East Africa: Region Adopts 35% Common External Tariff

(file photo).

East African Community (EAC) Ministers in charge of trade and finance on Thursday, May 5, adopted 35 per cent as the 4th band of the region's Common External Tariff (CET).

Tariff lines in the 4th band include dairy and meat products, cereals, cotton and textiles, iron and steel, edible oils, beverages and spirits, furniture, leather products, fresh-cut flowers, fruits and nuts, sugar and confectionery, coffee, tea and spices, textiles and garmets, head gears, ceramic products and paints.

During a retreat on the comprehensive review of the CET, held in Mombasa, Kenya, the Ministers decided that implementation of the reviewed EAC CET shall commence on July 1.

The region's private sector was represented by the Executive Director of the East African Business Council (EABC), John Bosco Kalisa.

Kalisa told The New Times that "this is very positive move" and he commended the Ministers for adopting a rate that will drive industrialisation, promote regional value chain, create employment opportunities for youth and women as well as boost intra regional trade.

"The EABC is committed to sensitising and raising awareness about the opportunities of investing in these sectors that have been earmarked for growth and investment. This is one of the important trade tools that enhance economic recovery from the devastating impact of Covid-19 and current Ukraine conflict."

Kalisa explained that they agreed to focus on product diversification and also encourage producers to produce sufficient quantity that's required by regional markets.

"For example, we import wheat and cereals and these products can be sourced from our region once the incentive structure and strategies are promoted."

Senior officials from regional ministries in charge of trade, industry, finance and investment on March 21, could not reach consensus over the EAC maximum CET rate. They then forwarded the matter to the bloc's Council of Ministers.

According to a related EAC statement, they also agreed on flexibility in the implementation of the revised CET, particularly on products currently affected by the current global economic realities.

The Chairperson of the EAC Council of Ministers, Betty Maina, who is also Cabinet Secretary in Kenya's Ministry of Trade, Industrialization and Enterprise Development, hailed the move, dubbing it beneficial to the promotion of industrialization and in safeguarding consumer welfare on products where the region is net importing.

"The reviewed CET will address the requests for stays of application, which distort the EAC CET," Maina said.

The Ministers directed EAC Partner States to identify products which are affected by the current global trade disruptions for consideration during the pre-budget consultations meeting scheduled for May 9 to 13.

EAC Secretary General, Peter Mathuki, termed the development as a positive step towards the promotion of industrial sectors and realization of the benefits of the African Continental Free Trade Area (AfCFTA).

"The move is set to spur intra-regional trade by encouraging local manufacturing, value addition and industrialization," said Mathuki.

Mathuki said the CET is one of the key instruments under the Customs Union pillar which justifies regional integration through uniform treatment of goods imported from third parties.

The meeting was informed that the maximum tariff band at 35% was the most appropriate rate, as in the long run, it has the most positive impact on regional growth.

They noted that in its application, a welfare loss is expected, but would be cured from generated added employment opportunities from the switch of local production.

The meeting, held in a hybrid format was attended by the respective Ministers and Principal or Permanent Secretaries from Partner States.

Burundi was represented by Marie Chantal Nijimbere, Minister of Trade, Transport, Industry and Tourism; Tanzania by Mwigulu Lameck Nchemba, Minister of Finance and Planning; Uganda by Francis Mwebesa; and Rwanda by Trade Minister Beata Habyarimana.

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