Private sector actors want the criteria used to determine the origin or nationality of a product under the East African Community to be reviewed in light of the African Continental Free Trade Area (AfCFTA) Agreement.
After East African Business Council, the rules of origin could be a game changer for the continent as long as they are simple, transparent, predictable and business-friendly.
Although the region has adopted the EAC tariff offer for “A” category products amounting to The region still has 90.2 percent to trade with the rest of the continent under the AfCFTA, which came into force last year.
The rules of origin define the conditions that companies must meet in order to certify that their goods come from the Free Trade Area (FTA) and are therefore eligible for preferential treatment.
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They are a “passport” that enables goods originating in the US Free Trade Zone to circulate duty-free in the region.
“We need to make sure the business community understands the EAC rules of origin and how they align with the AfCFTA rules of origin,” said John Kalisa, Managing Director of EABC.
“That’s why we’re pushing Simplicity, predictability and certainty in terms of rules of origin because this is one of the tools to enable our EAC companies to take advantage of the AfCFTA.”
Mr. Kalisa noted that it is important that the business community understand how the rules of origin work so they can reap the tremendous benefits of the free trade zone.
The eighth meeting of the AfCFTA Council of Trade Ministers on January 28 agreed on the rules of origin for the bloc and thus removed a major hurdle for the Introduction of reduced tariffs.
By granting trade preferences, AfCFTA member countries would source more intermediate and final products from each other instead of charging each other from abroad.
“The current challenge about the rules of origin is that they are somewhat complex. The applicability of these rules of origin has been one of the constraints restraining the growth of intra-regional trade,” said Mr. Kalisa.
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He explained, “This is because some of the sectors and products are not included in the rules of origin, such as cooking oil and some building materials.”
He says the private sector has recommended an overhaul of the rules to reflect the dynamics of trade in the region.
EAC countries have adopted the EAC tariff offer for “A” category products account for 90.2 percent (5,129 fare lines out of a total of 5,688 lines) but have yet to trade under the AfCFTA.
The EABC is concerned that some of the business community still does not even aware of the tariff offers within the framework of the AfCFTA and calls for the participation of the private sector in the n next stage of negotiations.
“The private sector needs to be sensitized ed. They need to understand which products will be covered by the 90 percent tariff offer so they can prepare them,” said Mr. Kalisa.
The private sector is also concerned that EAC customs union operations have yet to be aligned with AfCFTA.
AfCFTA is expected to boost intra-African trade by 33 percent once full tariff liberalization is implemented .
Currently, intra-African trade is only 15 percent, compared to around 47% in the Americas, 61% in Asia and 67% in Europe, according to the United Nations Conference on Trade and Development.