Building capacity to help Africa trade better

Rules to raise value of regional trade


Rules to raise value of regional trade

Rules to raise value of regional trade

The value of East African Community intra-regional trade is set to rise following the review of the cross-border passage rules of origin on export goods originating from the partner states.

In the revised draft of the rules of origin agreed on by the EAC Sectoral Council of Trade and Finance Ministers, the value threshold has been lowered from 35 per cent to 30 per cent local imports.

Likely beneficiaries of the rules of origin include manufacturers of edible oils, beauty products, milk products, television sets, car assembly and lubricants makers.

Under the current rules of origin, only goods produced wholly from local inputs are allowed to cross national borders without attracting Customs taxes.

Goods produced from imported raw materials also enjoy duty-free treatment, where the exporter can prove that at least 35 per cent of the ex-factory value was added within the region.

The application of this rule has been controversial, with traders claiming it is selectively applied by Customs officials to bar Kenyan products from entering Tanzania, Uganda, Rwanda and Burundi.

Last year, Kenyan manufacturers lost a bid to have the EAC Council of Ministers stop Uganda and Tanzania from charging full duty on imports.

The Kenya Association of Manufacturers had in June written to the Ministry of EAC Affairs, Commerce and Tourism requesting that under the EAC Common Market Protocol, Kenyan firms be allowed into the Ugandan and Tanzania market without paying full duty as demanded by the two countries.

The revised rules are expected to prepare the region for an eventual merger with the Common Market for Eastern and the Southern Africa (Comesa) and Southern African Development Community (SADC) under the Free Trade Area regime.

Also in the new rules is an introduction of specific processes as a qualifying criterion to some goods, such as manufacturing to start from completely knocked down kits for motor vehicles assembled in the region.

The EAC has also introduced a rule for goods sold in sets. In this case, the tax on such goods will be lower than that on goods sold singly.

According to the draft, a central database of registered exporters will be developed at the Secretariat to track the type and number of goods traded within the partner states.

A rule has been introduced on approved exporters, where the competent authorities of the exporting partner states may authorise any exporter who makes frequent shipments of products.

In the new rules, proof of origin shall be valid for six months from the date of issue in the exporting country.

The EAC Sectoral Council for Trade, Industry, Finance and Investment in their meeting in Arusha directed partner states to submit the results of their consultations on the draft rules of origin by end of July for consideration and adoption at the next meeting of the Council in August.

The purpose of these rules is to ensure that there is uniformity among partner states in the application of rules of origin and that to the extent possible, the process is transparent, accountable, fair, predictable and consistent with the provisions of the Customs Union Protocol.


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