There’s need to up our efforts in consolidating EAC Customs Union

Wednesday March 15 2017

 

By Edith N Mwanje

On July 1, the East African Community will be marking 12 years of the implementation of the Customs Union Protocol.

This Protocol, the first pillar of EAC integration, is defined under Article 75 of the Treaty establishing the EAC.

It came into effect in 2005 having been signed by the three East African Heads of State on March 2, 2004 in Arusha, Tanzania. The Republic of Rwanda and Burundi joined the Customs Union in 2008 and started applying its instruments in July 2009.

In the theory of economic integration, a Customs Union is supposed to be the third stage after a Preferential Trade Area and a Free Trade Area.

However, the 1999 Treaty establishing the EAC provides that a Custom Union shall be the first stage in the process of economic integration.

This is basically because even before the signing of the treaty, there were strong partnerships already between Uganda, Kenya and Tanzania.

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For instance on November 30, 1993 the trio had signed the Agreement for the Establishment of the Permanent Tripartite Commission for East African Co-operation.

The Custom Union has allowed East Africa to operate as a free trade area where partner states have reduced or eliminated taxes on goods originating from within the community and have a Common External Tariff (CET) on goods imported from other countries.

For the last 12 years, the CET has been based on three bands of 25 per cent for finished goods, 10 per cent for intermediate goods and 0 per cent for raw materials and capital goods.

There are also a limited number of products under the sensitive list that attract rates above the maximum rate of 25 per cent.

However, the community is discussing varying these bands in line with Article 12 of the Customs Union Protocol and in view of the changing dynamics, most notably increased industrialisation among the partner states.

The year 2014 in particular marked a profound achievement with the launching of the Single Customs Territory (SCT).

To minimise controls at internal borders and to boost trade, importers clear their goods once at the point of entry and revenues are collected at that single point and remitted to the destination partner states.

Previously, there were multiple clearances because importers would clear their goods at Mombasa and then internally at Malaba or Busia and Katuna for goods destined for Rwanda.
Since the commencement of the SCT, the volume and value of goods destined for the hinterland of the EAC have increased substantially. The time taken for goods to be transported from the port of Mombasa has decreased from 18 days to four days for Kampala-bound trucks, and from 21 days to six days for Kigali-bound trucks.

Along the Central Corridor, the time taken to transport goods from Dar es Salaam to Bujumbura and Kigali has reduced from 10 to six. This has resulted in lowering the cost of doing business where up to 30 per cent reduction in transport and transactional costs have been reported.

Another significant development is the construction and operationalisation of the One Stop Border Posts (OSBPs).

This is the land border management system where customs and other government agencies of neighbouring countries work in one office and clearance procedures are done once at the point of entry.

Hitherto, clearance was done twice; at the point of exit, say Busia Uganda and at the point of entry, say Busia Kenya. To date, 11 OSBPs have now been completed and 10 of these are already operational.
In Uganda, these include Malaba, Busia, Mirama Hills, Katuna and Mutukula. These OSBPs operate 24 hours a day

Admittedly, the implementation of the Customs Union Protocol has not been smooth sailing all the way. We still have a lot of challenges. Chief among these is the existence of non-Tariff barriers (NTBs).

Non-Tariff Barriers are regulations, administrative and technical requirements other than tariffs which impede trade.

The obligation to eliminate NTBs amongst EAC Partner States is embedded in Article 13 of the Customs Union Protocol, which requires each Partner State to remove with immediate effect, all the existing non-tariff barriers and not to impose any new non-tariff barriers. The EAC NTB Monitoring Committee has been established at EAC level and in each partner state. In Uganda, the NMC is hosted and coordinated in by the Ministry of Trade Industry and Cooperatives.

As the community continues to expand, we still owe a duty to East Africans to up our efforts in consolidating the Customs Union and all protocols we have signed and to eliminate NTBs. This will enhance intra EAC trade, boost our economies and create the desperately needed jobs especially for our youth.
Ms Mwanje is the Permanent Secretary, Ministry of East African Community Affairs.

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