East Africa’s industrial sector to benefit from revised import duties
Arusha. The industrial sector in the East African Community (EAC) is set to benefit from a new tariff for imported goods.
This follows the adoption of a common external tariff (CET) of 35% by partner states for goods imported into the bloc. This will be the fourth band of the tariff for imported goods and the implementation of which will begin on July 1 this year.
The current maximum CET for goods imported into the Community is 25%.
The agreement to this effect was reached during an in-depth review of the CET held on Thursday in Mombasa, Kenya.
The incumbent Ministers of Finance took part with Tanzania represented by the Minister of Finance and Planning Mwigulu Nchemba.
Mrs. Betty Maina, Chairperson of the EAC Council of Ministers, said the decision will benefit the region’s industrialization drive.
“The new tariff will also protect consumer welfare on products for which the region is a net importer,” said Ms. Maina, Kenya’s Cabinet Secretary for Trade, Industrialization and Business Development.
EAC General Secretary Peter Mathuki said the new tariff would encourage local manufacturing and safeguard locally produced products.
“It is also a positive step towards realizing the benefits of the African Continental Free Trade Area (AfCFTA),” he said.
This, he noted, would boost intra-regional trade in the long run “by encouraging local manufacturing, value addition and industrialization.”
The CET is one of the key instruments of the customs union pillar which justifies regional integration through uniform treatment of goods imported from third parties.
Among the tariff lines of this fourth tranche are; dairy and meat products, cereals, cotton and textiles, iron and steel, edible oils, beverages and spirits.
Also, there are furniture, leather goods, fresh cut flowers, fruits and nuts, sugar and confectionery, coffee, tea and spices.
There are also textiles and clothing, headwear, ceramics and paintings, among others. Ministers agreed that the maximum tariff band at 35% was “the most appropriate rate”.
It also appeared that the revised CET will respond to requests for suspension of application which distort the CET which was applied in 2005.
The EAC CET is currently structured in three tranches of 25% for finished goods, 10% for intermediate goods and 0% for raw materials and capital goods.
Tariffs that were applied when the EAC Customs Union protocol came into force in 2005 were last revised in 2020.
The East African Business Council (EABC), an umbrella body of private sector associations based here, welcomed the move.
Besides safeguarding locally produced goods, the proposed CET will attract new investment to the region.
An analysis carried out by both the EABC and the EAC indicates that Partner States will benefit from an increase in revenue generation of 5.5%.
The analysis further shows that if implemented, the new CET will boost intra-EAC trade, which currently stands at $18.9 million.