Press Center | Freight Shipping Logistics News
Key players in the envisaged political and economic federation say there is still along way to go, dashing hopes of businesses craving an immediate collapse of trade barriers, including duty.
This is taking a toll on the proposed Customs Union that became effective in January with the promise of unhindered trade between the five member states.
The delays has been blamed on structural rigidity.
“The feedback that we are getting is that there are still challenges in the implementation of the operations of the customs union,” says Mr David Nalo, Permanent Secretary in the Ministry of East African Community in Kenya.
Of concern is the reciprocity of service that is the pillar of the customs union in eliminating barriers. Each member still maintains certain regulations that should have been dropped at the lapse of the five- year grace period that ended on December 31, 2009.
This has resulted in conflicts at border points between traders and tax authorities.
“We do not have instruments of ensuring that these directives are carried to the letter. We only rely on their goodwill,” Mrs Beatrice Kiraso, deputy secretary-general in charge of the political federation said in Arusha last week.
While the EAC customs union took off January 10 – meaning no import tariffs among member states – its effects are yet to get to the border posts.
At the Namanga border point, goods and services from Kenya are still subjected to 25 per cent duty. This, according to Mr Nalo, is replicated across the community.
“Kenya too has its issues with goods coming in from its neighbours,” he said, “and so is Uganda, Rwanda and Burundi. However these are all being addressed to come up with a lasting solution.”
Most business often get their products stuck at the border post for non-compliance, more so larger manufacturers. Vehicle makers in Kenya face more roadblocks, linked to the rules of origin in the establishment of the customs union.
The interpretation of this article has remained a centre of debate among states resulting in confusion on tariff coding. It has evoked discussion on the level of disclosure of raw materials used in the production of certain products deemed to have been manufactured locally.
But as things stand, the unresolved issues are largely being considered a barrier to trade by businesses.
The customs union was the entry point of the EAC integration process and commenced on January 2005 with Tanzania, Uganda and Kenya. Burundi and Rwanda joined the community later in 2007 and started implementing it in July 2009
The customs union had an initial transitional period of five years starting January 2005 and ending in December 2009. Goods originating in the community should attract zero tariffs once traded among the partners, though domestic taxes such as Value Added Taxes (VAT) and Excise duties are still to be paid to the importing member.
A task force has been appointed to fine-tune the issues of taxation. It is expected to meet sometime in March.
PARASTATAL heads who signed the Mombasa port community charter risk being sacked if their agencies do not deliver on the contents of the new entity. The charter signed between the government and the private sector aims at improving the movement of cargo from the port into hinterland