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Sunday, February 5, 2023

East Africa: EAC Partner States Adopt Import Duty Measures to Boost Local Production.

East African Community (EAC) partner States, i.e Burundi, Kenya, Rwanda, Tanzania, and Uganda have adopted various measures on Common External Tariff (CET) with the aim of boosting local production in the region.

The duty remission measures adopted by the partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate.

The decisions by the EAC partner States to stay application of the EAC CET rate and apply a higher duty rate is aimed at stimulating local production by safeguarding manufacturing of that particular product against similar cheap imports.

These duty remission measures are strictly specific for the gazetted manufacturers who have applied for the importation of a specific amount of input/ product at the reduced import duty rate.

Some of the products include textile (garments) and textile products; leather (shoes) and leather products; edible oil; tiles, processed tea; coffee & cocoa; meat & meat products; and steel articles, iron & metal products.

The decision by EAC partner States to stay application of the EAC CET rate and apply a lower duty rate was informed by the fact that the region has no sufficient capacity to produce that particular product hence the need to protect East Africans against a higher import duty.

The Stays of Application measures that are instituted on final products are reported in two scenarios. First, where EAC partner States agreed to stay application of the EAC CET rate and apply a higher duty rate for the imported products.

The second scenario is where EAC partner States agreed to stay application of the EAC CET rate and apply a lower duty rate for imported products.

This second scenario of stay of application was applied to a few products such as mobile phones, rice in the husk, semi milled or wholly milled rice, sugar, wheat, and barley.

Analysis indicates that the existence of the Stays of Application and Country’s Specific Duty Remission in the current EAC Gazette aims at cushioning vulnerable sectors/products, protect local industries as well as enhance local manufacturing and production for those products that the EAC region has the capacity to produce.

Since most of EAC partner States opted for stay of application of the EAC CET and applied higher duty rates ranging from 35% to 60%, it gives a positive indication that EAC Partner States may soon conclude the comprehensive review of EAC CET as countries have shown some commonalities on the maximum tariff or the level of protection they require.

In addition, the ranges of CET measures contained in the EAC Gazette are in line with the EABC Budget Proposals which were submitted to the EAC Secretariat.

However, one of the critical challenges arising from the existence of numerous Stays of Application and Country’s Duty Remission is an impediment to the intra-EAC trade as the finished products that benefit from these measures cannot access the regional market at preferential tariff treatment.

This is due to the fact that all finished products which benefit from the Country’s Duty Remission once sold in the EAC customs territory shall attract duties, levies, and other charges provided in the EAC CET.

Furthermore, these measures erode the EAC CET as a uniform policy against imported products into EAC market.

To address this critical challenge,

The EAC CET is currently structured under three bands of 25% for finished goods, 10% for intermediate goods and 0% for raw materials and capital goods.

In addition, there are a limited number of products under the sensitive list that attract rates above the maximum rate of 25% whereby they range from 35% to 100%.

Emmanuel NKANGURA|www.zamireports.com|Kigali

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