EAC secretariat keen to protect local industries, grow trade

The East African Community Secretariat is keen to harmonise the region's Common External Tariff (CET)) to protect industries within the bloc and boost intra-EAC trade.

It targets to have a uniform application of CET in the bloc by end of this year, Secretary General Peter Mathuki said as he marked 100 days in office this week.

CET is a uniform tariff rate adopted by a customs union or common market to imports from countries outside the union.

The 38th meeting of the Sectoral Council of Ministers on Trade, Industry, Finance and Investment (SCTIFI), in May adopted a three-band CET structure of zero per cent, 10 per cent and 25 per cent.

There is also a sensitive items list with exceptions to the three-band rule for specified commodities attracting high rates of duty (notably, all above 30 per cent).

It is anticipated that an agreement on a rate that is above 25 per cent shall be concluded before the end of 2021.

Reviewing of the CET is expected to encourage manufacturing whilst protecting local industries from imported finished goods.

Whilst consensus has been achieved on the lower tariff bands of CET, it is yet to be achieved for the upper tariff band.

In Kenya, manufacturers holds that Kenya should adopt 35 per cent as the fourth tariff band, to support the industrialisation agenda.

“We are looking at a comprehensive review of the EAC Common External Tariff (CET) to be concluded by December,” Mathuki said.

He is also leading the push to remove Non-Tariff Barriers(NTBs) which are hindering growth of intra-EAC trade, where some countries have been playing protectionism on their markets.

NTBs generally include laws, regulations and administrative and technical requirements (other than tariffs) imposed by a partner state, whose effect is to impede trade.

Removal of NTBs is expected to drive intra-regional trade to at least 30 per cent in the short-term, with Mathuki who took office in April targeting to have it grow to over 50 per cent by the end of his five-year tenure.

Intra-EAC trade currently stands at less than 15 per cent as compared to common markets such as the EU which stands at 70 per cent.

“This is bound to improve going forward in the wake of bilateral engagements between partner states aimed at eliminating NTBs. For instance, maize imports from Tanzania jumped more than six fold to 118,329 bags in May,” he noted.

Kenya has been concerned over what it terms “discriminatory treatment” of its exports mainly to Tanzania.

For instance, cigarettes manufactured in Kenya are charged excise duty that is 80 per cent higher than cigarettes manufactured in Tanzanian.

Tanzania also introduced import charges on animal and animal products intended to protect Tanzania’s domestic industry against other community goods.

These charges have rendered Kenyan exports especially milk and milk products and sausages uncompetitive in the Tanzanian market, local players say.

The Tanzania Bureau of Standards (TBS) also requires registration of food products, including those already certified by competent authorities in other partner states, which is seen as a violation of agreements on mutual recognition of standardisation marks.

Tanzania Revenue Authority (TRA) has also been demanding duties on motor vehicles assembled in Kenya.

Further, Tanzania Coffee Board charges one percent of the invoice value on coffee exported to Tanzania from Kenya.

Kenya and Uganda have also had stand-offs cross-border movement of maize, milk and poultry products.

Some of Mathuki's achievements so far include the introduction of consultative meetings with EAC partner states–Heads of States and ministries responsible for East African Community Affairs.

He has also initiate the launch of the verification mission to the Democratic Republic of Congo (DRC), oversee the verification and completion of the report.

There is also an East African Business Council -EAC technical working group in place to help adres trade challenges.

He has led the setting up of a hot-line to address challenges on cross-border trade, a time when the pandemic has affected turn-around time from ports (Mombasa and Dar es Salaam) to landlocked countries, mainly delays on clearing trucks at border points.

The pandemic however came as a blessing in disguise where EAC states have been trading more among themselves in the wake of reduced global trade, mainly caused by a cut in manufacturing activities in Asia and a global vessel shortage.

Kenya recorded a jump in trade value with her peers in the third quarter of 2020 where total volumes exported to the region were valued at Sh165 billion, up from Sh130 billion in the second quarter.

Uganda, a key trading partner with Kenya, was the second biggest exporter in the region during the period with volumes closing at Sh137.4 billion up from Sh91.6 billion.

Tanzania's exports to the region were valued at Sh133 billion, recovering from a low of Sh10.1 billion in the April-June quarter, a survey by TradeMark East Africa, United Nations Economic Commission for Africa (UNECA) and African Economic Research Consortium indicates.