CET review resumes amid trade disputes
East African Community partner states have resumed negotiations on a comprehensive review of common external tariff. The member states had taken time off to finalise their national positions.
Officials from the partner states met in Kigali last week to agree on a regional position that should lead to a new CET regime.
The heads of state tasked the committee of experts to work out the sticky issues on how goods imported into the region will be taxed, amid divergent national proposals that have threatened to derail the review.
The meeting came after the February 1 EAC Heads of State Summit held in Arusha, Tanzania, where the Council of Ministers was asked to review the relevant policies and harmonise the CET in three months with a view to supporting the growth of local industry.
However, despite a consensus on the need to review the CET, disagreements on the tariff structure, exemptions or stay of application and how to treat sensitive goods, which have been at the centre of regional trade disputes, still came up at the Kigali meeting.
Chris Kiptoo, Kenya’s Trade Principal Secretary, told The EastAfrican that the technical committee is expected to come up with a report that will be presented to the EAC Council of Ministers for adoption.
“The objective is to drive growth of intra-EAC trade, which has not been doing well. That is why we hope to reach a consensus on the issues,” said Dr Kiptoo.
Kenya wants the current CET regime that comprises a triple band reviewed to make it a four-band structure, a proposal that Uganda is opposed to. It argues that the three-band structure does not encourage backward and forward linkages in value addition to products, thus curtailing the growth of the manufacturing sector.
On exemptions, Kenya is pushing for an end to the frequent tendencies of other member states to seek stays of application for products coming into the region, something the country blames for the problems facing local industry.
On sensitive goods like wheat, rice, milk and sugar, Kenya and Tanzania want strict enforcement of duties that have been set at a rate of more than 25 per cent to discourage importation.
“The process of reviewing the CET is coming to an end with the points of disagreements becoming fewer,” said Richard Kamajugo, TradeMark East Africa senior director for Trade Environment. The last time the CET was reviewed was in 2010, when the three-band structure was maintained.
Intra-regional trade within the EAC is significantly low at less than 20 per cent, compared with the Southern African Development Community, where intra-regional trade levels stand at 46 per cent.