Trade Regime

Posted in Investment Guide

The EAC Customs Union Protocol furthers the liberalisation of intra-regional trade in goods; promotes production efficiency in the Community; enhances domestic, cross-border and foreign investment; and promotes economic development and industrial diversification; Trade Facilitation - The Partner States have agreed to cooperate in simplifying, standardising and harmonising trade information and documentation so as to better facilitate trade in goods.

The Customs Union Protocol spells out the rules and regulations that are to govern trade within and outside the Community. The areas of cooperation in the Customs Union are:

1. Customs administration;
2. Matters concerning trade liberalisation;
3. Trade related aspects including the simplification and harmonisation of trade documentation, customs regulations and procedures;
4. Trade remedies;
5. National and joint institutional arrangements;
6. Training facilities and programmes on customs and trade;
7. Production and exchange of customs and trade statistics and information; and
8. The promotion of exports.  

The key pillars of the EAC Customs Union are the Common External Tariff; the EAC Rules of Origin; and the Customs Management Act, 2004.

The EAC Common External Tariff (CET)

With effect from 1^st July, 2022 the EAC Common External Tariff (CET) will be structured under four bands of:

• 0% for raw materials and capital goods;
• 10% for intermediate goods not available in the region;
• 25% for intermediate  goods available in the region; and
• 35% for imported finished products available in the region

 
The EAC Customs Management Act, 2004

The EAC Customs Management Act, 2004 governs the administration of the Customs Union, including legal, administrative and operational matters. 

The Directorate of Customs under the EAC Secretariat identifies policy issues and coordinates and monitors customs and trade-related activities in the EAC.

The Community has developed anti-dumping regulations, as elaborately highlighted in the EAC Customs Union Protocol.

 
EAC Single Customs Territory (SCT)

The EAC Single Customs Territory (SCT) came into effect in 2014. Implementation of the SCT is aimed at improving trade facilitation through the introduction of ‘hard and soft infrastructure', which facilitate the interconnectivity of customs systems to facilitate seamless flow of information between customs stations and a payment system to manage transfers of revenues between EAC Partner States.

The Single Customs Territory has been implemented to facilitate faster clearance and improvement in cargo movement along the two corridors (Northern and Central) and the now Standard Gauge Railway line.

The implementation of the SCT has witnessed the development of requisite instruments, the information Technology has been revamped to respond to the new operating environment and the capacity of both the public and private sectors equally enhanced to facilitate the smooth rollout of the SCT.

There has been increased trade and investment in the EAC as a result of elimination of non-tariff barriers based on an online monitoring and tracking system, improved infrastructure like the One Stop Border Posts (OSBP), introduction of the Integrated Border Management (IBM) and use of Information, Communication and Technology (ICT).

 
Standardisation, Quality Assurance, Metrology and Testing (SQMT)

Under Article 81 of the Treaty Establishing the Community, the EAC Partner States recognised the importance of standardisation, quality assurance, metrology and testing (SQMT) for the promotion of trade and investment and consumer protection, among other things.

 
Non-Tariff Barriers (NTBS)

Under Article 13 of the Customs Union Protocol, the EAC Partner States have agreed to remove all existing non-tariff barriers to trade and not to impose any new ones. Also, Re-exports are exempted from the payment of import or export duties.

EA Competition Policy

The Community also put in place an EAC Competition Policy and Law with an aim to deter any practice that adversely affects free trade within the Community. Its implementation agency, the EAC Competition Authority, deals with all competition issues having cross-border effects. In principle, domestic competition issues remain under the jurisdiction of national competition laws and institutions.

Trade Agreements

The EAC has increased market access to EAC goods and services by entering into a number of key trade agreements such as;

1. the Tripartite Agreement between the EAC, SADC and COMESA to establish a Tripartite Free Trade Agreement (TFTA);
2. the US-EAC Trade and Investment Agreement; and
3. the Economic Partnership Agreement (EPAs) aimed at the formation of a free trade area between the EAC and the European Union (EU) which has been signed by two Partner States, i.e. Republics of Kenya and Rwanda.

EAC Partner States have also ratified the African Continental Free Trade Agreement (AfCFTA) that will integrate the EAC regional economy into the African continental trade and bring about sustainable trade and investment opportunities and unleash the region’s growth potential.