Import Polices, Tariffs, and Restrictions: Kenya’s Case Coursework

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	Vietnam	Kenya
Tariff structure	Applies a six-digit tariff nomenclature. The country is however converting its current 6-digit nomenclature into 8-digit system, in line with AFTA (Asean Free Trade Agreement)	Applies an eight-digit tariff nomenclature.
Tariff rates	tariff rates range from 0 to 60%	Average of 12.6% in 2008
Trade impediment		A value added tax which is 18%, together with high import tariffs impedes trade in Kenya.
Types of tariff rates	1. Ordinary tariffs charged to goods imported from Countries that do not share normal trading relations (NRT) with Vietnam. 2. The countries that share NRT with Vietnam are charged Preferential Tariffs. 3. The special tariffs are charged to goods imported from countries sharing special preferential tariffs with Vietnam.	Zero duty is charged on raw materials and inputs 10 percent is charged on processed or manufactured inputs 25 percent is charged on finished products
Protection of local industries	Tax rates charged on local and sensitive products such as used cars, automobiles and special purpose vehicle were increased in 2003	Taxes increased from time to time especially to protect agricultural output such as sugar.
Import duty on fuel	Kerosene, diesel, and other types of fuel goes for 15% import duty
Import of other items/additional charges	Import of items such as cosmetics, soft drinks, garments, and automobiles ranges from 50% to 60%.	There is a system of specific rates that apply in addition to custom duties, on certain product such as paper and paper boards, tobacco, alcoholic beverages, motor vehicle tires, cosmetics, footwear and certain fruits, just to mention but a few. The rate ranges up to 70%.
Most Favored Nations (MFN) duties	The rates are 50%less than the normal tariffs rates.	MFM accorded to all countries, including those that are not members of World Trade organization (WTO). MFN rates ranges from 0% to 45%.
Temporary reduced duties	Raw materials and materials imported for manufacturing are exempted from import duties. Goods imported temporarily for exhibition are also exempted from import duties. Import of medicine, equipment and machinery also exempted from import duties (US. Commercial Service, 2012).	Refunds, remissions, and export incentive schemes are accorded on capital equipment, raw materials, machinery and other equipments used to package and manufacture goods for export. Other duties that are also remitted include unassembled trailers and semi-trailers, sowing seeds, motor vehicles and particular spare parts for Safari Rally, bars and fittings among many others. Petroleum Act also provides that duties on products and materials for oil tasks are remitted. There is however a compulsory 2.75% compulsory duty on all importers who enjoy exemption duties, also referred to as import declaration fee (UNICTAD, 2012).

Summary

High import tariff in Kenya, especially in the agricultural sector impedes trade significantly. Furthermore, trade in Kenya is risky due to uncertainties that result from import regulation which is often interfered by domestic supply and demand, together with political factors. Kenya uses trade barriers to protect domestic producers from external competition, a measure that would prohibit trade in the region, and perhaps an impediment from global recession recovery. A case in point is the Kenya’s extreme use of tariff on trade, which according to WTO; Kenya applied a 12.6 percent in 2008 only, which was rather prohibitive.

In Vietnam, tariffs have been reduced considerably, specifically with the aim of meeting ASEAN and WTO objectives. However, some key segments remain sheltered. Roughly all the tariffs indicators have been going down. In addition, the mean tariff rates have remained more or less stable. High tariffs are mainly directed on specific sectors such as used cloths, vehicles, spirits, beverages and vehicle parts (Athukorala, 2006). In view of this analysis, it goes without saying that doing business in Vietnam is better as the tariffs rates and policies, together with other factors that impede import business are less prohibitive compared with Kenya.

References

Athukorala, P. C. (2006). Trade policy reforms and the structure of protection in Vietnam, The World Economy, 29(2), 161-187.

UNICTAD. (2012). Country notes. Web.

US. Commercial Service. (2012). Connecting you to U.S Suppliers. Web.

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