EAC Blogs

EAC Director General (Customs and Trade) Mr Peter Kiguta answers questions from journalists in the region.

1.  Are you aware of Uganda’s request for exemption on CET for 66 industrial inputs? [David Mugabe, New Vision, Uganda]

First of all, it would have been helpful if you indicated whether Uganda’s request for exemption on CET for 66 industrial inputs is a new request or a request for extension of the remission of duty to zero on Uganda’s list of raw materials and industrial inputs that was granted in 2005 and expired on 31st December 2010. All the same, I am not aware of any request by Uganda for exemption on CET for 66 industrial inputs.

2. Apparently the status quo regarding an interim Customs Union remains in Uganda, is this true? [David Mugabe, New Vision, Uganda]

It’s not true that [the] status quo regarding an interim Customs Union remains in Uganda since there is no Council decision to that effect.

3. Have the revenue authorities of the member states adjusted their tax structures to fit the fully fledged Customs Union? [David Mugabe, New Vision, Uganda]

Yes the revenue authorities have transposed their tax structures to meet requirements for a fully fledged Customs Union. We have been working with them to do and we are satisfied they were all set for 1st January 2010.

4. We saw trade rise by over 40% since the commencement of the customs union, what will it be like in the fully fledged Union? [David Mugabe, New Vision, Uganda]

We expect trade to rise higher than 40 per cent in the coming years,  especially taking into account that the Uganda list has expired and inputs that were being remitted to zero while imported from outside the region will now attract a CET of 10 per cent while they will attract zero duty if sourced from the region. This will create an incentive to source imports from within rather than from outside, thereby making trade to go up.

5. I am a journalist from Burundi and I would like to ask how the Customs Union protocol can be fully achieved while Tanzania is still charging entry visa fees for nationals from Burundi. Yet, Burundi has abolished the visa fee for Tanzanians entering Burundi. [Apollinaire Niyirora, Senior Reporter, Radio Burundi]
 
The Customs Union protocol is under implementation in Burundi from 1st July 2009. Indeed, free movement of goods requires people to also move freely especially while accompanying the goods. Therefore, any measures that could hinder free flow of goods and people should be discouraged. The EAC Partner States agreed that their peoples should be allowed to move freely within the region. I trust that the issue of Tanzania requiring/charging for visas from Burundi nationals is being given the due attention, since I am aware that Burundi has in numerous times urged Tanzania to resolve the issue.

1.0 Introduction

Following the signing of the Common Market Protocol on 20 November 2009 by the EAC Heads of State, the East African Community Secretariat, as was expected has been inundated with calls from various quarters, investors, traders, transporters, and students among others, eager to know what the signing of the Protocol portends for them. The purpose of this note is to offer general information about the operationalisation of the EAC Common Market Protocol.

2.0 Mandate

The mandate for the Partner States to negotiate the EAC Common Market is derived from Article 5(2) of the Treaty and more specifically from; Article 76(1) which states that “There shall be established a Common Market among the Partner States. Within the Common Market, and subject to the Protocol provided for in paragraph 4 of this Article, there shall be free movement of labour, goods, services, capital, and the right of establishment”; and, Article 76 (4) of the Treaty which states that “For purposes of this Article, the Partner States shall conclude a Protocol on a Common Market.”

Further, Article 104 (2) of the Treaty states that “For purposes of paragraph 1 of this Article, the Partner States agree to conclude a Protocol on the Free Movement of Persons, Labour, Services and Right of Establishment and Residence at a time to be determined by the Council.”

3.0 What is a Common Market

This is a merger/union of two or more territories to form one common territory in which there is free movement of goods, labour, services and capital.  The basic elements of a common market are:

• A smoothly functioning Customs Union including complete elimination of all tariff and non-tariff barriers plus a common external tariff
• Free movement of persons, labour, services and right of establishment and residence
• Free movement of capital within the Community
• Enhanced macro-economic policy harmonisation and coordination particularly with regards to fiscal regimes and monetary policy
• Setting up, strengthening and empowering the necessary Institutions/Organs supportive of the Common Market operations like the East African Court of Justice and the East African Legislative Assembly.

4.0 The EAC Common Market Protocol

Negotiations on the EAC Common Market Protocol commenced in February 2008 and were successfully concluded in September 2009 when the Multi Sectoral Council of Ministers adopted the Draft EAC Common Market Protocol and its annexes.  The Draft was further considered for its legal content by the Attorneys General under the Sectoral Council on Legal and Judicial Affairs and approved in October 2009.

The Protocol was signed by the EAC Heads of State on 20th November 2009 at a colourful ceremony in Arusha, Tanzania.  The Protocol will undergo the ratification process in the Partner States before entering into force on 1st July 2010.

The EAC Common Market Protocol, in accordance with the provisions of Articles 76 and 104 of the Treaty, provides for the following, to be progressively implemented:

(i) free movement of goods;
(ii) free movement of persons;
(iii) free movement of workers;
(iv) the right of establishment;
(v) the right of residence;
(vi) free movement of services; and
(vii) free movement of capital

In addition, the Protocol provides for cooperation in the following areas that are necessary for the effective functioning of the Common Market and maximising the benefits derived there from:

(i) protection of cross border investments
(ii) economic and financial sector policy coordination
(iii) competition and consumer welfare
(iv) commercial policy
(v) coordination of transport policies
(vi) harmonisation of social policies
(vii) environmental management
(viii) statistics
(ix) research and technological development
(x) intellectual property rights
(xi) industrial development; and
(xii) agriculture and food security

To give effect to the above freedoms and areas of cooperation, the Protocol has the following annexes which contain the implementation timeframe and operational details:

• annex on the free movement of persons
• annex on the free movement of workers
• annex on the right of residence
• annex on the right of establishment
• schedule on the free movement of capital, and
• schedule of commitments on trade in services in the Community

5.0 Current Status

The current status, therefore, is that the provisions of the Protocol are not effective until it is ratified by the five Partner States.  In this context, the Protocol has been dispatched to the Partner States for ratification. After ratification, the Protocol is expected to enter into force on 1st July 2010.

The EAC Secretariat, in conjunction with the coordinating Ministries of EAC Affairs, intends to hold sensitisation workshops on the EAC Common Market Protocol for a wide range of stakeholders in all the Partner States beginning February 2010.  In the meantime, a soft copy of the EAC Common Market Protocol and its annexes can be downloaded here.

In accordance with Article 76 (3) of the Treaty, a comprehensive study on the necessary institutional reforms of the Community is ongoing.  An extra-ordinary meeting of the Council of Ministers is scheduled for end April 2010 to consider the institutional reforms and the budget necessary to implement the provisions of the Protocol.

The EAC Secretariat will keep the general public informed about the progress in terms of establishing the EAC Common Market.

A publication of the EAC Secretariat, Arusha, Tanzania, December 2009

Transit goods are goods imported through the region to a country outside the region.

Q: What value is applicable for transit goods?

It is the transaction value adjusted according to Article VIII of the WTO valuation regulations.

Q: Are transit goods subject to import duty?

No they are not. However if the consignment fails to exit the region within the prescribed period and no official extension is granted, duty becomes due. The importer may request the Commissioner to allow consumption of the goods in the local market. If this is authorized, then duty becomes payable.

Q: What is the nature of goods that can be transited?

All types of goods can be transited with the exception of prohibited goods.

Q: Can transit goods be converted for home consumption?

Yes, the owner can apply in writing to the Commissioner to allow entry of the goods and refund on any deposit will be given or the bond on such goods will be cancelled

Q: Is there a specific transit period?

Yes, the transit period is less than thirty days from the date of entry or any further period as the Commissioner may allow. During this period, bulk cargo may be stored in a Transit go-down. This is a facility licensed by the Commissioner for the storage of transit cargo.

Q: How does the Customs administration secure the duty due on transit cargo?

Duties due are secured through the execution of a security bond.

Q: Is there a standard security bond amount?

Yes, security bond is set at an amount equal to the duty payable on the goods.

Q: What is the fate of securities, bonds and other deposits made on transit goods?

• Refunds or bond cancellation are granted after exportation. The owner must submit an application (form C30) for refund of deposit or cancellation of the bond accompanied by necessary documents including the export certificate form C17.
• If the application for a refund is not made within 30 days, goods will be viewed to have been imported for home consumption and import duty will be charged on them.
• If the owner fails to submit exportation proof of part of the transit goods due to circumstances beyond his/her control, the Commissioner shall only refund the deposit or cancel the bond to goods that have proof of exportation.

Q: What are the procedures and requirements for application as a carrier?

• Goods in transit shall only be carried through the Community in sealed, licensed vehicles except in the case of exceptional loads
• Trailers and motive units intended for the conveyance of transit cargo must be licensed by the Commissioner using form C.38. For motive units and trailers licensed in any of the   COMESA Member States or SADC a certificate of approval in Form C.39 should be issued by the Commissioner on application.
• On approval the carrier should execute a bond using Form CB.12.
• Where a carrier owns more than one vehicle, only one bond shall be required
• A carrier who is a licensed customs agent shall not be required to execute a bond.
• License fees of  payable by carriers of transit goods is currently being harmonized
  • The vehicles mentioned above should bear the words “TRANSIT GOODS” printed boldly and clearly on both sides as specified in Form C.38
  • The vehicles used for conveyance of transit cargo should be constructed and equipped in such   manner that:-
  • a customs seal can be fixed easily on doors and all other closing systems
  • goods cannot be removed from or introduced into the sealed part of the vehicle without breaking the customs seal
  • the vehicle does not contain concealed spaces
  • spaces capable of holding goods are readily accessible for Customs inspection
  • additional compartments inside the vehicle should be firmly fixed, sealed, unbroken and capable of being dismantled without leaving obvious traces,
  • openings for lubrication, maintenance and filling of the sand box are fitted with a cover and should be inaccessible to the loading compartment from the outside;
  • hinges are made and fitted such that doors and other closing systems cannot be lifted off the hinge-pins
  • doors cover all interstice and ensure complete and effective closure; and
  • The Customs seal is protected once it is affixed.

Q: Who is authorized to clear transit goods through Customs?

A licensed Customs agent who is further licensed by the Commissioner to clear transit goods.

Q: Is there a special route that transit goods must go through?

Yes, goods in transit shall be conveyed by road on routes approved by the Commissioner.

A person who does not follow the specified transit route commits an offence whose fine is 5% of the value of the goods and the goods which are the subject of the offence shall be detained.

Q: Is it an offence not to export transit goods?

Yes it is an offence not to export transit cargo, however one can apply to the Commissioner for authority to convert the consignment for home use.

Q: What penalties are payable by the owner to the proper officer for offences related to goods on transits?

• Where the quantity of goods presented at the port or place of exportation is less than that written on the entry, the owner should pay the duty on the extra goods, unless they are accounted to the proper officer.
• If the transit period expires before any part of the goods is exported, the owner should pay the penalty to bond.
• If in addition to the expiry of the transit period there are extra quantities of goods undeclared in the declaration form, a penalty to bond will be paid and in addition, duty for the extra cargo will also be paid.
• If goods are not exported after the payment of any penalties, the goods shall be subject to forfeiture.

Q: What laws apply to goods in transit?

Goods in transit are subject to laws that relate to importation, prohibition, entry, examination, landing and exportation of goods as stipulated in the EAC Customs Management Act.

Q: Can a commissioner detain goods on transit?

Yes, the commissioner can prohibit, restrict or control the entry of certain goods or type of transport used to convey the goods if they pose a safety, health, hygiene risk or pose harm to animal, plant or if they are against the public interest.

For more please visit the Customs Union Website

The East African Community (EAC) is the regional intergovernmental organisation of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Burundi and Republic of Rwanda with its headquarters in Arusha, Tanzania.

The Treaty for Establishment of the East African Community was signed on 30th November 1999 and entered into force on 7th July 2000 following its ratification by the Original 3 Partner States Kenya, Uganda and Tanzania. The Republic of Rwanda and the Republic of Burundi acceded to the EAC Treaty on 18th June 2007 and became full Members of the Community with effect from 1st July 2007.

Aims and Objectives

The EAC aims at widening and deepening co-operation among the Partner States in, among others, political, economic and social fields for their mutual benefit. To this extent the EAC countries established a Customs Union in 2005 and are working towards the establishment of a Common Market by 2010, subsequently a Monetary Union by 2012 and ultimately a Political Federation of the East African States.

Enlargement of the Community

The realization of a large regional economic bloc encompassing Burundi, Kenya, Rwanda, Tanzania and Uganda with a combined population of 120 million people, land area of 1.85 million sq kilometres and a combined gross domestic product of $ 41 billion, bears great strategic and geopolitical significance and prospects of a renewed and reinvigorated East African Community.

Current status

The regional integration process is at a high pitch at the moment. The encouraging progress of the East African Customs Union, the enlargement of the Community with admission of Rwanda and Burundi, the ongoing negotiations of the East African Common Market as well as the consultations on fast tracking the process towards East African Federation all underscore the serious determination of the East African leadership and citizens to construct a powerful and sustainable East African economic and political bloc.