EAC Introduces Fully-Fledged Customs Union

by Lorys Charalambous, Tax-News.com, Cyprus

19 January 2010

The Director General of the Customs and Trade Directorate of the East African Community (EAC), Peter Kiguta, recently introduced the community’s fully-fledged customs union (CU), which came into force on January 1, 2010, following a five-year transitional period.

The EAC is the regional intergovernmental organization of Kenya, Uganda, Tanzania, Rwanda and Burundi. Its CU focuses mainly on merchandise trade, with two main pillars – the establishment of a free trade area among the member countries, and a single customs territory.

Under the CU, goods manufactured in one partner state move to another without suffering any import duties. In addition, goods imported into the CU, once the collection and accounting for customs revenue are worked out, move freely from one partner state to another.

Kiguta admitted that there still remained some implementation issues, such as non-tariff barriers and lengthy customs procedures, which continue to hamper progress. However, they are “now engaged in carrying out activities aimed at thrashing out some of the sticking challenges, as stipulated in the roadmap adopted by the (EAC) council during its meeting in November 2009. Nevertheless, we should appreciate that ensuring smooth trade in goods is not a one-off event, but a continuous process.”

He said that the EAC secretariat will continue in assisting EAC states to adopt best practices in handling activities aimed at opening up more trading and investment frontiers, such as the operation of export promotion schemes. It is also working on a regional plan to enable partner states to take advantage of export markets under the US African Growth and Opportunity Act, now that the EAC has signed a trade and investment framework agreement (TIFA) with the US. The EAC-US TIFA council is to be launched sometime in February this year.

Although intra-regional trade has grown over the years, he professed that there is still a lot of room for further growth. In a market of over 130m people, intra-regional trade is only 13% of the total volume of trade in the EAC. This, he said, is very low compared to Europe at 60% and Asia at 40%.

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