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EAST AFRICA: EAC to Increase Import Duties on Finished Goods to 32%

East African Community (EAC) member-states will increase the upper tariff band for imported finished goods to 32% under the Common External Tariff (CET) agreement.

The EAC is a regional intergovernmental organisation of six nations: Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. The new CET rates, which were agreed on 20 February, are expected to be ratified by the EAC Council of Members and then adopted at its upcoming heads of state summit. The summit was originally scheduled for the 29 February 2020, but has been postponed at the request of South Sudan, pending the establishment of its transitional national unity government.

The CET sets the import tariff limits for the region applicable to all imports from non-EAC nations. It has a three-band structure that currently charges a zero import rate on all raw materials and capital goods; 10% on inputs; and 25% on all finished imports. There are a number of products, such as maize, rice and textiles, which incur special import duties of between 35% and 100 % because of the need to protect local production.

The agreement on the new rate of 32% for the top band was finally resolved after nearly 10 years of discussion. Most member states agreed that the top band rate was too low and was making foreign goods too cheap, however, the sticking point was just how much to increase the tariff. Kenya and Uganda had favoured a higher upper CET band of 35%, whereas Rwanda was keen on an upper limit of only 30%. Peter Mathuki, CEO of the East African Business Council (EABC), who was involved in the negotiations, said: “We mediated and arrived at an upper band of 32%, a figure we thought would be favourable to everyone.”

Content provided by Picture: HKTDC Research
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