Manufacturers of confectionery in Kenya, oil and fats in Uganda and a
wheat and juice producer from Tanzania reported encountering tariff and
non-tariff barriers that blocked them from entering regional markets.
PHOTO | NMG
East African Community partner states continue to introduce
tariff and non-tariff barriers that are hindering intra-regional trade
and putting integration at risk.
Manufacturers of
confectionery in Kenya, oil and fats in Uganda and a wheat and juice
producer from Tanzania reported encountering tariff and non-tariff
barriers that blocked them from entering regional markets.
Yasin
Billo, export manager of Tanzanian industrial conglomerate Bakhresa
Group, said the company currently has 15 trucks stuck at the
Tanzania-Kenya border because the Kenya Revenue Authority changed the
rules and systems for exporting goods to the country.
However,
Tanzanian Commissioner for Customs and Excise Ben Usaje said Bakhresa
Group believed they were being mistreated because of the continued
dispute over Kenyan confectionery. Customs officials in Tanzania have
blocked Kenyan confectionery products because they were allegedly
manufactured using sugar that was imported at zero rate, instead of the
EAC’s 100 per cent CET.
Sugar dispute
In
2017, Kenya faced a sugar crisis that prompted importation of sugar at a
zero tariff. Under the EAC regulations, this rate should have been 100
per cent, since sugar is a sensitive product that needs protection from
dumping. Mr Usaje said it is this sugar that the confectionery
manufacturers are using and such products will not be allowed into the
Tanzanian market unless a 25 per cent import duty is paid on them.
Mr Usaje added that Kenyan confectionery will not enjoy duty
free rates in the Tanzanian market until the EAC forms another committee
that declares their processes legitimate.
An earlier
committee formed by the EAC to verify the origins of ingredients used in
the process of manufacturing confectionery compiled a report that Mr
Usaje says was “non-committal.”
“Products manufactured
using industrial sugar when transferred to the EAC qualify for
preferential tariff treatment provided they meet the criteria set under
the EAC Rules of Origin, 2015, and other conditions set under the EAC
Customs Management Act,” the report says.
The report
adds that sugar for industrial use was not imported under the provisions
of the Kenya Gazette notice announced in May 2017. Mr Usaje questions
the methodology used by the committee to come to the conclusion that
confectionery makers used industrial and not ordinary sugar.
These tariff and non-tariff barriers coupled with what appear to be political manoeuvring are harming trade across the region.
NTBs are back
The EAC Trade and Investment Report shows that intra-regional exports dropped by 42 per cent from $3.7 billion in 2013 to $2.6 billion in 2016.
The
2017 preliminary trade and investment report shows that intra-EAC
exports recovered slightly to increase by nine per cent. This is
attributed to favourable weather conditions that contributed to a bumper
harvest in the region.
The report also notes that
intra-EAC exports increased from $2.6 billion in 2016 to $2.9 billion in
2017 on account of growth in manufactured goods such as cement,
textiles, sugar, confectionery, pharmaceuticals, fats and oils moving
freely in the region.
The report notes that in 2017,
most East African partner states were able to resolve non-tariff
barriers, facilitating increased trade in products like oils and fats
and dairy products. The states also discontinued policies that suspended
the implementation of sections of the EAC Common External Tariff.
However,
these non-tariff barriers are back, threatening the gains that were
made last year. In addition to the trade disputes between Tanzania and
Kenya, Uganda has also been experiencing its own challenges.
For
example, Uganda’s cooking oils and fats can’t enter the Tanzanian
market because of alleged failure to meet the EAC Rules of Origin.
The
convening of a verification committee agreed on during a Joint
Permanent Commission meeting between Ugandan and Tanzanian officials in
August seems to have been delayed.
Mr Usaje said he
received the letter instructing him to visit factories that manufacture
cooking oils and fats on September 24. The letter was sent over a month
after Tanzania and Uganda agreed on deployment of the team before the
end of September.
Lilian Awinja, chief executive
officer of the East African Business Council, said the delay in sending
teams to investigate and resolve tariff and non-tariff barriers is a
tactic routinely used by EAC partner states.
Despite Tanzania actively blocking goods from the EAC, it is willing to allow in manufactured products from Asia.
Subhash
Patel, chairman of the Confederation of Tanzania Industries, criticised
his country for failing to protect the local steel industry. While
Uganda and Kenya have imposed a 35 per cent or $250 rate on imported
steel products, Tanzania still applies a 25 per cent tariff.
Mr
Patel said Tanzania’s position on importation of steel from outside the
EAC is slowly killing its factories and flooding the market with
substandard goods.
Analysts say blocking products from the EAC while allowing in poor quality from Asia is a region-wide problem.
“Some
East African governments are happier to import products from Asia,
North America or Europe than to support small firms from within the
region,” said Bernd Schmidt, deputy programme manager of the German
Development Co-operation delegation at the EAC.
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