The East African Business Council (EABC) Vice Chairperson Simon Kaheru is has urged EAC partner states to uniformly apply for the EAC Common External Tariff (CET). According to Kaheru, the move will enhance intra-EAC trade, investment and regional value chain.
Kaheru aired his sentiments at the officiating EABC webinar focusing on Post-Budget 2024/25 Disparities in the Application of EAC-CET and Impact on EAC Businesses. The webinar was organized in partnership with the EAC Secretariat and RSM Eastern Africa.
Kaheru further elaborated that the EAC-CET is an essential instrument of the EAC Customs Protocol, as it facilitates intra-trade and creates a level playing field in the EAC Customs Territory. However, the Stays of Applications and Country-Specific Duty Remissions continued to be applied, diluting its effectiveness and distorting the market.
The webinar convened over 100 industry leaders and government officials in the region. The industry leaders discussed the importance of the CET as central to driving intra-trade and called for political goodwill to ensure its uniform application. Other key recommendations include the need to build productive capacities in the region, harmonize private sector positions on CET, protect local industries, apply regional duty remission schemes to promote East African manufacturers, develop industrial infrastructure for priority value chains, among others.
In his remarks, Adrian Njau, Acting Executive Director of EABC, stated that the previous CET maximum rate was a 3-band structure with a maximum tariff rate of 25%. The current EAC-CET, successfully adopted in 2022, is a 4-band tariff structure with the maximum tariff rate of 35% that promotes value addition, regional value chain integration, intra-EAC trade, and safeguards products that are sufficiently produced in the region against similar imports outside the EAC bloc.
Donald Tindamanyire, Principal Customs Officer Tariff and Valuation at the EAC Secretariat, stated that Partner States agreed to adopt 35% as the maximum tariff. This is after analysis showed that it will increase revenue by 5.5%, boost intra-regional trade, reduce importation, promote value addition, attract FDI, and create employment opportunities for East Africans. The benefits are unlikely to be attained because of the non-uniform application of the agreed CET. Persistent stays of applications (SOA) and country-specific duty remissions, for example, in the 2024/25 financial year, there are 1,956 tariff lines under stays of applications. Uganda takes the lead with 901, followed by Kenya with 816, Rwanda with 116, Tanzania with 89, and Burundi with 24.