EA traders to access bigger market

 

Tanzania has edged past Uganda as Kenya’s largest export market in East Africa as a result of the ongoing elimination of non-tariff barriers and increasing local production in Uganda of goods that were previously imported. TEA GRAPHIC |  NATION MEDIA GROUP

By CHRISTABEL LIGAMI, Special Correspondent
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East African traders stand to benefit from an expanded market outside the EAC after the region opened its tariff offers as required by the Tripartite Free Trade Area.

By liberalising its tariff offers (tax imposed on imported or exported goods and services), the region will have no restrictions to trade with other blocs in the tripartite region, the Common Market for Eastern and Southern Africa (Comesa) and the Southern Africa Development Community (SADC) since they will all have the same taxes.

Tariffs are one of several tools available to shape trade policy in the region. The Tripartite Technical Working Group on Tariff Liberalisation last month finalised its draft on tariff liberalisation.

According to Dickson Poloji, policy analyst at the East African Business Council, the EAC tariff offers prepared within a 60-85 per cent range as required by the Tripartite FTA is awaiting approval by EAC Sectoral Council on Trade, Industry, Finance and Investmentbefore finally being presented to the tripartite negotiation team.

“With a total of 26 countries and a population of 594.5 million, the increased market will allow industries in East Africa to expand,” said Mr Poloji, adding that traders will also have easy access to goods and services especially industrial inputs from South Africa (paper, iron and steel) that they are not able to produce or produce in small quantities.

“Industrial competition is also expected to increase within and outside the region,” he said.

Member states of the Tripartite Free Trade Area (TFTA), the EAC, SADC and Comesa had earlier been asked by the tripartite negotiating team to prepare their tariff offers in order to allow the completion of on-going negotiations for a free trading area by next year.

The tariff books, to be liberalised and produced by the 26 members of SADC, Comesa and EAC, will show how products produced within and outside the tripartite regions should be treated.

The main aim of this, Mr Poloji said is to resolve the challenges of different trade regimes brought about by the multiple memberships that are hindering regional trade processes.

EAC Secretary General Richard Sezibera, in his remarks concerning tariff lines, said that the EAC tariff offers to the tripartite free trade area should be the same in terms of rates and tariff lines.

“Countries that are already liberalised will therefore maintain their existing tariff lines,” said Mr Sezibera.

A report by the EAC Tripartite Technical Working Group on Tariff Liberalisation held in Arusha between August 21 and 23 indicates that the community will have three categories of the EAC Tariff offers for the Comesa-EAC-SADC Tripartite FTA negotiations.

These will include the EAC offers to Comesa Free Trade Area member countries (Comoros, Djibouti, Egypt, Libya, Madagascar, Malawi, Mauritius, Seychelles, Sudan, Zambia and Zimbabwe), EAC tariff offers to Southern African Customs Union (SACU) member countries (Botswana, Lesotho, Namibia, Swaziland and South Africa) and the EAC tariff offers to non-FTA Comesa member countries (Angola, Eritrea, Ethiopia, Mozambique and DR Congo).

According to the report, the Comesa countries that are already fully liberalised will maintain the existing tariff lines but those without FTA arrangement will need to harmonise their rates with other EAC states over a predefined time frame. “The period for the phase down of the sensitive products like sugar, rice to both FTA and Non-FTA member countries will be five years,” said the report.

The EAC tariff offer to SACU countries will have a total of 100 per cent, of which 63 per cent of tariff lines will be for immediate liberalisation and 37 per cent of tariff lines to be liberalised and further negotiated

EAC will make an equivalent offer to the non-FTA member countries commensurate with those granted to FTA member countries. However, this is subject to the principle of reciprocity. But the period for gradual harmonisation of the phase down for the non-FTA member countries will be five years.

Delays by regional blocs to liberalise tariffs has been cited as one of the reasons for the delayed conclusion of on-going tripartite talks among the three trading blocs in Africa.

The Tripartite FTA is driven by three pillars namely market integration, infrastructure development and industrial development.

A free trade area is the second stage of the tripartite economic integration in which member countries will eliminate tariffs, quotas and preferences on goods and services traded among them.

The tripartite negotiating team is to conclude talks on forming a Tripartite Free Trading (TFA) area by the end of next year and implementing it within five to eight years.