NAIROBI, Feb 17: Pakistan has threatened to effectively shut off Kenya from its largest tea export market after Nairobi hiked its import duty on rice from the South Asian country by more than 100 per cent, officials said on Thursday.

"Pakistan has issued a veiled threat that it may reciprocate by increasing tax on Kenyan tea," said Daniel Koech, a spokesman for Kenya's trade ministry. Tariffs for rice entering Kenya increased from 35 to 75 per cent on January 1, when the East African Community Customs Union entered into force, prompting Pakistan to threaten a similar boost for Kenya's tea, which could cripple its exports.

Pakistan is the leading buyer of Kenyan tea, followed by Egypt, Britain, Afghanistan and Sudan, according to the Tea Board of Kenya. The spat over the duty hike has led to a build-up of rice containers at the Kenyan port city of Mombassa, with importers arguing the new tariffs are unrealistic.

Around 8,000 containers of rice, including some destined for Uganda, have been stuck in Mombassa since the beginning of the year, officials said. Officials from the Kenyan ministries of trade, finance and agriculture have been holding consultations with representatives from the Pakistani High Commission in Nairobi with a view to breaking the stalemate. But unless Kenyan authorities reverse the move, Pakistan has threatened to hit back by increasing the duty on Kenyan tea from the current 33 to 75 per cent, officials said.

Last month, Pakistani authorities proposed that rice already at the port and shipments on the high seas be exempted from the new tax regime, but Kenya remained undecided because the move might upset Tanzania and Uganda, the other members of the customs union.

Koech said the customs union was designed to free up trade and harmonize tariffs on goods entering the three east African nations but acknowledged it "has experienced some teething problems and this is one of them." "We have asked Pakistani authorities to give us more time to resolve this," he said. -AFP