Writes Leo Odera Omolo
IMPORTS into the East African Community countries from two key African trade blocs will continue to enjoying zero tariff for one more year.
With effect from January 1, 2013 imports from the Common Market for East and Southern Africa {Comesa} and the Southern African Development Community [Sadc] will continue enjoying preferential treatment courtesy of the East African Community Customs Management Act 2004 which expired on December 30, 2012.
The chair person of the EAC Council of ministers Shem Bqrgeine recently moved to have the Bill amended as the EAC is yet to complete the negotiation of the Tripartite Free Trade Area [FTA] which would establish a market of 525 million people with an output of the USD One Trillion.
The TFTA is a grouping of 27 countries members of the Common Market for Eastern and southern Africa [Comesa}, and the Southern African Development Community [Sadc.
The Tripartite arrangement is expected to remove intra-regional trade distortions in the three regional groups of Customs, EAC and SADC.
Last month, EAC member states said the common external tariff will take effect in 2013.
The five member states signed a protocol establishing the EAC Customs Union and the Common External Trade [CET] in 2005.
The delay in establishing the CET and a single customs territory is hindering the free movement of goods, capital and people across member country borders, even though the common market protocol was officially launched in 2010.
However, the harmonization of trade deals between the EAC member countries remained complicated as long as countries belong to several different economic blocs.
BURUNDI FOR EXAMPLE IS A MEMBER OF Comesa, FTA, EAC the Comesa Free Trade Area {FTA}, the EAC and the Economic Community of Central African States {ECCAS], Kenya is a member of Comesa,Comesa FTA, EAC and IGAD, Rwanda is a member of Comesa,Comesa FTA, EAC and ECCAs,Tanzania is a member of SADC AND eac WHILE Uganda is a member of Comesa,Comesa FTA,EAC and IGAD.
This means that partner states apply different external tariff because of their membership in the different trade blocs.
According to the provisions of the EAC Customs management Act 2004, goods imported by the EAC partner states under Comesa and Sadc attract preferential tariff treatment as proscribed in each of the member states legislation.
For example, Burundi, Kenya and Rwanda charge tariff on all imports from SADC member countries, because they do not have a trade arrangement with the bloc. However, all SADC countries that are members of the Comesa are accorded preferential tariff treatment under the Comesa and EAc arrangement.
The issue of multiple membership is pushing up operational costs for business in East Africa. It is understood that the region’s business community is paying heavily, and losing money as a result of multiple membership because in some countries within the EAC when they ought to pay less in trade tariff, they are forced to pay more.
For instance, while Tanzania is trading with SADC using the rules of origins, goods imported from Sadc into Kenya, Rwandfa, Burundi and Uganda have to be charged according to EAC member countries, apart from Tanzania are 4xempted from an external tariff.
Ends