EAC Political Federation a welcome move but facilitate trade

Shares

BY BETTY MAINA

As the East African Community (EAC) evolves towards a political federation it is worth commending the efforts put in place so far in the integration process. Last year alone we eliminated over 66 percent of the non tariff barriers (reported as of January) and that has somewhat enhanced trade in the region. That notwithstanding, a number of areas still need to be concluded and/or ratified in order to ensure the smooth flow of business in the region.

Regional integration is important for the manufacturing sector as it provides market opportunities across the EAC which is a key market for Kenya. The initial stages of integration saw the growth of Kenyan exports to the region. There has however been a slowdown in the exports to EAC and figures from the 2014 Economic survey indicate that Kenya’s exports to the East African Community have reduced by a staggering 7.4 percent from about Kshs. 134 billion in 2012 to Ksh.124 billion in 2013. This is mainly attributed to the imposition of non- tariff barriers by partner states, the non – recognition of EAC certificates of origin, regulatory authority actions, a lack of harmonized standards and the misinterpretation of the provisions on the Customs Union Protocol on export promotion schemes.

The Sanitary and Phytosanitary Protocol still needs to be ratified by partner states in order to resolve the long outstanding non tariff barriers on standards and to allow movement of goods within EAC.

Some delays have been experienced in the implementation of the EAC Single Customs Territory and there is need to sensitize the EAC stakeholders on the benefits of the Single customs territory so that implementation can be expedited. In addition, there is need to hasten the opening up of one-stop border posts to make the border stations process more efficient.

It is pleasing to note that there is a NTB Bill which is before the East African Legislative Assembly (EALA). The Bill needs to be fast tracked into law so that there is a legal framework for the elimination of non tariff barriers. Part F of the Customs Union Protocol on Export Promotion Schemes also needs to be amended to provide for EAC manufacturing for local market and export market.

There have been long outstanding market issues as a result of the delay in gazettement of the revised EAC rules of origin which was adopted in November 2014 by the Council of Ministers. Gazettement of the same would resolve some market access issues for key exporting sectors including motor vehicles, furniture, and chemical and allied.

To smoothen cross border trade, partner states should do away with the technicalities in trading on goods manufactured within the EAC. Partner state should also allow intercompany transfer of intermediate goods. Double taxation has been a thorn in the flesh for the business community and it is sad to note that even after an agreement was made at EAC level to ratify the EAC agreement on double taxation only one partner state has ratified the same. There is need to expedite the ratification of the agreement by the other four partner states. In addition partner states should desist from subjecting products from the EAC region to additional levies that would have been subjected to tax in the home country.

Many a times officers manning the borders do not have sufficient knowledge on the procedures, rules and regulations applicable under the region’s protocol agreements. In order to facilitate trade and not cause any delays at the border more effort should be channeled towards educating enforcement officers on the applicable laws.

Free movement of labour within the community needs to be addressed. Tanzania currently charges $200 for a visa regardless of the period of stay. Of concern as well is the pace of standards development is slow. The observation has been that it takes over two years to draft and approve a standard. The process needs to be expedited to facilitate trade. Moreover, there is need to ensure that Partner state adopt all the harmonised standards and have a legally binding mechanism to ensure that harmonised standards are adopted by the partner states within the required time.

An anomaly also exists in road user charges which are not harmonised. Harmonising EAC road user charges and road tolls will ensure uniformity. One of the greatest issues which the Presidents need to ensure is that the manufacturing sector is enabled in order to grow by promoting an increase in production and market access. In terms of market access, there are double standards in implementation of requirements for market access. Chinese products are not subject to the same scrutiny as EAC products. Products from China access the market freely.

Counterfeits continue to frustrate the trade of locally produced goods. According to a survey conducted by Kenya Association of Manufacturers on illicit trade, industry in Kenya loses over Ksh 2 billion in illicit trade and counterfeit goods annually. Hamonization of intellectual property regulations and legal frameworks will go a long way in fighting illicit trade.

Great strides have been made and much more needs to be done to boost trade in the East African Community.

(The writer is the chief executive officer of Kenya Association of Manufacturers and can be reached on [email protected])

Shares
Hit enter to search or ESC to close