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Mitigating risks from dumping and deceptive trade practices
Officials from the Kenya Bureau of Standards (Kebs) inspect some of alleged sub-standard rice seized on November 06, 2024 from the warehouse of Anytime Limited.
Is it the beginning of the end of the dumping of unsafe products and deceptive trade practices?
“Cassis de Dijon: If it is fit for the French to drink, and so, it should be fit for the Germans too.”
The Business Laws (Amendment) December 27, 2024. And with it, the National Assembly introduced some far-reaching fundamental amendments to: the Banking Act; the Central Bank of Kenya Act; the Microfinance Act; the Standards Act; the Special Economic Zones Act; and the Kenya Accreditation Service Act.
This article focuses on amendment to the Standards Act regarding goods importation into Kenya. The new Sub-section 12(2) of the Standards Act has far-reaching implications, given that Kenya has adopted the Cassis de Dijon principle, as a defensive rule for presumption of conformity of imported products.
The Cassis de Dijon principle
The principle, also known as the mutual recognition principle, stems from a 1979 landmark ruling by the European Court of Justice, in a dispute over the importation and marketing of a French-made liquor called "Cassis de Dijon," which did not comply with German national law, which limited minimum alcohol content to 25 percent.
The plaintiff was Rewe-Zentral AG, a retail cooperative firm, while the defendant was the German regulatory authorities.
The court ruled that, in principle, a member country of the European Union (EU) should allow a product lawfully produced and marketed in the origin country into its market, unless there are justifiable good reasons for prohibiting the product such as health, safety or consumer protection.
The Cassis de Dijon principle has been used with the goal of allowing market access and free movement of goods across the European Community in the least trade-restrictive way possible.
Closer home, the Constitution's Articles 42 (Environment rights) and 46 (Consumer rights) ... address these regulatory goals.
Conversely, unlike the EU, adopting the Cassis de Dijon principle in the current provision for Kenya is not required to facilitate market access, but as the first line of defense to mitigate risks from unsafe products and deceptive trade practices when evaluating their conformity.
...The presumption is that if a product is suitable for inhabitants of the country of origin to consume or use, it should also be fit for Kenyans to consume.
What can we expect now that the Cassis de Dijon concept has been incorporated into our laws? The Kenya Bureau of Standards (Kebs) is the lead agency in administering the present import control regime, which was created in September 2005 under the Pre-Export Verification to Conformity Standards (PVoC) initiative.
Kebs must comprehensively redesign the current PVoC programme to align with the Cassis de Dijon principle.
Pending the attendant regulations, a good starting point is for Kebs to review existing trade agreements ratified by Kenya on the extent of functional equivalence of regulatory objectives.
Auxiliary, Kebs should investigate how other nations have applied the Cassis de Dijon approach and lessons gained in order to create a viable and robust model for Kenya. It remains to be seen how Kebs will apply this approach in cases where the regulatory aims are not functionally identical.
Kebs should pursue practical regulatory cooperation under the one-government approach strategy.
In conclusion, this new provision is perhaps a first for an African country to put into law, as its primary line of defense against unsafe products and deceptive trade practices. For Kenya and Africa, it heralds the beginning of product safety compliance mindset.
In this case, Kenya will shape how other African countries implement it, particularly in light of the African Continental Free Trade Area arrangements.
The PVoC Programme is a conformity assessment process designed to ensure that items imported into Kenya meet the applicable Kenya Standards or equivalents prior to shipping from the place of origin.
The Kenya PVoC Programme is one of twenty-two comparable programs, primarily in Africa and the Middle East; Mexico and Mongolia being the outliers. Under the present PVoC system, the importer must certify that their products meet Kenyan standards.
As a result, the new paragraph 12(2) provision broadens the foundation for evaluating product conformance to include the nation of origin's laws and regulations. It indicates that any imported items must demonstrate and offer evidence that they are legally made, freely sold, consumed, or used in their nation of origin.
Simply put, an importer must now get an export certificate from the regulatory authorities in the country of origin as part of the proof.
Further, Kebs will be required to speedily formulate the attendant regulations provided under the new subsection 12(7) concerning implementing the new subsection 12 (2).
Besides the East Africa Community countries for which the Cassis de Dijon principle has been in operation since 2005, Kenya has signed several bilateral agreements, including the recent Kenya–European Union Economic Partnership Agreement (Epa), which took effect in July 2024.
In the practical sense, for instance, under the Kenya-EU Epa, Kebs may, under the relevant Articles of the EU Epa agreement, enter into an arrangement to accept products manufactured by EU countries that conform to the CE marking directives.
Today, Kebs is the horizontal lead agency concerning products placed on the Kenyan market, including imports.
The success of implementing this new provision will be determined by how Kebs will engage and cooperate with other sector regulators to establish a coherent, citizen-centric, business-friendly and harmonised approach to the revised import control regime.
Similarly, sectoral regulatory authorities must pay close attention to this new clause and harmonise their regimes. The amount of transparency and regulatory collaboration necessary to implement this clause is critical for enterprises and the general public alike. Foreseeable benefits
And, if properly applied, this new clause has significant long-term benefits. A good example is the widespread use and sale of highly hazardous pesticides (HHPs) in Kenya.
According to the letter of this new provision, these hazardous pesticides are now officially banned or withdrawn from the Kenyan market.
For instance, the 2023 report produced under the Route to Food Initiative (RTFI) states that 63 percent of pesticide products used in Kenya are rated as Highly Hazardous, amounting to 76 percent of the overall pesticide volume utilised. Almost half of these hazardous pesticides (44 percent) have been banned or withdrawn in the European Union.
Therefore, Kenyans should expect reduced instances of unsafe and harmful products banned or not used in the country of origin in the Kenyan market. However, it is a wait-and-see on how the Pest Control Products Board (PCPB) and Kebs will apply, enforce and comply with this new law.
On the other hand, Kenyan produce is expected to have better market access, given that some pesticide products will exit the market, helping farmers attain the minimum residue levels requirements of the foreign markets.
Beyond the benefits of strengthened public health, safety, consumer protection and environmental preservation, businesses should expect simplified import conformity procedures and reduced associated costs of demonstrating conformity.
Thus, the great benefit of this new law is the import of low-risk products, and it will allow them to enjoy reduced conformity checks and unnecessary costs for duplicative certification procedures.
Also, for importers of new innovative products or products where Kenya has not established standards, this new provision provides a reasonable basis to undertake conformity checks and access the Kenyan market in a less bureaucratic way.
What is still a grey area are imports that are purely targeted to Kenya only, not otherwise manufactured for the country of origin, with no established national standards or regulatory requirements. In sum, the letter of this new law should be a win-win for citizens and businesses if implemented and enforced effectively.
Although the Business Laws (Amendment) Act 2024 introduced some progressive amendments to the Standards Act, it is not a sufficient step forward. It is most desirable for a comprehensive review of Kenya's quality assurance system, which is over 50 years old, to modernise it, including installing a modern national market surveillance system that this new provision calls for.
The writer is the immediate former Chief Executive Officer Managing partner, Kenya Accreditation Service Sisule & Associates LLP