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COMESA Member States Agree To Create Customs Union
by Robert Lee, Tax-News.com, London

08 June 2005

Member states of Africa's largest trade bloc, the Common Market for Eastern and Southern Africa (COMESA) have agreed to establish a customs union in order to accelerate the pace of economic development and promote trade and investment in the region.

"The member states decided that the COMESA customs union should be established by December 2008 and that member states not yet participating in the preferential trade area should do so as soon as possible," explained an official communique, released after a two-day conference in Rwanda.

The objective of the customs union is to impose identical duties on goods flowing into member countries from outside COMESA. To ease the transition towards this goal, member states, many of which are dependent on customs duties for a large part of their tax revenues, have been urged to approve the protocol of a COMESA fund by the end of 2005.

Customs duties contribute between 30% and 40% of government revenues for most members of the bloc, which includes: Angola, Burundi, Comoros, Djibouti, Democratic Republic of Congo (DRC), Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

However, officials have calculated that a customs union could eventually lead to a 25% increase in trade between member states, which have a combined population of 380 million and a total gross domestic product of about $200 billion.

So far 11 COMESA countries have signed up to the free trade deal, which was launched in October 2000. However, not all countries are said to be entirely happy at the prospect of a customs union, with governments fearing a loss of tax revenues, and business interests in poorer countries worried that they will be unable to compete with firms in the more the more economically dynamic member states.

The summit also saw the swearing-in of judges for the COMESA Court of Justice, which will have jurisdiction over trade disputes among member countries and their citizens.

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