Kenya's President Mwai Kibaki has refused to pass into law a bill that would have returned the country to fixing essential food and fuel prices, a policy abandoned in the 1990s in favour of economic liberalisation.
In June, Kenya's parliament passed a bill with a clause allowing the finance minister to set maximum retail and wholesale prices of essential goods including fuel, maize flour, wheat, wheat flour, rice, cooking oil, sugar, paraffin, diesel and petrol.
"Apart from going against the policy of liberalisation, this clause also violates the fundamental principle of the World Trade Organization on national treatment of which of Kenya is a contracting party," President Kibaki said in memorandum submitted to the Speaker of the National Assembly.
Kibaki said his decision was based on Article Three of the WTO's General Agreement on Tariffs and Trade that warned that internal price control measures by contracting parties could be harmful.
"This obligation places a duty on Kenya to avoid measures including price controls, which would have prejudicial effects on other contracting parties supplying imported products to Kenya," Kibaki said in his memorandum.
Not that I support price controls, but I'm not sure I follow the points about GATT Article III. No doubt there is an impact on imported goods, but wouldn't there also be a similar impact on domestic goods?
ADDED: In the comments, and in an email, some people have mentioned the Canada - Liquor Boards case, where an Article III violation was found for a price control measure. To clarify, I didn't mean to imply that price controls could never violate Article III. Rather, my point was that price controls do not inherently violate Article III, which is what the article above seemed to indicate. Without some explanation of why the Kenyan measure violates Article III, I'm a little skeptical here.