27 June 2009
Arusha — The East African Community Secretariat has announce the official launch of the East African Community Customs Union in Rwanda and Burundi on July 6 The launch activities will be held simultaneously in the respective capitals of the new EAC Partner States; Kigali (Kigali Serena Hotel) and Bujumbura (Source du Nil Hotel). Implementation of the EAC Customs Union Protocol in the new Partner States will commence on July 1
The Ministers responsible for East African Community Affairs, Finance, Trade and Industry, officials from the EAC Secretariat, members of the East African Legislative Assembly (EALA) and Judges of the East African Court of Justice (EACJ), the private sector and the general public are expected to participate in the launch activities.
The launching of the EAC Customs Union is a culmination of Rwanda and Burundi's integration into the East African Community. The Protocol on the Establishment of the East African Community Customs Union came into force on the 1st of January 2005 in the three founding Partner States; United Republic of Tanzania, Kenya and Uganda. The implementation of the customs union has been steady and it is expected that the region will have a single customs union territory come January 2010.
The Republics of Rwanda and Burundi signed the Accession Treaties on 1st July 2007, which expanded the EAC membership to five Partner States. The two new Partner States made a commitment to commence the implementation of the EAC Customs Union on 1st July 2009; two years after their entry into the regional bloc.
The main objective of the EAC Customs Union is to promote intra EAC trade, enhance production and industrialisation, and promote investment in the region. The main pillars of the Customs Union include:
(i) Application of a common Customs law which leads to uniform application of Customs procedures and trade documentation in the region;
(ii) Implementation of a Common External Tariff which enhances a common trade policy with third parties;
(iii) Elimination of internal tariffs which enables Partner States to trade freely amongst themselves;
(iv) Elimination of charges of equivalent effect and discriminatory treatment to goods traded among Partner States; and
(v) Export promotion and competitiveness through various incentive schemes.
In the three original Partner States, the Customs union has resulted into substantial increase in intra EAC trade, investment flows and revenue. Further, the Customs Union has provided a platform for policy harmonisation on fiscal and trade matters whereby the Partner States through a consultative process jointly agree on key macroeconomic measures.
The commencement of the Customs Union in Rwanda and Burundi further enlarges the market of the region and provides an incentive for increased production and trade by the private sector. By implementing the Common External Tariff, the tariff regime of Rwanda will be rationalised along with the other EAC Partner States which will enhance business predictability and planning. The common tariff regime enhances compliances because it eliminates price differentials arising out of differing tariff rates.
The Customs law enhances information exchange amongst the Partner States and this provides the framework for trade facilitation and trade statistics. Specifically, it will among others enhance management of transit of goods through simplified and harmonised customs procedures at the borders and eliminates discretional treatment to business by harmonisation of exemption regimes and prohibitions.
The Customs Union focuses on promoting production for export and enhanced competitiveness through export incentive schemes. These include establishment of export processing zones, free trade zones and duty remission schemes. The Protocol on the Establishment of the EAC Customs Union recognises the vulnerability of some of the economies in the region and the negative effects that may arise in the course of implementation of the Customs Union. To mitigate this, inbuilt safeguard mechanisms can be applied in order to cushion industries that may face threat in the Customs Union.
The region is still experiencing challenges particularly the Non Tariff barriers to trade. The Customs Union which brings together the five Partner States as one trading entity provides an opportunity and framework to collectively address and eliminate the Non Tariff barriers which increase the cost of doing business particularly in the land locked countries.
According to the Secretary General of the East African Community, Amb. Juma Mwapachu, "launching of the EAC Customs Union in Rwanda and Burundi is a turning point for their full integration into the EAC". He said while both countries have been participating in programmes of the EAC, the Customs Union is a tangible integration springboard that will accrue into benefits for both the public and private sector.
The Director General of the EAC Directorate of Customs and Trade, Mr. Peter Kiguta has confirmed the readiness of the two countries to commence the Customs Union on 1 July 2009. He said the Directorate undertook a mission to Rwanda and Burundi on 8 and 12 June 2009 to assess the level of preparedness on the implementation of the Customs Union on 1 July 2009. "All the government institutions and officials in charge of implementing the Customs Union, as well as the private sector that we met during the mission, were very ready for 1st July", asserted the Director General.
Mr. Peter Kiguta said during the meeting with the executive members of the Chamber of Commerce and Investment in Bujumbura, Burundi, the members expressed their positive expectations of the customs union and in particular the direct benefits which would mitigate competitiveness challenges. These included zero tariffs on raw materials and capital, valuation of imports based on CIF value at the first port of entry into the Community, exclusion of airfreight in computation of duty on goods imported by air and investment inflows that comes with a custom union.
Mr. Kiguta said the private sector in Burundi also indicated the challenges ahead such as the threat to their nascent industry, language barrier and non tariff barriers. In this context, he said the Private sector had developed a list of raw materials and sensitive goods that will be presented to the EAC Policy Organ; the Council of Ministers for consideration and further guidance.
The Director General disclosed that Burundi was in the process of establishing its Revenue Authority to be operational from 1st July 2009. In this context, the Revenue Authorities of the respective Partner States will be responsible for the implementation of the East African Community Customs Union within the Partner States.
He said the Revenue Authorities will be the focal points from where the business community, stakeholders and the general public will get assistance regarding the EAC Customs Union matters. Adding that the EAC Customs Management Act, 2004, the EAC Common External Tariff Handbook, the Internal Tariff Handbook, the Rules of Origin, and the EAC Customs Union Protocol are also obtainable from the Revenue Authorities and other Centres as will be advised by them.
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