards in tea, meat, coffee, cereals, seeds.  It seems as if the private sector could play a
greater role in many of these government dominated markets. Paragraph 99 states that implementation
of the parastatal reform program has slowed since 1996.  While noting the government's
determination to proceed with privatization efforts, we are perplexed at the slow pace, especially with
regard to telecommunications.WT/TPR/M/64
Page 40
Questions:
- What steps is the government taking to ensure that the privatization of TelKom is concluded
expeditiously and in an open, fair, and transparent manner?
- Of the 207 parastatials to be privatized, how many have been privatized to date?
(3) (iv) Protection of Intellectual Property Rights, Paragraphs 103, 107
Comment:  Paragraph 107 states that Kenya is amending its intellectual property legislation with a
view to conforming to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) and other international agreements or conventions to which it is a signatory.
Questions:- Are trademarks for services  protected?
- Is Kenya taking steps  to become fully compliant with TRIPS?  Under what timetable?
CHAPTER IV: TRADE POLICIES BY SECTOR
(3) Agriculture (ii) Policy objectives and instruments
Comment: Sectoral policies are aimed at enhancing production and productivity, especially in the
agricultural sector, through a continuous process of economic reform and liberalization.  While the
United States sees this as a worthwhile objective, we are concerned about the implementation of
policies which appear to run counter to this objective (i.e., the increases in import duties on
agricultural products announced in the government's 1999/2000 budget and the broadening of the
coverage of suspended duties).  Moreover, the proliferation of suspended duties in recent years hasmade Kenya's trade regime more distortive and less predictable and transparent.
Questions:- How does the government explain the adoption of these policies which appear at odds with
the government's stated objectives?
- A number of agricultural goods are subject to 70% suspended duties, in addition to regular
customs tariffs. The system for imposing these additional duties appears arbitrary.  What is
the mechanism by which these suspended duties are imposed and removed?
- How has Kenya's current import regime fostered self-sufficiency in the grains sector?- What steps will the Government take to restructure the National Irrigation Board?
(iii) Policy by type of product (b) Cash crops
Questions:
- How does the Government intend to return cont rol of the Coffee Board of Kenya (CBK) and
Kenya Tea Development Authority (KTDA) to the private sector?WT/TPR/M/64
Page 41
- What steps will the Government take to restructure the Horticultural Crop Development
Authority (HCDA) to allow the private sector to spearhead the development of horticulture?
- When will the Cotton Board be restructured?
Part (5) Services (ii) Financial Services
Comment:  There are two principal areas in which we believe Kenya could take action to make its
financial services market more attractive to fore ign investors.  First, Kenya should ratify its
commitments under the Fifth Protocol as soon as possible.   Second, although Kenya has market
access commitments for commercial presence in a number of important activities, there is room for
additional liberalization, including improved market access and national treatment bindings.
Questions:- When does Kenya expect to ratify its commitments under the Fifth Protocol to the GATS?
- As called for by Services Council Decision S/L/68, has Kenya refrained from taking measures
that would be inconsistent with the commitmen ts it made during the 1997 financial services
negotiations?
- Kenya did not make national treatment commitments for commercial presence in banking and
other financial services in 1997.  As a policy, do Kenyan authorities treat foreign financial
services providers less favorably than domestic service suppliers?
- The report did not contain sufficient information concerning securities and asset management
services.  Have Kenyan authorities granted licenses to foreign financial services suppliers to
provide securities trading and/ or securities underwriting services in Kenya?  What type of
asset management services are available to the public in Kenya?
Insurance:
- We note several elements of Kenya’s commitments that would not seem to accord with
Kenya’s need to develop its infrastructure for foreig n trade, including mandatory cession limits for the
reinsurance sector, foreign equity limitations for the brokerage sector, and the lack of national
treatment commitments for the non-life sector.  Kenya also maintains foreign equity limitations in the
life sector.  Please explain Kenya’s plans to further liberalize these key sectors.WT/TPR/M/64
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ANNEX II
RESPONSES BY THE GOVERNMENT OF KENYA
TO ADVANCE WRITTEN QUESTIONS
ECONOMIC ENVIRONMENT
Macroeconomic Stability
Prudent management of major macro-economic variables is essential for higher economic
growth in Kenya.  This involve maintaining price stability and ensuring an enabling environment for
accumulation and efficient utilization of financial resources. These measures are expected to facilitate
efficient private sector operations and increase both the level and efficiency of domestic savings and
investment.
Fiscal Policy
Kenya's fiscal policy aims at reducing the budg et deficit as a proportion of GDP with a new
aim to eventually eliminating it.  This is necessar y to mitigate the undesirable effects that high budget
deficit have had on domestic prices, interest rates, balance of payment and the value of the shilling.
The Government plans to employ the following measures to reduce the deficit:- maintenance of proper accounting procedures by Ministries to curb excessive
expenditures;
- curbing corruption through appropriate legal and administrative actions;- rationalisation of taxes through widening the tax base, while at the same time
reducing the upper limits to discourage tax evasion and promote domestic savings;
- avoiding implementation of unplanned and uneconomic projects;
- avoiding accumulation of unpaid bills and drawing foreign funds promptly;
- releasing exchequer issues on a timely basis.
Monetary Policy
Kenya is pursuing a monetary policy whose purpose is to maintain price stability.  This is
being done by ensuring that the rate of expansion of money supply is consistent with both the growth
of economic activity and attainment of sustainable balance of payment position.  Factors which
include pursuit of tight monetary policy by Central Bank of Kenya and more stringent budgetarycontrol by the Government have resulted in the reduction of inflation rate to a single digit level.
Money supply growth has been considerably reduced from 23.8% in 1994 to 18.6% in 1995.
More recently the growth has further been reduced to 9.8% in 1997 and to a modest 3.3% in 1998.
This has been achieved by the use of measures such as the strengthening of the primary market inTreasury Bills, improving the flexibility of monetary policy instruments, the lombard facility
coordinating monetary management with debt management and foreign exchange operations to ensureWT/TPR/M/64
Page 43
stability in interest rates and exchange rates, as  well as encouraging the development of an active
secondary market in treasury bills.
Social Dimension
The Government has implemented structural adjustment programme, which led to reduced
relative expenditure on social services mainly education and health,  cost sharing schemes, price
decontrols and privatization and import liberalization resulted in exposure of  the poor to severe social
economic risks, including worsening poverty.
To counter such adjustment effects the Government with the participation of major donors,
NGOs and the private sector designed a social policy framework for development.  This gives details
on Government policy and on projects aimed at povert y alleviation.  The long term objective of this
program is to attain accelerated economic growth and employment creation, and thus alleviating
poverty.
This intervention targets the following main areas:(i) labour intensive public investment programme targeting the poor and private sector
involvement in the provision of basic social services;
(ii) the involvement of women and children in development;
(iii) the promotion of small scale industrial, agricultural and service enterprises;(iv) the promotion of sustainable environment resource conservation;
(v) social mobilization and sensitization, including training and institutional capacity
building as well as the  development of an information base for monitoring and
evaluating poverty;
(vi) the protection of human rights and the rehabilitation of internally displaced persons;
promotion of good governance; regional peace and conflict resolution; insecurity and
crime prevention; and emergency relief;
(vii) the decentralization of development activities to district level.
Competition Policy
Questions by the United States, Japan and Canada
(1) Provide a detailed summary of the following Restrictive Trade Practices, Monopolies and
Price Control Act.
(2) Explain how the Kenyan government copes with transborder anti-competitive behaviour.
Does the Kenyan government cooperate with governm ents from  other countries to control such
behaviour?
(3) What constitutes restrictive trade practices?  What practices are exempted by the Act?  Give
examples of the firms exempted.  Does Kenya plan to review such exemption?
(4) Give enforcement priorities over the past five years.  What has been the enforcement record
by monopolies and prices Commission over that same time period?
(5) How many appeals have the Restrictive Trade Practices Tribunal (RTPT) heard over the past
five years?  Are the deliberations of the Tribunal made public?WT/TPR/M/64
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(6) The budget of the MPC and people employed.
(7) Does the Act allow the Commission to engage in independent advocacy efforts to ensure
pro-competitive reform of state owned enterprises and monopolies?
The Restrictive Trade Practices, Monopolies and Price Control Act (Chapter 504)
The competition law in Kenya is known as the Restrictive Trade Practices, Monopolies and
Price Control Act, Chapter 504.  It's applications started from 1st February 1989.  This act was drafted
during the price control regime which has now be en abolished, and is currently under review.
The Restrictive Trade Practices Monopolies and Price Control Act Chapter 504 of the Laws
of Kenya is divided into the following six parts:
- Part I explains the title of the Act, interpretation of terminologies used and the
appointment of the Monopolies and Prices Commissioner etc.
- Part II contains the provisions relating to trade restrictive practices whereby practices
which are deemed as restrictive trade are listed, the process of enquiries and
investigation into restrictive trade practices explained the process of making orders
and appeals on such practices as well as the definition of offences and the
corresponding penalties.
- Part III deals with the control of monopolies and concentration of economic power,
which include the control of mergers and takeovers.
- Part IV has become redundant since Kenya has liberalized its economy.- Part V provides for the establishment of the Restrictive Trade Practices Tribunal.
- Part VI contains miscellaneous provisions.
Part 2 of the Act Section 4 (1) to 4(3) defines restrictive trade practice as follows:
4(i) "For the purpose of the Act restrictive trade practice refers to an act performed by one or more
persons engaged in production or distribution of goods or services which
(a) in respect of other persons offering the skill motivation and minimum seed capital
required in order to compete at fair market price in any field of production or
distribution, reduces or eliminates their opportunities to participate; or
(b) in respect of other persons able and willing to pay fair market prices for goods or
services either for production, for resale or final consumption reduces or eliminates
their opportunities to acquire those goods or services".
4(ii) "For the purpose of subsection (1), reduction or elimination of opportunities is to be measured
with reference to the situation that would pert ain in the absence of the practices in question.
4(iii) Subject to exemptions set out in section 5, the practices enumerated in section 6 to 12 (of the
Act) are declared to be restrictive trade practices for the purpose of this Act; (these include
various categories of trade agreements declared to be restrictive trade practices, practices of
trade associations, refusal or discrimination in supply, specific instances of refusal or
discrimination in supply, predatory trade practic es to repress competition, collusive tendering
and collusive bidding at auction sales)."WT/TPR/M/64
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The following trade practices are exempted from the provision of the Act:
(a) "trade practices which are directly and necessarily associated with the exercise of exclusive or
preferential trading privileges conferred on any person by an Act of parliament or by an
agency of the Government acting in accordance with authority conferred on it by an Act ofParliament.
(b) trade practices which are directly and necessarily associated with the licensing of participants
in certain trade and professions by agencies of the Government acting in accordance with
authority conferred on them by an Act of Parliament".
The Kenya Airports Authority and Telkom Kenya are typical examples of exemptions under
the Act.
With the development of globalization and liberalization of trade, predatory pricing is likely
to be used across borders with a view to driving domestic firms out of business.  Despite the fact that
there are no multilateral rules and regulations, on competition policy a committee has been constituted
under the Ministry of Tourism, Trade and Industry to investigate allegations of trading malpracticesoriginating from exporting countries.
On the domestic scene, the MPC has conducted investigations at the instigation of local firms
and almost all problems were sorted out amicably.  From 1995 to 1999 the MPC handled 76
merger/takeover cases and 41 restrictive trade practices, and out of this only one case involvingmerger/take-over was referred to the Restrictive Trade Practices Tribunal.
The Act provides for the Commission to engage in independent advocacy efforts to ensure
pro-competitive reform of State owned enterpri ses and monopolies. The Commission's budget ranges
between K£845,200 and K£933,805 and it has a work force of 75  qualified officers.
Investment Regime
Questions by the European Union and Japan
(1) Measures to stop steady decline in investment in Kenya;
(2) Conditions for expropriation of property for security or public interest;
(3) Do foreign firms have the possibility to become members of the EPZ,  and which
requirements do they have to meet?
(4) Procedure for processing of application forms by Investment Promotion Centres.  What is the
criteria for being approved?
(5) Does Kenya require an approval  of the Government for any employment of foreign natural
persons? Are there any possible exemptions?
(6) Is there any procedure which allows for appeal against IPC's ruling?
(7) What are the measures being taken by Kenya to reduce widespread controls and bureaucratic
red tape in trying to encourage investment?WT/TPR/M/64
Page 46
(1) In order for the Kenyan economy to grow at a rate above its population growth rate, it
requires adequate domestic and foreign investments. Kenya is therefore making a determined effort to
attract portfolio and Foreign Direct Investment s (FDI) by implementing the following measures:
- The government has established the Kenya Anti-corruption Authority (KACA) to handle all
cases related to corrupt practices;
- Road rehabilitation programmes are under implementation financed by:
(i) the fuel levy;
(ii) el niño fund;(iii) urban roads improvement funds and European Development Fund.
The telecommunication and energy sectors are being restructured with a view to new players
coming into the market.
The government has established a Joint Industrial and Commercial Consultative Committee,
whose membership includes the top private and public sector decision makers. Kenya is in the processof drafting an investment code.
The Committee meets regularly to discuss investment problems and make recommendations.
(2) The Investment Promotion Council advises potential investors on suitable areas of
investment.
Following factors are key to the approval of any project:- Security reasons;
- Environmental impact;
- Impact on the health;- Employment consideration;
- The investment should be in excess of Kshs. 2 million.
IPC does not involve itself with the viability assessment nor does it seek approval from the
Ministry of Finance and Planning except where the project involves the financial sector.  For otherprojects, approval is sought from the relevant Ministries.  A general authority licence is issued
pending final approval.
3) The government may only expropriate an investor's assets  if he is found engaging in
prohibited activities such as manufacture of or dealing in ammunition in which case the investor is
compensated.
4) The Government is Committed to the removal of bureaucratic and administrative
impediments to allow the free flow of portfolio and foreign direct investment.
5) The government allows investors to hire expatriate staff to occupy key management positions
or to fill vacancies where local skills are not available.  There are no other exemptions to this rule.WT/TPR/M/64
Page 47
WTO Implementation, Status, Technical Assistance
Questions by the European Union
1. Trade Policy Implementation: Please explai n more specifically how the process of trade
policy implementation proceeds and which institutions are participating in it.
2. Para 8. Is Kenya planning to modify its legal system in order to allow provisions of the WTO
Agreements to be invoked before national courts?
3. Para. 15: When does Kenya plan to incorporate WTO Agreements into domestic law?
4. Para 57: What is the justification for the recent requirement by the Kenya Bureau ofStandards (KEBS) for all whisky imports to be la belled with the name of the local importer?
6. Para 46 - 58:  Does Kenya have an enquiry point as required under WTO TBT Agreement -
Article 10? Are there any particular problems faced by Kenya in establishing such enquiry points?
Technical Regulations
Question by the Republic of Korea
It was recently reported that the Kenya Ministry of Commerce will reinforce technical
regulations for imported goods with a view to pr otecting consumers and domestic industries.  What
measures will the Kenyan authorities take to ensure universality and impartiality of these technical
regulations?  Please explain the Kenya technical regulations system.
Questions by the United States
(1) Please explain Kenya's approach to its WTO commitments and when it plans to incorporate
its WTO Agreements into Kenyan law.
(2) Kenya's obligations for notification, as presented in Table II.2  show a troubling pattern of
tardiness.  Please explain what measures Kenya intends to undertake to provide proper notification of
its various trade and commercial laws and programs as required under the WTO.
(3) In particular, we would appreciate a detailed summary of the following laws and programs
that are mentioned in the Government Report, including a schedule for notification to the WTO.
(a) The Restrictive Trade Policies, Monopolies and Price Control Act (described in Section V(2)
of the Government's Report) including amount of funds and eligible recipients.
(b) The Investment Promotion Centre and Inves tment Incentives the Manufacturing under Bond
and the Export processing zone program (described in section (Investment policy) of the
Government Report).  Please include a desc ription of the duration, amount of funds and
eligible recipients.
(4) Has Kenya considered or requested technical assistance from the WTO or elsewhere in order
to deal with notification issues?.
(1) We agree with the analysis by the WTO Secretariat regarding trade policy formulation and
implementation in Kenya as described in Chapter II paragraphs 9 to 12.
The main responsibilities for trade policy formulation lies with the Ministry of Tourism,
Trade and Industry; Ministry of Finance and Planning, as well as the Ministry of Agriculture andWT/TPR/M/64
Page 48
Rural Development (which constitute the Cabinet's Economic sub-committee) and the Central Bank
of Kenya.
Trade policy is formulated by the Cabinet's Economic Sub-Committee.  Recommendations
may also be made by the two main inter-ministerial and consultative committees.
(i) The Joint Industrial, Commercial and Consultative Committee (JICC) consists of the
Kenya Association of Manufacturers, the Kenya National Chamber of Commerce and Industry and a
group of research institutes and private enterprises.  Members of the JICC also include Permanent
Secretaries of key  Economic Ministries.  It is chaired by the Minister for Finance and Planning andmeets monthly to deliberate on issues affecting Kenya's trade and industry, among others.
(ii) The Export Promotion Council is a responsible for organizing export promotion
activities abroad, sponsoring contact promotion programmes and sales missions, and conducting
export market surveys.
The Ministry of Tourism, Trade and Industry oversees the Country's trade and is responsible
for regulating imports, promoting exports, protecting consumer interests and ensuring fair trade.
It is also charged with implementing the industrial protection policy which includes the
administration of imports of industrial raw materials and capital goods, and regional initiatives, such
as COMESA.  The Ministry chairs numerous Committees including one on the WTO and others
which address the concerns of the business community.  It has also established key sub-committees on
trade, tourism and industry chaired by Assistant Ministers, whose membership is drawn from both
public and private sectors.  The sub-committees provide the stake-holders with a forum for airing
views and monitoring the implementation of various trade policy measures.
The responsibility of the Ministry of Finance and Planning on the other hand, include the
collection of taxes and import duties through the Kenya Revenue Authority, the administration of theExport Promotion Programmes Office (EPPO) and deals with fiscal and monetary policies.
(2) As a Member of the WTO Kenya is under obligation to fulfil its commitments under the
various agreements.  It is the Government's intention to incorporate the WTO Agreements into
domestic law.  Already a  memorandum has been prepared and will soon be tabled before the Cabinetfor consideration and approval.
Ministers and Members of Parliament have been briefed about the WTO and more
sensitization seminars are underway.
(3) As regards notifications to the WTO, Kenya has submitted a large number, and arrangement
are underway to submit the outstanding notifications. Delays in submission have been due toinadequate staffing following some of the changes that have occurred in the Ministries recently.  This
not withstanding, Kenya would welcome any technical assistance in training the current staff and
equipping them with the necessary skills so as to handle this exercise expeditiously.
(4) As regards the question on standards raised by the Republic of Korea, technical regulations
being applied on imported goods are the same as those applicable to locally manufactured products.
This is in line with the national treatment principle of the WTO on equal treatment for both  domestic
and imported products.WT/TPR/M/64
Page 49
(5) With regard to the question by the EU, we wish to confirm that there is no requirement for
whisky imports to be labelled with the name of the local importer. This is contained in regulation
KS 05-612  1992 of KBS.
(6) We would also like to assure our colleagues in the EU that Kenya has established an enquiry
point as required under article 10 of the TBT Agreement.  The Kenya Bureau of Standards  is the
National Enquiry Point (NEP) and is currently being upgraded through the support given by JITAP
while ARSO is assisting with elec tronic information dissemination.   There are other areas for which
the NEP would require assistance from donors.
Role of the National Committee on the World Trade Organization (NCWTO)
Question by the European Union
Please explain  more specifically how the National Committee on WTO (NCWTO) works and to what
extent it possesses decision-making rights.
In view of the complex nature of the WTO Agreements, the Government decided to establish
a national committee whose principal mandate was to study and analyse in-depth, the WTO
Agreements and their likely effects on the country's economy, to monitor on a continuous basis the
implementation of the Agreement by other members and recommend appropriate action, and to
provide modalities for implementation of the Agreements  to ensure maximum gains to the country.
The Membership of the NCWTO is drawn from the key Government Ministries and
parastatals, the Chamber of Commerce and Industry, the Association of Manufacturers, the research
Institutions, the academia as well as civil society.
In order to facilitate its work, the NCWTO has established a number of technical sub-
Committees which deal with the nitty gritty of the WTO Agreements.  It has also set up focal pointswhich receive documentation directly from our Mission in Geneva, and provide necessary back up to
the Sub-Committees.  Both the Sub-Committees and the focal points function on clearly defined terms
of reference and have drawn up a yearly work programme.  The Sub-Committees submit their
recommendations to the National Committee which makes decisions on what is to be done.  The
NCWTO meets four times, but may meet more ofte n depending on the nature and volume of work.
The technical back-up to the NCWTO is provid ed by the Department of External Trade,
Ministry of Tourism, Trade and Industry.   In fact the NCWTO is chaired by the Permanent Secretary,
and on some occasions the Minister himself.
Some of the problems that militate against the effective and efficient operation of the
NCWTO are inadequate training, lack of equipment and lack of adequate financial resources.
Since its launching, the NCWTO has remained purely advisory. There are plans to strengthen
it, and a memorandum to this effect has been prepared and submitted to the Cabinet for consideration.WT/TPR/M/64
Page 50
Regional Arrangements
Questions by Canada and the Republic of Korea
(1) According to the report, Kenya is a signatory to the Common Market for Eastern and
Southern Africa (COMESA) treaty and that COMESA members have agreed to create a Free Trade
Area (FTA) by October 31, 2000.  The report also states that Kenya is a member of the permanent
tripartite commission for the East African Cooperation (EAC) and that the treaty establishing theEAC was expected to be signed by the end of 1999.  Both agreements have as an objective the
liberalization of trade via the free movement of people.  What progress has been made to-date
towards reaching this objective under these regional arrangements?
(2) The Secretariat's report from paragraph 24 through 27 of pages, 20 to 21 describes the
Common Market of Eastern and Southern Africa (COMESA), COMESA members agreed to create a
FTA by 31 October 2000.  All members were supposed  to have reduced tariffs by 80% as of October
1996.
(3) What are the measures to be taken by Kenya to  ensure conforming of the FTA with WTO rules
and principles?  Will rules of origin be applied on some products?
COMESA
Kenya became a member of the Common Market for Eastern and Southern Africa
(COMESA) following its signing of the COMESA Tr eaty, in Kampala, Republic of Uganda on 5th
November 1993.
The Treaty provides for the establishment of a customs union with a common external tariff,
within a transitional period of ten years and for free movement of persons and right of establishmentof business by nationals of COMESA in any member State.
It is a requirement under Article XXIV of GATT 94 that the WTO must be notified of the
existence of a regional body.  Consequently, a notification dated 4th May 1995 was received by the
WTO from the office of the Permanent Secretary of the Ministry of Commerce, Trade and Industry of
the Republic of Zambia with the request that it be circulated to WTO Members.
In its objective of a Free Trade Area by the 31 October 2000, COMESA has set out a
progressive tariff reduction programme for the member States to implement.   In 1999 all member
States were expected to reduce their tariffs by 90%.  Kenya is among the four countries which have
managed to meet this requirement by reducing tariff by 90 % of the MFN tariff.
COMESA also aims at becoming a customs union with a common external tariff.   The rules
of origin are being worked on to ensure that on ly goods from COMESA Members receive preferential
treatment.
Kenya is working in tandem with other members to ensure the achievement of goals set by
the COMESA treaty.  It has undertaken to reduce its tariffs on goods originating from the Comesa
members  to zero by 31 October 2000.WT/TPR/M/64
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East African Community (EAC)
Kenya, Uganda and Tanzania signed the East African Community Treaty on 30 November
1999 allowing for the rebirth of the old East African Community.
The Treaty provides for cooperation in all economic, social and political sectors of the
economies of the member states.  Chapter 75, which is on cooperation in trade, was not concluded and
the treaty provided for the development of a trade protocol.
On the free movement of persons, the three states have started issuing East African passports
to their citizens which allows them to move freely within regions.
TRADE POLICIES BY MEASURE
RegistrationQuestion from Hong Kong, China and the United States
It is noted that under the 1968 Trace Licensing Act as revised, foreigners are not allowed to conduct
businesses in certain places or in specific goods.  We would like to know the details of the measure,
and whether the Kenyan authorities have any plan to remove such restrictions?
In reference to paragraph 5, in which markets or places are foreigners  not allowed to conduct
business?
Are licensing fees prohibitive to small businesses?
Soon after independence in 1963, there was an attempt by the Government to use legal means
to protect the indigenous Kenyans against unfair competition from non-citizen.  But in this era of
globalization and liberalization, these measures are no longer relevant.  For instance, the Act states
that non-citizens are not allowed to conduct businesses in areas other than those specified in  Part II.This section has however been repealed and non-citizens are allowed to engage in all kinds of
business activities in the country.
Customs Valuation
Question by Japan, Canada, the European Union, and the United States
According to the Secretariat Report, the transaction value will be applied from 1st January 2000, i.e.,
at the end of the period granted to developing countries under the "Agreements" provisions (para. 8.
Pg. 28).
Has Kenya already introduced the valuation methods based on Transaction value?How is Kenya going to deal with the problems found in the implementati on of the ACV? When is
Kenya expected to notify its legislation and regulation? Has this been done?
Kenya acceded to the WTO agreements in 1994 and invoked a five (5) year delay under Art.
20 (b) of the Agreement on the implementation of Art.  VII of GATT '94 (ACV).  In this regard Kenya
also sought for technical assistance from WTO and WCO. On the implementation of the ACV in 1997WT/TPR/M/64
Page 52
the WCO sent technical experts to Nairobi, to advice Kenya customs on the modalities of
implementation.  As a result, the Customs Department formed a core group  to study the legislation
and formulate a mechanism for implementation.
On the advice of WCO Technical experts the core group was able to draw a Technical
syllabus for the customs officers and the public. Between 21 - 25th September 1998 two (2) technical
experts from WTO visited Nairobi for the same purpose.  As a result of this technical assistance,
customs Department was able to commence training of  staff from  August to December, 1999.  On 4th
January, 2000 Kenya embarked on the implementation of customs valuation without any problems.
J.I.T.A.P has also assisted in the training of the business community which will assist Kenya
to deal with the problems of implementation on ACV normally encountered at inception.
The Customs and Excise Act was amended in June, 1999 and was effective by 1st January,
2000.  The Finance Act has already been ammended and the WTO will be notified on this legislation
soon.
Kenya has restructured the Customs Department and put in place other mechanisms to deal
with the problems encountered in the implementation of the Act.  This includes a team to profile
importers and imports and to carry out risk analysis and random port importation audits.
Question by the United States
PSI
Will pre-shipment inspection be required?
The contract for pre-shipment inspection companies expired on 31 December 1999 and the
Government has renewed the contract for a further 6 months by which time the customs is expected toovercome its transition problems.  The government will  then decide on the role to be played by PSI
Companies.
Tariff, other levies and charges
Import declaration fee of 2.75% along with an addi tional 1% for agricultural goods seems excessive
and unrelated  to the cost of any services rendered as required under Art. VIII of the GATT. Please
describe your efforts to develop and alternative system that provides a minimum/maximum amount
and a fee for service formula.
How does Kenya view the 1% surcharge for agriculture in light of the transparency of Art. II:I (b)
and its bindings?
IDF fee of 2.75% is GOK processing fee and  1% is KEPHIS fee.All imported agricultural products are subject to grading and inspection to protect the
agricultural sector against foreign insects and diseases. Sampling visual observation and subsequentlaboratory evaluation has to be corned out and as these activities are expensive, an inspection fee of
1% is levied to defray the costs.WT/TPR/M/64
Page 53
The 2.75%  charged by the government is the cost of procession and the administering the
IDF documentation.  It is therefore not a tax to importers.
Has this dependency on border revenue increased or decreased since the last Review  in 1993
In 1993 Kenya's dependency on border revenue was about 66% inclusive of VAT. It has now
been reduced to 54% of total tax revenue. We can therefore conclude that reliance on border Revenue
is on the decline.
Question by Thailand, Korea, the United States and the European Union
Tariff, other levies and charges
According to VAT except system, unprocessed agricultural products and processed foodstuff are
exempt from VAT. We would like to know that such an exemption system is applied to both local and
import products?
The report notes that the VAT can also be waiv ed by the Minister of Finance under specific
programme conditions which are detailed in the Value-Added Tax Act.  Could the Government of
Kenya kindly explain details on such a programme?
The exemptions are applicable to both local and imported products, and there is no specific
programme for waivers.
The Royal Thai Government is pleased to know that the customs clearance is normally completed in
two days, given all documents are in order. This will encourage and strengthen trade relations
between Thailand and Kenya. Based on our own sour ce the customs clearance takes longer than two
days. In our experience it took 1 - 2 weeks on the customs clearance at the port of entry. It would
grateful if the Government of Kenya could provide us with detailed information of this concern. Canthe Government of Kenya also confirm that the customs clearance is transparent and predictable?
Kenya confirms that customs clearance is transparent and predictable and that it takes a
maximum of two (2) days to clear goods when all documents are in order.  In the event that the
documentation is incomplete, it is referred back to the importer who may not act immediately hence
causing delay.
Questions by the European Union, the United States, the Republic of Korea, Discussant , Japan,
Czech Republic, Pakistan, Switzerland
Please explain the origin of suspended duties. What duties have been suspended. Are they on
an MFN basis?
The suspended duties appear to be an arbitrary application of duties on selected products.
What are the guidelines by the Ministry of Fin ance in imposing or eliminating such duties? How
frequently are the duties applied? It would be useful if Kenya would supply a list at the eight digit
level, of the 1,011 tariff lines subject to suspended duties and are rates of duties applicable to each.
Duties the Government  have plans  to limit the application of suspended duties with a view to
eventually eliminating  or folding them in Ad valorem duties.WT/TPR/M/64
Page 54
Page 30 of the Secretariat's report states that "on the request of a domestic industry, the
Minister of Finance may on a discretionary basis impose a suspended duty on a product on the list and
that the applied rate must not exceed the ceiling set by the Act".
After liberalization the Kenya Industry found itself unable to compete with products imported
into the country.  As a trade remedy measure, th e government introduced suspended duties to allow
the industry a transitional period to adjust to the new trading environment.  They were imposed after
consultation with the local Industry concerned.
The ceiling rates on suspended duties are far below the bound-rates acceptable to the WTO.Once the local Industry adjusts to the new tradin g environmnet, the government will consider
converting the suspended duties into ad valorem duties.
At the moment suspended duties are applied on MFN basis, a list of which is available from
Cotechna website.
Yes, they are applied on a MFN basis and are used on all like products without distinction on
the sources of supply.
Questions by Canada, the United States, the European Union and the Republic of Korea
According to reports, imports into Kenya with FOB value of U.S. $ 5,000 or more (US $ 10,000 for
goods airlifted by courier services) are subject to pre-shipment inspection by one of three companies
appointed by the Government, each of which has been allocated an exporting (foreign) region. The
report also notes that non-negotiable report of finding is issued by the inspecting office in instances
where there are unsolved problems regarding quantity, price etc.
Are the findings of such a report considered final or can a review of the findings be requested?
The findings are not final since the customs authority makes the final decision. When such
situations arise the non-negotiable reports of finding are treated as the opinion of the PSI companies
and customs Department makes a final ruling.
Para. 26. When is Kenya going to im plement the ASYCUDA/EUROTRACE System?
Kenya currently has no plan of implementing the ASYCUDA system. However,
EUROTRACE is already in operation in the Ministry  of Finance and Planning.  Arrangements  are
under way to feed EUROTRACE with trade da ta from the customs information system.
For customs information data, Kenya is implementing a homegrown system called BESPOKE to
support customs in the implementation of ACV.
Para. 27:  Why is the excise on imported goods based on the import value while excise tax on domestic
products is based on ex-factory price?  From our point of view this could lead to a factual
discrimination against imported goods. Could you explain the reasons for this distinction?
Excise tax on imported goods are based on the import values, plus duty; while for domestic
products the tax is based on the ex-factory price which includes customs duties that may have been
paid on the inputs and value added tax. Thus there is no discrimination as this is the only fair way to
determine  dutiable values for the purpose of taxation.WT/TPR/M/64
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What is the justification for this? The use of import duties also increases the uncertainty of Kenya
trade regime. Will the Kenyan authorities consider increasing the coverage of their tariff bindings,
and bringing the bound rates into line with the applied rate to increase tariff predictability for trading
partners?
Kenya will consider the possibility of increasing the scope of her binding during the next
round of negotiations.  Our level of binding will be dependent on the offers made by our major trading
partners.
The import into Kenya of an FOB value  of $ 5,000 or more ($ 10,000 in case of goods imported by
courier services) are subject to a compulsory quality and quantity inspection, and price comparison.
What is the portion of total import subject to inspection in terms of value and quantity?
We shall provide the answer to this question in writing in the near future .
Could you please provide more  information  on how and to what extent import tariffs have been
rationalised and reduced?
The Kenya import tariffs have been rationalized and reduced into 5 bands (of 0, 5 10, 15, and
25). At the moment there is no immediate intention to reducing them further. However, this does not
preclude any further reduction in the future.
Question on Anti-dumping and countervailing duties:
What will the major provisions of the new anti-dumping and countervailing duty law contain?
There are no plans to covert the existing mixed or specific duties on agricultural and
petroleum products into ad valorem rates but  this does not preclude the future possibility of reviews
of this decision.
Our anti-dumping and countervailing law is co ntained in the section 125 and 126 of Customs
and Excise Act Cap 472 of the Laws of Kenya.  Section 125 & 126 in the 1997 amendment .  Anti-
dumping regulation on the conduct of investigations are contained in the legal Notice No. 110 of 6 th
August, 1999. The regulations  are in conformity with the WTO Agreement on implementation of Art.
VI of GATT 1994.  The preparation of the necessary notification to the WTO is underway.
Question by Thailand
The Secretariat report notes that Kenya retained the right to use the transitional safeguard
mechanism of Article 6.1 of the WTO Agreement on Textiles and Clothing, but so far, the Government
of Kenya  has not yet notified the lists of products.
- What is the intention of the Government of Kenya, with regard to the notification of the lists of
products?
- Could Kenya also provide details of the products.
The Government of Kenya notified the WTO of its intention to retain the right to use the
transitional safeguard mechanism as provided for under Article 6.1 of the Agreement on Textiles andClothing, but this mechanism has not been resorted to, and no specific products have been identified.
As stipulated in Article 6.2 Safeguard action may be taken on the basis of a determination by
a Member, if it is demonstrated that a particular product is being imported into its territory in suchWT/TPR/M/64
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increased quantities as to cause serious injury, or actual threat thereof, to the domestic industry
producing like and/or directly competitive products.
Although Kenya may have experienced problems with increased imports of certain textile
items, it has not had the capacity and competence to deal with the problem.   It is a fact that following
the liberalization policies that the country has been pursuing over the last few years, imports of cheap
textile items caused serious injury leading to the closure of a large number of textile firms.
However, no proper legislation on safetuard exists making it difficult to take any measures for
redress as provided for under the WTO Agreement.
However, a notification will be sent to the relevant Committee in the WTO once the product
list has been developed.
Trade Related Aspects of Intellectual Property (TRIPs)
(1) Did Kenya manage to bring its legislation into conformity with the TRIPs Agreement by 1
January 2000?
(2) Has the amendment of the Industrial Property Bill and the Copyright Bill been completed,
and what are their contents in light of the TRIPs Agreement?
(3) What is the latest progress of the legislative amendment progress?
(4) Please indicate whether geographical indications, integrated circuits, layout designs and
undisclosed information will be protected as a result of the amendments proposed to Kenya's
legislation?
(5) Is Kenya willing and able to improve its patent legislation in general, and in particular with
respect to all major discrepancies with the TRIPS Agreement  including local working, rights to
prevent unauthorised imports and other broad exclusions from patentability, and will this be done indue time? (Japan, Hong Kong, China, European Union, United States)
Kenya did not manage to bring its legislation into conformity with the TRIPS Agreement by
1st January 2000, but has been reviewing its statut es, and has so far drafted two bills which are
currently before Parliament. These are the Kenya Industrial Property Bill of 1999 and the Copyright
Bill.  Unfortunately, it is not possible to give a definate date by which time the bill will be passed into
law.
The main purpose of these bills is to bring Kenya's legislation into conformity with the TRIPS
agreement. The most notable amendments to the Industrial Property Bill for this purpose are in the
area of patents and include the following:
- The current Industrial Property Act provides for patent protection for a total of 17
years. The bill extends this to a single term of twenty years from the date of filing of
the patent application. This provision would ensure conformity with article 33 of
TRIPS Agreemnt.
- The Industrial Property Act provides for the issuance of non-working patents in
Kenya.  A provision has been incorporated in the new Bill  limiting the instancesWT/TPR/M/64
Page 57
available for the issuance of compulsory licences, thus ensuring that patents shall be
available and patent rights  enjoyable without discrimination as to the place of
invention, the field of technology and whether the products are imported or locally
made.
- The provisions of article 31 of the TRIPS agreement on other uses of the subject
matter of a patent without the authorization of the right holder have also been
incorporated in the new Bill.
- Article 34 of the TRIPS Agreement places the burden of proof with respect to the
infringement of the rights of the owner of a patent process on the defendant. This
provision has been incorporated in the Industrial Property Bill under Part XVI.
However, as regards trade marks, the Trademarks Act has not been amended yet, but it is
currently under review to make it TRIPS compliant. Other areas on which no legislation currently
exists, and which are currently under review with a view to drafting new legislation, are the protection
of geographical indications, layout-designs of integrated circuits and undisclosed information.
Regarding copyright law, the drafting of the new Copyright Bill was concluded in August last
year and will be placed before Parliament when it resumes in March. The bill taken into account the
provisions of the TRIPS Agreement, as well as with the WIPO Copyright Treaty (WCT) and the
WIPO Performers and Phonograms Treaty (WPPT).
Questions by the European Union
It seems there also exists a 1995 revision of the 1983 Copyright Act. Can Kenya confirm this
information?
What measures are planned to alleviate the problem of piracy in particular and to improve the
enforcement of intellectual property rights in general?
The Copyright Act was amended in 1995 to take into account the need for compliance with
the provisions of the Berne Convention which Kenya acceded to in 1993.
As regards piracy, the new copyright bill provides heavy criminal penalties and civil remedies
against copyright pirates. Also in the pipeline is the introduction of tough measures contained in the
recommendation of a workshop sponsored by WIPO in  Windhoek, Namibia, where stakeholders from
the Copyright Office, Customs, Kenya Revenue Authority, the Kenya police and the producers agreed
to introduce the banderole system in Kenya. Consequently, a national committee has been set up and
has identified a local firm to manufacture the banderole or holograms for the Government.
Can you please provide some examples of inventions that are considered to be contrary to public
order, morality, etc. and therefore are not eligible to receive intellectual property protection in
Kenya?
Can you please provide some examples of inventions that may be declared non-patentable?Does Kenya intend to become a member of the Un ion for the Protection of Plant Varieties (UPOV)?WT/TPR/M/64
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Article 26(b) of the Industrial Property Bill provides for two sets of inventions that are
unpatentable. These are:
(i) plant varieties as provided for in the Seeds and Plant Varieties Act, but not parts
thereof or productsof biotechnological processes; and
(ii) inventions contrary to public order, morality, public health and safety, principles of
humanity, and environmental conservation.
These qualifications are within the scope of the TRIPS agreement. The language of this
sub-paragraph is contained in article 27(2), and as these provisions are not operational as yet, it would
not be possible to give examples of patent applications that have been received and turned down on
these grounds.
As regards sub-paragraph (b), and to correct the contents of the Secretariat's report at
paragraph 104 on page 49, Kenya became a member of the Union for the Protection of Plant Varieties
(UPOV) on 13th May 1999 following th e deposit of its instrument of accession to the 1978 Act of the
(UPOV) Convention. Consequently, plant varieties are not patentable, but are protected under the
Seeds and Plant Varieties Act which is currently under review. This is in conformity with the
provisions of article 27.3(b).
As a developing country, Kenya is unable to devote adequate resources generally towards the
protection of intellectual property, and in particular, to the implementation of the TRIPS Agreement,
which has hampered efforts to comply with thes e obligations. Consequently, we would appreciate
financial and technical assistance to develop our human resources, for example,  training of our
customs officials and police to enable them detect and intercept counterfeit items, as well as other
Government departments, members of the judiciar y and the prosecution, the staff of the industrial
property and copyright offices, the universities, research and development institutions, the private
sector and others who require capacity building. Assistance in the development of physicalinfrastructure such as modern equipment for customs purposes and equipment for purposes of
information networking would also be invaluable..
According to the Government Report, Kenya has noted instances where the ambiguity of the text of
the TRIPS Agreement allows for both different and controversial interpretations, as exemplified inArticle 27.3(b) of the Agreement (paragraph 68, page 16).
Please explain concretely Kenya's view on the instances where it notes that ambiguity of the text
exists, including regarding Article 27.3(b).
Please also explain which provisions in Keny a's legislation exist regarding the above instances.
Answer to be provided later through the Secretariat.S
ECTORAL POLICIES
Questions by Japan
The Government Report states that, "The forthcoming negotiations on Agriculture, established under
Article 20 of the Agreement, are a priority for Kenya for entrenching the process of reform in
international Agricultural trade.  The main obje ctive of this reform process should consist ofWT/TPR/M/64
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subjecting Agricultural trade on the same rules and disciplines as are applied to trade in other goods,
in view of the fact that agriculture has not been prioritized in the multilateral trade negotiations"
(paragraph 70, pages 16 & 17).  The view expressed by Kenya that "this reform process should
consist of subjecting Agricultural trade to the same rules and disciplines as are applied to trade in
other goods"  is not based on Article 20 of the Agreement on Agriculture, though Japan is of the viewthat agricultural negotiations in the WTO should be based on Article 20 of the agreement.
Please explain what exactly it means by the view that "agriculture has not been prioritized in the
multilateral trade negotiations"
Please also explain why Kenya has come to have such an opinion?
Trade in agricultural goods was not subjected to the same GATT rules as trade in industrial
goods.
This was disadvantageous to countries such as Kenya which rely heavily on trade in
argicultural products as opposed to industrial products. However under the new multilateral tradingsystem agriculture is expected to be progressively integrated into the new GATT rules. Kenya
believes that total rather than progressive liberalization would be beneficial to countries heavily
dependent on agricluture. It is therefore in Kenya's interest to have the agriculturral sector liberalized
as soon as possible to redress the existing inbalance between agricultural and industrial goods.
It is reported that the introduction of, and research on, genetically modified organisms are strictly
regulated under the Science and Technology Act (paragraph 13, page 54, of the Secretariat report).
Please explain in detail how such introduction and research is regulated under the Act?
Discussion of proposals by the Institutio nal Advisory Committee on Biotechnology:  It is
now a requirement that all proposals for research on all genetically modified organisms be discussed
at the institutional level before forwarding to the National Bio-safety Committee (NBC) under theNational Council for Science and Technology.
National Bio-safety Committee (NBC):  The National Bio-safety Committee receives
proposals from the Institutional Advisory Committee on biotechnology for discussion. The proposals
are discussed in details raising all concerns which are not adequately addressed. The proposals arethen sent back to the institutions for further information and resubmission as required.  If the
proposals have provided all answers to the questions  by the NBC, it is then approved subject  to
satisfactory laboratory and greenhouse facilities that are intended for use by the project.
Kenya Standing Technical Committee for Imports and Exports (KSTCIE):  This
committee is charged with the responsibility of advising on the operation of Kenya’s Plant Quarantine
Regulations. The import permits are issued with conditions to be met as recommended by the NBC oras may re required to comply with International Plant Protection Convention (IPPC) and the Sanitary
and Phytosanistry Measures.  Kenya Plant Health Inspectorate Services (KEPHIS), has the mandate to
implement the national policy on the introduction and use of genetically modified species of plants,
insects and micro-organisms (bio-safety) in the country.
According to the Secretariat Report, food security (defined as self sufficiency in basic foods) is
indicated as one of the objectives of the agricultural policy in Kenya.  It is also reported that maize,
the predominant food crop provides nearly half of the calories and useable protein available to
Kenyans and that, for food security purposes,  Kenya's agricultural policy emphasises supply ofWT/TPR/M/64
Page 60
maize?  However, because of changes in weather conditions, maize production has fluctuated between
1.8 million and 3.1 million tonnes.
Please explain the measures taken, or to be taken, by the Kenyan Government to improve the
self-sufficiency ratio of staple food. (paragraph 10, page 53 & paragraph 18, page 55, of theSecretariat Report).
The national objectives of the Ministry of Agriculture & Rural Development are, food self
sufficiency, employment creation, income generation, generation of foreign exchange earnings,
rural-urban balance, and overall growth.
Maize still remains the staple food for most Kenyans. Because of the difference in soil and
climate, Kenya Agricultural Research Institute (KARI) has in the past done a lot of research on maize,
and has managed to come up with different  varieties of hybrid maize specifically for each ecological
zone.
However, due to population pressure on land, poor prices on maize, cheaper imports, high
cost of inputs, lack of credit for maize farmers and persistent poor weather performance particularly in
marginal areas, most farmers especially on the major maize growing zones are shifting from
cultivating maize to horticulture, tea, wheat, cattle rearing etc.
Strategies to improve self-sufficiency- Liberalization of seed industry.
- Strengthening of KEPHIS to ensure plant health and good quality seed.
- Promotion of use of recommended varieties in the correct ecological zones through extension
(field days, demonstrations, and on-farm trials).
- Liaison with KARI to develop maize streak resistant varieties.
- Government policy to ensure affordability of agricultural inputs.- Strengthening of Early Warning Systems to improve forecast and advisory services on
shortfalls and surpluses.
- Strengthening market information system to assist farmers in rational decision making on
produce marketing.
- Establishment of Standing Committee for the purpose of monitoring imports.
As stipulated in Sessional paper No. 2 of 1994 on National Food Policy traditional food crops
such as sorghum, millet, cassava, sweet potatoes are being promoted to reduce over-dependence on
maize.
Question by the European Union
Please explain more specifically the new po licy framework concerning domestic and export trade.
The Kenya Agricultural Policy Framework is comprised of the following policies:
1
Food Pricing, Marketing and Distribution Policy:   The pricing and marketing of food and
animal products have already been fully liberalized.  However, to protect farmers, from extreme
                                                     
1 This policy framework does not include policies of the new Ministries and Departments that
were recently brought under this Ministry, these are Ministry of Cooperatives, Ministry of Rural
Development, Department of Fisheries, and Ke nya Agricultural Research Institute (KARI).WT/TPR/M/64
Page 61
fluctuations on their returns, minimum (floor) pric es will be maintained for maize, wheat, rice, and
sugar, based largely on import parities.
Agricultural Input Policies:  This is to ensure that adequate and quality inputs are made
available to farmers and that to the greatest extent possible, they are used at the right time and in thecorrect quantities. These inputs include, ferti lizer, chemicals, seeds, animals feeds and drugs.
Agricultural and Livestock Credit Policy :  To continue making effective use of improved
supply of agricultural and livestock inputs, however , the policy of the government will be to move
towards a decentralized agricultural finance system and to support the expansion of informal credit.
Research and Extension Policy:  The objective of the food crop research will be the
search for more productive and affordable crop varieties.
Food Security policy:  The central objective of national food security is to ensure an
adequate supply of nutritionally balanced foods in all parts of the country at all times.
Food Trade Policy:  Kenya’s food policy priority will continue to be the maintenance of
broad self-sufficiency in essential foodstuffs, a major objective being the achievement of
self-sufficiency in maize production.
Nutritional Policy :  The overall objective is to overcome this situation of malnourished
pre-school age children, as a result of inequalities of purchasing power etc. The government policy is
aimed at increasing the production and consumption of more nutritious foods.
Development Policy:  The government land-use policy is to ensure that all land is efficiently
utilized and developed.
Employment Policy:  The agricultural sector will continue to be the major source of new
jobs for the rapidly expanding labour force. The basic aim of the manpower development policy is to
increase the willingness of the population to participate in agricultural development and to equip the
agricultural workforce with technical and managerial skills.
Question by the United States
How has Kenya's current import regime fostered self-sufficiency in the grains sector?
The current import regime may not have fostered self-sufficiency in the grains sector due to
the impact of other factors such as weather. It has, however, impacted positively on food security
which is the over-riding objective for poverty alleviation.
Are there any plans to convert the existing mixed or specific duties on agricultural
and petroleum products into ad valorem rates in the near future?
Does government have plans to limit the application of suspended duties with a view to eventually
eliminating or folding them into ad valorem duties?
Kenya will consider the suggestions made by members within the meeting of the relevant
WTO agreements.WT/TPR/M/64
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According to Paragraph 22, Kenya's tariff bindings in the WTO cover 15.1% of all tariff lines.  In
addition, the bound rates are almost all over the maximum tariff rate of 25%.  Bound rates are much
higher than the current applied rates.  We would encourage Kenya to act on the Reports suggestion to
increase the coverage of its tariff bindings and to narrow the existing gap between bound and applied
rates.
Does Kenya plan to close the gap between applied and bound rates?
Kenya will consider narrowing the gap betwee n the bound and the applied rate in the next
round of negotiations.
Question by the European Union
Can change from the current prohibition of  foreign ownership of agricultural and
small retail operations be foreseen in the near future?
Questions by the United States
The report notes that foreign ownership of agricultural land and small scale retail operations is
prohibited.  In addition, there may be restrictions on business activity to what is termed a general
business area.  Please explain the intention of these restrictions.
Kenya’s arable land is around 20 % of the total land area, as against a population of more than
29 million persons, where 80% of the same population derive their livelihood from agriculture.
Kenya’s agricultural land is sub-divided into small units, where machinery is not often used.
Traditionally ancestral land is inherited from one generation to another.
Since independence ownership of land has been restricted to citizens. However, as we enter
into a free market economy, there will be need to de-restrict the ownership of commercial land.
Is the 1% additional fee on agricultural imports to support the Kenya Plant Health Inspectorate
Service also applied to domestic agricultural goods? If not, when will this system be brought into
conformity with GATT Article III.
The import declaration fee of 2.75% along with an additional 1% for agricultural goods seems
excessive and unrelated to the cost of any services rendered, as required under Article VIII of the
GATT.  Please describe your efforts to de velop an alternative system that provides a
minimum/maximum amount and a fee for service formula.
How does Kenya view the 1% surcharge for agriculture in light of the transparency requirement of
Article II:1(b) and its bindings.
Any imported agricultural produce is subjected to grading and inspection with a purpose to
protect the agricultural sector against foreign insect pests and diseases. The grading and sampling
involves sampling, visual observation and subsequent laboratory evaluations. All these activities arean expense hence the inspection fee of 1%. All exported agricultural produce are subjected to the
same treatment to ensure they meet the phytosanitary requirement of the importing country.WT/TPR/M/64
Page 63
Question by the European Union
Does Kenya intend to become a member of the Union for the Protection of New Varieties
of Plants (UPOV)?
The Government of Kenya deposited its instrument of accession to the International
Convention for the protection of New Varietie s of Plants (UPOV) 1978, on May 13th, 1999. Kenya
therefore brought the total number of member states of the UPOV to 40.
Could Kenya provide further details of the im provements which are currently being made to
harmonise the fish trade and quality restrictions?
The government of Kenya intends to manage the fishery resources on a sustainable basis, and
to promote fish marketing and consumption. Infrastr ucture such as access roads rural electrification
and fish preservation at the beaches is also to be improved with a view to speeding up the
transportation of catches to consumption areas while keeping them fresh and preserving their quality.
Several fish processing plants have already  been established in major towns such as Kisumu,
Nairobi and Mombasa. The proposal for the setting up of a fish Development Authority was passed by
Parliament on 9th June 1999 and modalities for it's operations are being worked out.
Regional efforts are being made to harmonise fish trade and quality regulations especially for
the Lake Victoria Nile Perch. Moreover the Common Market for Eastern and Southern Africa recently
carried out a study on the possibility of adding value to fish products.
In the meantime the following measures are being pursued:(i) Kenya is making efforts to ensure that fish landing beaches at the lake have high
standards of hygiene.
(ii) The Government  is putting up laboratories to carry out microbiological analyses of
the fish to ensure exports of fish are free from bacteria that can cause diseases.
(iii) The Government Chemist and KEPHIS have been carrying out frequent analyses of
water, fish and sediment samples, and once the results are confirmed over a
reasonable period of time, they will be sent to EU.
Question by the United States
Please indicate when Kenya intends to notify the WTO regarding the tax rebates for exported goods
as mentioned in paragraph 12. We would appreciate a detailed description of this programme,including title(s) purpose, duration, amount of funds, and eligible recipients.
Kenya does not provide any tax rebates, nor does she have the resoures to do so. However,
Kenya does refund VAT on exported tea.  This is because tea for local consumption attracts 15%
VAT at every stage of value addition, while tea for export was only recently loaded with VAT toprvent further off loading with the local market by dishonest exporters.  Thus, to ensure that tea sold
at the auction was actually exported, the tea exporters were hence required to pay a refundable 15%
zero rated VAT.WT/TPR/M/64
Page 64
Based on the above arrangements, the zero rated VAT cannot be regarded as a tax rebate or
an incentive but rather a “deposit” which is refunded in full after is has been confirmed that the goods
have been received at the destined point.
Kenya's regulatory seed approval process for maize and other seeds includes a lengthy four year
approval process that includes a domestic production requirement, which does not appear consistent
with Kenya's obligations under the SPS agreement.
Please explain the procedures and basis for Kenya's regulatory regime and approval process
regarding maize seed?
Please explain how Kenya's domestic production requirements for approved maize seed varieties
under Kenya's national treatment market access obligations under GATT Article III and IX, as well as
Article 4.2 of the Agreement on Agriculture.
Kenya has a three-tier release system consisting of:
(i) National Performance Trial Committee  (NPTC)
(ii) Specific Variety Release Committee (SVRC)
(iii) National Variety Release Committee (NVRC)
The NPT Committee meets annually to discuss the merits and demerits of new maize seed
entries,  and the performance of those that have been on trial during the previous season. The NPTC
recommendations are forwarded to the SVRC and later to the NVRC.  New seed entries are presented
to the NPTC by the sponsors based on their preliminary data with comprehensive descriptions
including morphological, agronomic and special attributes.  These entries are tested for a maximum of
three seasons/years.
Entries can be recommended for release in the first year of NPT testing based on their
performance and special attributes Upon official re lease by the Minister of Agriculture, production of
the seed in Kenya is encouraged. However, once a variety has been released there are no quantitative
restrictions on imports, provided that all the regulation's applicable to seed importation and seed
certification are complied with.
Compulsory certification of maize seed is required in Kenya.  In view of high risk of disease
and insect pest, maize is a quarantine crop. Importation of seed is permitted on condition that the
exporting country has a competent and reputable certifying agency that can issue OECD labels and
the International orange ISTA certificate with the specific minimum laboratory standards for maize.
In addition, Kenya's phytosanitary requirements should be observed before the export.
What steps will the Government take to restructure the National Irrigation Board.?
The restructuring of the National Irrigation Board (NIB) is already underway.  Once
completed, the new board will deal with policy formulation and regulation. Currently NIB, controls
the six irrigation schemes in the country. The Government has prepared a new policy and a legal
frame work that will create National Irrigation & Drainage Development Authority (NIDDA). This isa legal framework which will regulate, formulate and promote irrigation development in the country.
All irrigation schemes currently under the NIB will be privatised.WT/TPR/M/64
Page 65
How does Kenya intend to return to the control of the Coffee Board of Kenya(CBK) and the Kenya
Tea Development Authority (KTDA) to the private sector?
The Government has no intention of returning the CBK to the private sector as it is a
Regulator. The Coffee Act is however being reviewed to provide for the separation of the marketing,research and regulatory functions. On marketing, the rules will be reviewed to provide for enhanced
stakeholder (farmers) influence in the decision-making process.
Parliament has adopted the Sessional Paper No. 2 of 1999 on the privatization of KTDA. The
Tea Act,  Cap. 343 has now been amended and passed into law.  The Act will,  however, be effective
from 1 st July, 2000. KTDA is now set to be privatized and will be fully owned by the farmers.
What steps will the Government take to restructure the Horticultural Crop Development Authority
(HCDA) to allow the private sector to spearhead the development of horticulture?
The review of the legal framework for the horticulture sector is at an advanced stage. It is
envisaged that the Board of HCDA will only have  2 Government officers out of 17 members. HCDA
has been removed from all commercial activities and now handles only the regulatory functions. To
further promote the private sector, the licensing and registration procedures have been streamlinedand the number of forms to be filled reduced drastically to one registration form and one license.
When will the Cotton Board be restructured?
Following the collapse of the Cotton Board, the Government renewed the Cotton Act in 1988
in order to remove the Board's monopoly over the handling of cotton in Kenya,  and allow more
buyers to play a role in marketing. In 1991 the cotton industry was liberalised thus opening the
industry to many buyers.  The Government is however , in the process restructuring the entire industry
to revive cotton production to meet the local market demands,  and to export the surplus.
The revised functions of the proposed new apex body to be called Cotton Development
Authority (CODA) will be to advise the Government on policy matters on cotton, set up qualitystandards, collect data on the cotton industry, supe rvise and fund research activities, and co-ordinate
the production and distribution of quality seeds to the farmers.  The cotton sub-sector includes the
spinning industry, knitting, cottage and Rope Twain Industries, cotton gineries and textile
manufacturing.
Textiles and Clothing
Question by Japan
Please explain the current situation of the inte gration process by Kenya under Article 2 of the
Agreements on Textiles and Clothing (ATC).
In September 1995, the National Committee on WTO prepared a list of the items to be
integrated into GATT '94 but the same was not notified to the WTO as required, and consequently, no
further action was taken.
It is now the intention of the NCWTO to revisit the list with a view to taking action as
required under the agreement.  In view of the work that has already been initiated with regard to thisWT/TPR/M/64
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matter, it is anticipated that the Government will communicate with the WTO Secretariat on this issue
as soon as possible.
Financial Services
Question by Hong Kong, China
Kenya has participated in the WTO financial services negotiations and made improved commitments
in the sector.  However, it is mentioned that Kenya has not yet ratified  the Fifth protocol to the GATS,
which entered into force on 1 March 1999, we would like to know the time-table for its ratification.
Question by Canada
According to the report, Kenya's accession for the WTO was ratified on December 23, 1994 and
Kenya became a member of the WTO on January 1, 1995.  The footnote to paragraph 16 states that in
Kenya, international treaties and agreements have to be adopted through a domestic law.  What
domestic legislation has been passed to allow the adoption of the General Agreement on Trade inServices (GATS) into Kenya law)
According to the report, Kenya has participated in the financial services negotiations.  However,
Kenya has not yet ratified the Fifth Protocol to the GATS, which entered into force on March 1, 1999.
What progress has been attained towards ratification of the Fifth Protocol to the GATS.
Question by the European Union
Para 79, what are the reasons for Kenya still not having ratified the Fifth Protocol of the GATS which
entered into force on 1 March, 1999?  When is Kenya going to ratify it?
Question by the United States
Comment:  There are two principal areas in which we believe Kenya could take action to make its
financial services market more attractive to foreign investors.  First, Kenya should ratify its
commitments under  the Fifth Protocol as soon as possible.  Second, although Kenya has market
access commitments for commercial  presence in a number of important activities, there is room foradditional liberalization, including improved ma rket access and national treatment bindings.
- When does Kenya expect to ratify its commitments under the Fifth protocol to the GATS.
- Kenya did not make national treatment commitm ents for commercial presence in banking and
other financial  services in 1997.  As a policy, do Kenyan authorities  treat foreign financial services
providers less favourably than domestic service suppliers?
- The report did not contain sufficient information concerning securities and asset managementservices.  Have Kenyan authorities granted licenses to foreign financial services suppliers to provide
securities trading and (or securities underwriting services in Kenya? What asset management
services are available to the public in Kenya?
As regards Kenya's ratification of the Fifth Protocol of the GATS, the necessary ground work
was done, and a Cabinet Memorandum prepared in 1998.  But following a Cabinet reshuffle that
occurred thereafter, the matter was withheld.WT/TPR/M/64
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About a fortnight ago, the issue was revisited.  The Minister for Tourism, Trade and Industry
has signed a Cabinet Memorandum which will be presented to his colleagues for approval.  Once the
decision to ratify the Fifth protocol to GATS is made by Cabinet, the instruments of ratification will
be prepared, signed and deposited with the WTO Secretariat.
Kenya does not discriminate between foreign financial service providers and domestic service
suppliers.  Both are treated equally in accordance with the national treatment principle of the WTO.
There is active participation by foreign firms in securities and asset management services in
Kenya.  A list of those providing these services and who have been licensed could be supplied uponrequest.
Question by Japan
It is reported that not less than one third of the paid-up capital of an insurance company shall be
owned by Kenya citizens or by the Government.  It is also reported that in telecommunication
services, even after the privatization of telekom Kenya Limited, restrictions on ownership will remainlimiting to Foreign Investors to 30%.  Please ex plain the reason for maintaining foreign ownership
restriction in these fields.
Question by Hong Hong, China
It is noted that telecommunications services are provided by state-owned corporations, which retains
a monopoly until 2003.  Besides, Foreign ownership in that sector is restricted to a maximum of 30%.
Does the Kenya Government have any plan for further liberalization of the Sector?
Question by the United States
We note several elements of Kenya's commitments that would not seem accord with Kenya's need to
develop its infrastructure for foreign trade, including mandatory cession limits for the re-insurance
sector, foreign equity limitations for the brokerage sector, and the lack of national treatment
commitments for the non-life sector.  Kenya also mainta ins foreign equity limitations in the life sector.
Please explain Kenya's plans to further liberalize these key sectors.
One of the reasons why Kenya has taken the measures it has is because some of the items on
which commitments are being made are new.  We need time to understand them fairly
comprehensively before undertaking large scale commitments on them.
Kenya's commitments are based on liberalization as provided for in Article XIX (2) of the
general Agreement on Trade in Services.
As a matter of policy, Telecom Kenya will be free to engage in joint ventures with other
private investors in other areas of telecommunication de velopments.   It will be allowed to divest from
un viable services.  There is therefore room for further liberalization in the telecom sector should a
reputable investor(s) be identified.
The situation is the same in the insurance sector, and once the sector has been fully analyzed
by the authorities, prospective investors will be invited to participate.WT/TPR/M/64
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Question by Hong Kong, China and the European Union
It is noted that telecommunications services are provided by state-owned corporations which retain a
monopoly until 2003.  Besides, foreign ownership in that sector is restricted to a maximum of 30%.
Does the Kenya Government have any further plan for liberalization of the sector?Can Kenya provide a draft of a time schedule for the planned privatization of the Kenya Telecom
company and the Kenya Railways?
The Government has began the process of privatizing of Kenya Posts and
Telecommunications Corporation.  The corporation has been split into three entities, namely TelkomKenya Limited (TKL), the Postal Corporation of Kenya (POSTA) and the Communications
Commission of Kenya (CCK).  Forty (40%) per cent of Telkom Kenya Limited equity is expected to
be sold to a strategic investor, followed by a 20% initial public offer at Nairobi Stock Exchange
(NSE) and 3% to 5% of the shares will be offered to  the staff.  By creating an environment conducive
to private investment, CCK is expected to play  a vital role in ensuring fair competition and
development of the sector.
Kenya's mobile telecommunication sector is run by a subsidiary of Telkom known as
Safaricom.  A British firm has been licensed s astrategic partner of Safaricom in the mobile business.
The internet service has also been privatized with Jambonet, a subsidiary of Telkom Kenya, only
providing access to the internet, but not allowed to participate in internet service provision.
As regards railway transport, the Government has put plans in motion geared towards the
privatization of the railways.
Question by the European Union
Manufacturing Industry:  Please indicate for which products import licensing is still required and on
which grounds respectively.
Import licensing is no longer required.  However, information on goods coming into the
country is governed by various Acts of Parliament  and administered by various   Ministries and
institutions.  These include the Public Health Act, the Agriculture Act, Animal Diseases Act,
Pharmacy and Poisons Act and the Customs and Excise Act etc.
Restrictions to imports under those laws are basically for security, health and environmental
reasons.
Para 13: Considering the fact that the import a nd export licensing procedures stipulated in the
Imports and Essential Supplies Act are no longer followed, will the Act be abolished soon?
Yes, there are plans underway to abolish the Act in the near future.
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