Private sector wants EA to harmonise rules of origin

Whereas the region has adopted a number of tariff lines, East Africa is yet to trade with the rest of Africa under the AfCFTA that came into force last year. PHOTO | FILE

What you need to know:

The rules of origin define the conditions that firms must comply with in order to authenticate that their goods originate from the Free Trade Area (FTA) and are thus eligible for preferential treatment. 

The private sector under East African Business Council (EACB) want the criteria used to determine the origin or nationality of a product under the East African Community reviewed in light of the African Continental Free Trade Area (AfCFTA) agreement.

According to EACB, whereas the rules of origin could be a game changer, they can only be beneficial if they are simple, transparent, predictable and business friendly.

Despite the region having adopted EAC Tariff Offer for Category ‘A’ products, amounting to 90.2 percent, East Africa is yet to trade with the rest of the continent under the AfCFTA that came into force last year.

The rules of origin define the conditions that firms must comply with in order to authenticate that their goods originate from the Free Trade Area (FTA) and are thus eligible for preferential treatment.

They are a “passport” enabling goods originating within the FTA to circulate duty-free in the area.

“We need to ensure that the business community understands the EAC rules of origin and how they are compatible with AfCFTA rules of origin,” Mr John Kalisa, the EABC chief executive officer said, noting that “we have been pushing for simplicity, predictability, certainty in terms of rules of origin because it is one of the instruments to enable our EAC business to reap the benefits of the AfCFTA”. 

It is important, he said, that the business community understands how the rules of origin work to enable them reap the enormous benefits provided for by the free trade area. The Eighth Meeting of AfCFTA Council of Ministers responsible for trade, on January 28, agreed on the rules of origin for the bloc, removing a major hurdle to the roll out of reduced tariffs.

By granting trade preference, AfCFTA member countries would source more intermediate and final goods among themselves rather than import from abroad.

However, Mr Kalisa noted that the current challenge with the rules of origin is that they are a bit complex, which remains one of the biggest constraints that inhibit the growth of intra-regional trade given that some of the sectors and products such as edible oil and some construction materials are missing out of the rules of origin. 

The private sector, he said, had recommended revision of the rules to account for the dynamics of trade in the region.

EAC states have adopted the EAC Tariff Offer for Category ‘A’ products comprising of 5,129 tariff lines out of the total 5,688 lines. 

However, the region is yet to start trading under the AfCFTA.

The EABC is concerned that a section of the business community is not even aware of the tariff offers under the AfCFTA and is calling for private sector involvement in the next phase of negotiations.

Sensitisation       

According to Mr Kalisa, the private sector needs to be sensitized to understand what products are part of the 5,129 tariff lines so that they can prepare them. 

The private sector is also concerned that the EAC Customs Union operations are yet to be aligned with those of the AfCFTA. The AfCFTA is expected to boost intra-African trade by 33 percent once full tariff liberalisation is implemented.

Currently intra-African trade is a mere 15 percent, compared to around 47 percent in America, 61 percent in Asia and 67 percent in Europe, according to the United Nations Conference on Trade and Development.

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