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Country's tea loses its flavor in Pakistan.

NAIROBI -- A tactical maneuver by Pakistan into bilateral free trade arrangements with several Asian neighbors is threatening to throw its multi-billion shilling-a-year tea trade with Kenya into a spin. For many years, Pakistan has been the single largest buyer of Kenyan tea but the tea trade between the two nations has been in a slump over the last three years with analysts warning that the trend is likely to carry on.

Statistics obtained from the Tea Board of Kenya (TBK) confirmed the decline, both in value and volume. The trend was evident over the first quarter of 2008 when Kenya tea exports to Pakistan dropped 52%, confirming fears that commodity trade ties between the two countries were getting loose.

Analysts trace the weakening to a decision by Pakistan to enter into Free Trade Area (FTA) pacts with several of its neighbors under the ambit of the South Asian Association for Regional Cooperation (SAARC). A section of members of South Asian Free Trade Area (SAFTA) such as India and Sri Lanka directly rival Kenya in the tea business.

Seeking to take an early ride on the FTA, Pakistan and Sri Lanka struck a deal soon after the pact came into force exchanging preferential market access to each other's exports by way of tariff concessions. Sri Lanka would be able to enjoy duty free market access on 206 products in the Pakistani market including tea, rubber and coconut. Pakistan, in return, would gain duty free access on 102 products in the Sri Lankan market.

As the new FTA arrangements take shape, Kenya's traditional tea trade with Pakistan is already feeling the pinch. "We are in negotiations with Rwanda for an FTA because their tea production is improving both in terms of quantity and quality," revealed Dr. Iqbal. "I believe a similar effort is ongoing with Malawi."
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Title Annotation:World News: Coffee and Tea Reports from the Front Line
Comment:Country's tea loses its flavor in Pakistan.(World News: Coffee and Tea Reports from the Front Line)
Publication:Tea & Coffee Trade Journal
Date:Sep 1, 2008
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