BREAKING THE BARRIERS

Time to review EAC trade tariffs - CS

Tariff and Non-Tariff Barriers continue to hamper intra-EAC trade which according to the East African Business Council remains at a low of 12 per cent.

In Summary

•EAC and Regional Development CS Adan Mohamed says discussions are ongoing but could take up to 12 months before materializing.

•EABC chairman Nicholas Nesbitt has expressed optimism continued dialogue will open up trade in Kenya and East Africa which has improved with the One Stop Border Posts.

Lack of political goodwill has slowed down the implementation of  the East African Community-Common External Tariff (CET).

This even as tariff and Non-Tariff Barriers (NTBs) continue to hamper growth on cross-border trade, which according to the East African Business Council (EABC), remains at a low of 12 per cent.

East African Community and Regional Development Cabinet Secretary  Adan Mohamed has said it could take Kenya and her EAC peers up to one year, before having a revised and mutual tariff in place

“My guess is we probably have another twelve months or so before we can see a revised programme, because it has to go through the budgetary process and next budget is so many months away,” Mohamed told the Star.

He said the discussion is ongoing and acknowledged that current CETs have been in place for a while and it is the right time to assess whether the tariffs are working or not.

The tariff discussion which gained momentum at a regional forum in Entebbe,Uganda, in May this year, is yet to bear fruits as some countries have adopted a protectionist approach for their local industries.

In February,  EAC Heads of State directed the council of ministers to review the relevant rules and harmonise tariffs, which will see the region agree on how to tax goods traded across the borders.

Finished goods imported into the bloc are currently attracting a duty of 25 per cent while intermediate goods are taxed 10 per cent under the EAC’s existing three-band tariff structure, which came into effect on January 1, 2005.

Commodities such as sugar, rice, wheat, milk and clothing attract duties above 25 per cent.

Another major varying tax is the VAT where Kenya charges 16 per cent while Uganda, Tanzania and Rwanda have a rate of 18 per cent.

 

According to EABC chief executive Peter Mathuki, elimination of NTBs will boost intra EAC trade to 50 per cent.

“We have made progress but more needs to be done,” Mathuki said.

NTBs include import bans, general or product-specific quotas, discriminatory rules of origin, quality conditions imposed by the importing country on the exporting countries, unjustified sanitary and phytosanitary conditions and  unjustified packaging, labeling and  product standards.

Kenya’s exports to key EAC markets however defied the existing challenges to hit a three-year high in the year to August, government data shows, earning the country Sh77.32 billion. This is up 5.9 per cent compared to Sh72.99 billion same period in 2018.

“This is because of the engagements that we have continued to build within the EAC,” said CS Mohamed.

EABC chairman Nicholas Nesbitt has expressed optimism continued dialogue will open up trade.

“We are getting the policies in place, we are working on the laws, we are putting in the infrastructure to open up the trade highways to be able to do business in Kenya and East Africa,” Nesbitt said.