Kenya yet to sign trade deal scrapping taxes on ICT imports

What you need to know:

The State is still monitoring the Information Technology Agreement (ITA), which gives 201 goods duty-free access to markets of the WTO members from July next year.

Kenya expects to sign the World Trade Organisation (WTO) agreement that is aimed at removing taxes on Information Communication Technology (ICT) products like TV decoders and computers to promote economic growth and jobs creation.

Foreign Affairs and International Trade secretary Amina Mohamed on Thursday said the State is still monitoring the Information Technology Agreement (ITA), which gives 201 goods duty-free access to markets of the WTO members from July next year.

Some 53 countries, including the European Union (28 members), China and the United States, signed onto the ITA pact in Nairobi on Wednesday evening out of the 164 members, the newest members being Afghanistan and Liberia.

Asked Thursday whether Kenya had signed the pact, Ms Mohamed replied: “Not yet. It is a plurilateral agreement (between a smaller number of countries as opposed to multilateral), and we will be looking at it closely in the coming months.”

The deal means signatories will be required to eliminate custom taxes on goods like home Hi-Fi systems, headphones, digital car radios, TV cameras and set-top boxes for digital TV reception.

READ: WTO deal to cut tariffs on ICT goods

Ms Mohamed, however, said Kenya, like other countries are yet to sign up, would still enjoy the benefits of the pact based on the WTO principle of most favoured nation (MFN), which discourages trade discrimination among members.

“Its benefits will be immediate because even as a plurilateral it will be applied on an MFN basis,” Ms Mohamed replied to Business Daily queries.

The MFN, for instance, requires that if a country offers lower customs duty on goods from another nation, the preference should be extended to all other WTO members. This is a major win for consumers in form of lower commodity prices and reduced costs for manufacturers.

Ms Mohamed is chairing the Nairobi WTO conference — the first on the African continent — which ends Friday.

She however, did not offer details on how Kenya would handle the existing customs duty on the products.

Following the deal, the US will scrap various taxes including eight per cent tax on global positioning system (GPS) devices, 30 per cent duty on software media, and a tax of 30 per cent on video game consoles.

The world’s largest economy estimates that the deal will add 60,000 jobs in the US alone and raise the global gross domestic product by $190 billion (Sh19 trillion) per year.

Others products that are required to be given duty free access to markets are computers, microphones, medical scanners and telecommunication satellites.

Kenya’s customs duty on microphones and headphones stands at 25 per cent of the value of a unit, TV cameras duty free.