East African Customs Union Launch Confirmed For January 2010

by Lorys Charalambous, Tax-News.com, Cyprus

03 November 2009

High-level representatives at the recent East African Community (EAC) Regional Forum on Customs Reform have confirmed that a fully-fledged East African Customs Union will take effect on January 1, 2010.

The EAC is the regional intergovernmental organisation of Kenya, Uganda, Tanzania, Rwanda and Burundi. Over 150 senior executives of government and private sector agencies involved in the implementation of the Customs Union from within the EAC attended the two-day forum.

Participants at the forum were said to have taken stock of the achievements and challenges of the Customs Union in its five-year transitional period, and the main challenges to trade facilitation in the region, and held wide-ranging discussions on key implementation issues and its transformation to a fully-fledged Customs Union.

Tanzania’s Prime Minister, Mizengo Pinda, delivering a keynote address to delegates, noted that it was significant that: “No Partner State has so far reported negative or adverse impact on their economy arising out of the implementation of the Customs Union.”

He added that it represented an opportunity for an expanded market of over 130m people. He also pointed to the remarkable growth of intra-EAC trade, which increased by 37.6% in 2008, and the upsurge in cross-border investments, as further indicators of success.

Despite these achievements, he stated that challenges such as non-tariff barriers and lengthy customs procedures still hampered progress. He revealed, however, that these challenges are being addressed by EAC governments either at individual or collective levels, and sought to further reassure delegates that measures were also being taken to improve railway and road infrastructure.

EAC’s Director General (Customs and Trade), Peter Kiguta, in his welcoming statement, reminded delegates that it had been agreed that Customs Union implementation would be progressive, giving as an example the gradual phase-down of duties on selected lists of goods from Kenya to Tanzania and to Uganda.

Currently, the highest duty paid on goods to Tanzania is 5% and to Uganda is 2%. From next year, he revealed, goods will be traded duty free within the Partner States.

Mr Kiguta also informed the forum that the EAC Common External Tariff had been well implemented by all the Partner States, allowing third parties to trade with the EAC region in a reliable and transparent manner.

He added that the Customs Union has implemented the EAC Customs Management Act as the main legal instrument to guide the movement of goods; has instigated uniform rules of origin for the granting of preferential treatment to goods originating from the region (including a simplified EAC certificate of origin to be used by small-scale cross border traders); and has harmonised and gazetted 1,100 EAC standards for uniform application in the Partner States.

Finally, he confirmed EAC is negotiating trade relationships as a bloc. Currently, EAC is negotiating an Economic Partnership Agreement with European Union, and is in process of establishing a tripartite free trade area with the Common Market of Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC).

EAC has also signed a trade and investment framework agreement (TIFA) with the US, in 2008. The agreement provides a platform for EAC engagement with the US as a bloc. The process of launching a TIFA Council to oversee implementation of the agreement is planned in the near future.

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