NAIROBI (January 08 2004): Kenya will lose its share of the crucial Pakistani tea market if it does not open up to more exports from Pakistan, a trade official said on Tuesday.

Pakistan is the biggest importer of Kenyan tea, lapping up about a quarter of the east African country's total production of 287.1 million kg (633 million lb) in 2002.

But Kenyan tea authorities said they were not worried about the threat by Indian tea, saying that its world-famous tea with a distinctive flavour could hold its own against competition.

"If plans go as have been envisioned and India gets some tariff reductions by 2006, there is no way that Kenyan tea would be able to compete with Indian tea," said Safdar Sohail, Pakistan's commercial counsellor to Kenya.

"We are suggesting that before that kind of time comes, Kenya's government should move quickly to sign an agreement which could see their share going higher."

Kenya imported $112 million worth of goods from Pakistan, mainly wheat and rice, compared to $135 million that it exported.

The seven-nation South Asian Association for Regional Co-operation (SAARC) on Tuesday wrapped up a summit with raised hopes for greater regional co-operation that could see Pakistan import more tea from other south Asian countries.

Improving relations between India and Pakistan, the two biggest members of SAARC, would mean increased trade between the neighbours, which would directly harm Kenya's exports prospects.

In the last year alone, three tea-trade delegations from India have visited Pakistan.

"India is trying very desperately to capture Pakistani market," Sohail said.

"Pakistan is under tremendous pressure from Sri Lanka, Bangladesh and India to sign free-trade agreements based on tea especially in the context of the SAARC conference that has just been concluded."

A senior official of the Kenya Tea Board (KTB) said Kenyan tea was competitive and had a strong demand.

"Teas from different places have distinct characters. Kenyan tea is world renowned but we should not sit on our laurels and pretend nothing is happening," the marketing official, who did not wish to be named, said.

Kenya sold a total of 52.4 million kg of tea to Pakistan in the months of January to September 2003, compared to 49.4 million kg over the same period the year before.

Sohail said Pakistan submitted a free trade agreement draft in April, 2003 seeking a mutual reduction in tariffs, but that they have not received a response yet.

Pakistan proposes to export fabrics, agricultural machinery and chemicals to Kenya should such an agreement be made.

"A favourable agreement would be welcome especially for tea but before signing, you should look at everything. It is good for tea, but what will we open ourselves to," the KTB official said.

Courtesy Business Recorder