East Africa’s private sector wants a review of the region’s rules of origin to maximize its gains from the implementation of the African Continental Free Trade Area.
Traders, under the East African Business Council (EABC), say the Existing rules, which have not been reviewed since 2015, have denied a number of products duty-free access to EAC markets.
The current rules of origin deny cooking oil, cement and newly introduced duty-free access for fruit, among other products A.
The EAC rules of origin set out the criteria to distinguish between goods produced within the EAC customs territory and eligible for preferential tariff treatment in the Community and goods produced outside the bloc, for which import duties are levied as set out in the Common External Tariff (CET).
“The EAC rules of origin were updated by 2015 and are applied by all customs unions. Given that they should be reviewed every five years, the current one is overdue for review,” said John Bosco Kalisa, Managing Director of EABC, the governing body of private sector associations and companies from the six EAC members.
The main intent of the review is that the EAC Rules of Origin facilitate trade and attract more investment to the region.
But there has been an outcry the business community that some areas of the rules needed to be reviewed to respond to the environment, notably the entry into force of the African Continental Free Trade Area (AfCFTA).
The AfCFTA came into play January 2020 to come into effect, but so far EAC has yet to start trading under the agreement.
“EAC partner countries should initiate the process of aligning their preferential rules of origin with the AfCFTA and tripartite free trade U Rules of Origin of Territory (FTA),” Kalisa said.
“We didn’t have to reach the tariff for the AfCFTA and therefore we need to sensitize SMEs and our members to the challenges. We need to agree on what products we are willing to offer under tariff preferences.”
The main challenge identified in the current EAC rules of origin is the rigidity of some products such as cooking oils, cement and fruits. who cannot qualify for the EAC origin criteria and receive preferential tariff treatment.
“The rules of origin determine the origin of the products. There are products that we call whole products, such as cooking oils. They are obtained from our soil. There’s no dispute about that,” Kalisa said.
“But when we trade, we get more trade coverage, and that’s why it’s always important that we review the rules of origin for five years to take account of the new products.” or materials that either come into the region or are exported to other regions. There are always many discoveries and new products,” he added.
In 2016, the Sector Council for Commerce, Industry, Finance and Investment ordered the review of the rules of origin to be completed in 2015 after the completion of the comprehensive review of the CET.
However, it has taken more than five years to complete the review of the CET and some products cannot reach the EAC market with preferential tariff treatment.
“Several meetings were held in 2021 and significant progress was made in the EAC CET review process. However, no date has been set as yet, but we expect meetings to be held in Q1 and Q2 2022 to clarify the issues at hand,” said Phyllis Wakiaga, Executive Director of the Kenya Association of Manufacturers.
EAC partner countries have agreed to introduce a four-band tariff structure, i. H. zero percent, 10 percent, 25 percent and a rate over 25 percent.
The partner countries have only agreed on a consensus The first three bands. On the fourth volume they are between 30 percent and 35 percent torn.