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2006年10月WTO对肯尼亚、坦桑尼亚和乌干达贸易政策审议-WTO秘书处报告(英文)

World Trade

Organization

RESTRICTED

 

WT/TPR/S/171

20 September 2006

 

 

(06-4340)

 

 

Trade Policy Review Body

 

 

 

 

 

 

 

 

TRADE POLICY REVIEW

 

Report by the Secretariat

 

EAST AFRICAN COMMUNITY

 

 

 

 

 

This report, prepared for the first joint Trade Policy Review of the East African Community (EAC), has been drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from the EAC members on their trade policies and practices.

 

Any technical questions arising from this report may be addressed to Mr. Ricardo Barba (tel: 022/739 50 88), Mr. Arne Klau (tel: 022/739 57 06), or Mr. Jacques Degbelo (tel: 022/739 55 83).

 

Document WT/TPR/G/171 contains the policy statements submitted by Kenya, Tanzania, and Uganda.

 

Note:    This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on the East African Community.



CONTENTS

Page

SUMMARY OBSERVATIONS                                                                                                                                               v

                (1)           The Economic Environment                                                                                                             v

                (2)           Legal and Institutional Framework                                                                                         v

                (3)           Trade Policy Instruments                                                                                                              vi

                (4)           Sectoral Policies                                                                                                                             viii

                (5)           Trade Policy and Trading Partners                                                                                        viii

I.              the EAST AFRICAN COMMUNITY (eAC)                                                                                                       1

(1)           Overview                                                                                                                                                  1

(2)           Legal Framework                                                                                                                                1

(3)           Institutional Structure                                                                                                                 3

ii.            trade ARRANGEMENTS INVOLVING EAC MEMBERS                                                                               6

(1)           Participation in the WTO                                                                                                                6

(2)           Common Market for Eastern and Southern Africa (COMESA)                                      7

                (3)           Southern African Development Community (SADC)                                                          9

(4)           Other Trade Arrangements                                                                                                         10

(i)            Cotonou Agreement, and the Everything-but-Arms (EBA) Initiative of the EC           11

(ii)           African Growth and Opportunity Act (AGOA)                                                                  12

(iii)          African Economic Community (AEC) and the African Union (AU)                                13

                (iv)          Regional Integration Facilitation Forum (RIFF)                                                                  13

(v)           Intergovernmental Authority on Development (IGAD)                                                    14

                (vi)          Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC)                           14

(vii)         Generalized System of Preferences (GSP)                                                                            15

III.           Common trade policy measures                                                                                                          16

(1)           Introduction                                                                                                                                       16

(2)           Customs Procedures                                                                                                                         16

(i)            Customs clearance and valuation                                                                                         16

(ii)           Rules of origin                                                                                                                         16

(3)           Tariffs, and Other Duties and Charges                                                                                   17

(i)            MFN applied tariff structure                                                                                                  17

(ii)           Tariff preferences                                                                                                                    23

(iii)          Duty and tax exemptions and concessions                                                                         23

(iv)          Other duties and charges                                                                                                       23

(4)           Contingency Measures                                                                                                                    23

(5)           Import Prohibitions, Restrictions, and Licensing                                                               24

(6)           Standards and Other Technical Requirements                                                                  24

(7)           Export Prohibitions, Restrictions, and Licensing                                                               25

Page

(8)           Export Assistance                                                                                                                             25

                (9)           Competition Policy and Regulatory Issues                                                                          25

References                                                                                                                                                                          27

ANNEX 1:  Kenya                                                                                                                                                              29

annex 2:  Tanzania                                                                                                                                                    127

annex 3:  uganda                                                                                                                                                        209

CHARTS

III.           COMMON TRADE POLICY MEASURES

III.1         Breakdown of applied MFN tariffs, 2006                                                                                                             18

III.2         EAC's tariff by ISIC classification, 2006                                                                                                             21

III.3         Tariff escalation by ISIC 2-digit industry, 2006                                                                                                  22

TABLES

III.           COMMON TRADE POLICY MEASURES

III.1         Structure of MFN tariffs in the EAC, 2006                                                                                                          17

III.2         "Sensitive" products subject to high tariffs, 2006                                                                                             18

III.3         Summary analysis of the East African Customs Union MFN tariff, 2006                                                       20

III.4         Products for which applied MFN rates may be higher than the final bound rate, 2006                               22

 

 

 

 

 


SUMMARY OBSERVATIONS

(1)        The Economic Environment

Since their previous TPRs, held separately during 2000-01, the three East African Community (EAC) members (Kenya, Tanzania and Uganda) have continued their economic reform programmes aimed at addressing their common challenges, including poverty reduction; sustainable economic growth and development;  more equitable income distribution; unemployment reduction; and full integration into the world economy.  The reforms have resulted in real GDP growth rates of over 4% per year in 2004 and 2005, despite the negative impact of external shocks, notably droughts and low levels of investment.

Over the last few years, high oil prices have resulted in an increase in inflation rates for the three EAC members, and their fiscal deficits (including grants) have also risen.  With the exception of Kenya in 2003, the EAC countries have registered external current account deficits since 2000.  They continued to attract foreign direct investment throughout the 2000-05 period, though small by international standards, but significant to their economies.

Each EAC member currently has its own monetary and exchange rate policies:  Kenya maintains a managed floating exchange rate regime to smooth out fluctuations of the Kenyan Shilling (K Sh);  the official exchange rate of the Tanzanian Shilling (T Sh) is determined by the national interbank market; and Uganda has an independently floating exchange rate regime for the Ugandan Shilling (U Sh).  The three exchange rate systems are free of restrictions on payments and transfers for current international transactions, the countries having accepted the obligations of Article VIII of the IMF agreement.

The full integration of EAC members will bring together two least developed countries (Tanzania with per capita GDP of US$303, and Uganda with per capita GDP of US$220 in 2004) and a low-income developing country (Kenya with per capita GDP of US$416 in 2004), for a combined population of about 90 million people and GDP of around US$30 billion.  This is expected to provide a strong foundation for their participation in the world economy.  The re-establishment of a monetary union, which was in place during the first few years after independence, is also expected to introduce more discipline into their monetary policy formulation and implementation.

(2)        Legal and Institutional Framework

Kenya, Tanzania, and Uganda have a long history of regional integration that dates back to the creation  of the original EAC (in 1917), which collapsed for a variety of political and economic reasons in 1977.  The current EAC, which entered into force on 7 July 2000, is to be an economic area (including customs and monetary unions, with harmonized macroeconomic policies, and ultimately a political federation), although no overall timetable has been established.

The EAC's legal framework consists mainly of:  the Treaty for its establishment; its Protocol; and its Customs Management Act.  The framework provides for, inter alia, a common external tariff (CET);  asymmetry in the liberalization of intra-EAC trade;  rules of origin; contingency trade remedies;  restrictions to trade for security and other reasons;  competition;  duty drawback, refund and remission of duties and taxes;  exemption regimes;  customs cooperation;  re-exportation of goods; simplification and harmonization of trade documentation and procedures;  use of the harmonized commodity description and coding system; and freeports.  However, EAC members are yet to fully implement some of those provisions, such as harmonization of customs procedures, other duties and charges on imports, internal indirect taxes, and of fees on production.

The EAC's main institutions are:  the Summit of Heads of State and/or Government; Council of Ministers; Coordination Committee;  sectoral committees;  East African Court of Justice;  East African Legislative Assembly; and the Secretariat (based in Arusha, Tanzania).  In addition, the EAC Protocol established the Committee on Trade Remedies to handle: rules of origin; contingency trade remedies;  dispute settlement mechanism; and any other matter referred to it by the Council.  The EAC currently has the following autonomous institutions: Lake Victoria Development Programme;  the East African Development Bank (EADB);  Lake Victoria Fisheries Organization (LVFO);  and the Inter-University Council for East Africa (IUCEA).

EAC countries are all original WTO Members.  They are neither signatories nor observers to any of the WTO plurilateral agreements.  All EAC countries accord at least MFN treatment to all their trading partners. They have not been directly involved, either as complainant or as defendant, in any WTO dispute settlement proceedings.  However, both Kenya and Tanzania have participated as third parties in the "European Communities-export subsidies on sugar" disputes brought separately by Australia, Brazil, and Thailand.

In addition to the EAC, Kenya, Tanzania, and Uganda are also members of the African Economic Community (AEC) and the African Union (AU), the Regional Integration Facilitation Forum (RIFF), and participate in different regional trade agreements.  Kenya and Uganda are members of the Intergovernmental Authority on Development (IGAD), and the Common Market for Eastern and Southern Africa (COMESA);  Tanzania is considering re-entering COMESA after its withdrawal in 2000. Kenya and Tanzania participate in the Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC).  Unlike Kenya and Uganda, Tanzania is member of the Southern African Development Community (SADC), and a signatory to the Agreement on the Global System of Trade Preferences among Developing Countries (GSTP).

Under the EAC, each country is free to negotiate new bilateral trade agreements, subject to notification to the other two members.  In practice, this overlapping membership poses certain difficulties to the EAC countries, mainly because of differences in, inter alia, origin criteria, and intra-regional trade liberalization scenarios under the agreements.  Furthermore, EAC members are also eligible for non-reciprocal preferential treatment under the Generalized System of Preferences;  the Cotonou Agreement with the EC; and the U.S. African Growth and Opportunity Act.  As LDCs, Tanzania and Uganda are eligible for the Everything-but-Arms initiative of the EC.

(3)        Trade Policy Instruments

During the Uruguay Round, the EAC members bound their tariffs individually.  Bindings cover 13.5% of all Tanzania's tariff lines, 14.9% of Kenya's, and 15.9% of Uganda's:  these cover all tariffs on agricultural products, and 0.1% of Tanzania's non-agricultural tariff lines, 1.6% of Kenya's and 2.9% of Uganda's.  These tariff binding commitments leave ample margins for discretionary increases in applied rates.

In January 2005, the EAC CET entered into force, with a few provisional exemptions (for Kenya, on its rice imports from Pakistan;  and for Tanzania, on its wheat and barley imports).  The move from national tariffs to the CET has reduced average tariff protection in Kenya and Tanzania, and has increased it in Uganda.  The overall average applied rate of the CET is 12.9%.  The average tariff on agricultural goods (WTO definition) remains relatively high (19.7%), against 11.9% on non-agricultural products.  Using the ISIC (Revision 2) definition of sectors, agriculture, hunting, forestry, and fishing is the sector with the highest tariffs (17.3% on average), followed by manufacturing (12.8%), and mining and quarrying (5.8%).  About 99% of all tariff lines carry rates of 0%, 10%, or 25%.  Some 58 tariff lines carry higher rates, mainly on dairy goods, wheat, and sugar.  For eleven lines, applied tariffs are compound and could exceed bound ad valorem rates, depending on the unit import price of the product.

In aggregate, the EAC's tariff shows a pattern of mixed escalation, negative from the first stage of processing (with an average tariff of 13.5%), to semi-finished products (with an average of 10.1%), and then positive to fully processed goods, on which tariffs average 14.4%. This structure reflects the relatively high tariff protection for agricultural commodities in particular.  Further simplification of the tariff structure through, inter alia, reduction of rates on agricultural commodities, should reduce the need for concessions, introduce more transparency in the tariff regime, and make it more neutral, and hence less distorting.

Kenya and Tanzania bound other duties and charges at zero.  However, Kenya applies an import processing fee of 2.75%, and Tanzania a destination inspection fee of 1.2% and a customs processing fee of US$10.  Uganda bound other duties and charges at between 10% and 30%;  it has abolished its 2% import commission, and transportation and insurance from entry points in Kenya and Tanzania to its border are no longer dutiable.  Imports and locally produced goods are also subject to VAT at different rates in the three EAC countries (standard rates of 16% in Kenya, 20% in Tanzania, and 18% in Uganda), and to excise duties at different rates.

The free-trade area component of the EAC customs union is being established through asymmetrical liberalization.  While imports from Tanzania or Uganda are duty-free, tariffs on some selected items from Kenya to the other EAC countries remain in place and will be phased out by 2010.  Members are also committed to removing non-tariff barriers on intra-EAC trade.  Under SADC, Tanzania grants duty-free access (on a reciprocal basis) on mostly capital goods and equipment from other members.  Under COMESA, Kenya and Uganda apply preferences of 0%, 4%, and 6% on inputs, intermediate goods, and final goods, respectively.  Kenya applies a preferential tariff quota to sugar imports from other COMESA members.

While the EAC has adopted regulations on contingency measures, no anti-dumping, countervailing or safeguard actions have yet been taken.  The EAC members increasingly adopt joint voluntary standards (close to 600 as at July 2006).  In addition, they individually have technical regulations; Kenya is the only EAC member with a certain capacity to enforce its technical regulations.  The members also maintain common prohibitions and restrictions on imports for security, health, sanitary, environmental, and moral reasons;  they are allowed under the EAC rules to apply such measures individually for a transitional period.

The EAC has adopted provisions that allow member states to establish manufacturing under bond, export processing zones, and duty drawback schemes; the sale of goods (produced under any such scheme) in the customs territory is limited to 20% of production.  The EAC members apply an export tax of 20% on raw hides and skins to encourage local processing of these goods.  An EAC Competition Bill is under consideration. For the time being, Kenya and Tanzania each has its own competition policy, and Uganda is preparing its legislation.

EAC members have implemented their individual privatization programmes, with divestiture of some 108 enterprises in Kenya, 380 in Tanzania, and 224 in Uganda.  New public procurement regimes were adopted in 2003 by Uganda, and in 2005 by Kenya and Tanzania.  Kenya has adopted new legislation on intellectual property rights;  it is also negotiating to achieve an extension of the TRIPS Agreement to protect genetic resources and traditional knowledge.  Tanzania is revising its legal provisions on patents and trade marks to align them on the WTO TRIPS Agreement by 2006.  Uganda has adopted a new Copyright Act.

Overall, with the exception of customs issues (which are being harmonized), including the CET and customs procedures, non-tariff measures are yet to be fully harmonized within the EAC.  Moreover, differences remain between mainland Tanzania and Zanzibar in certain trade policy instruments (e.g. on domestic trade and export promotion).

(4)        Sectoral Policies

Sectoral policies are not yet harmonized throughout the EAC area, and there are differences between mainland Tanzania and Zanzibar regarding some sectoral strategies, such as on agriculture, energy, telecommunications, and tourism.  Full establishment of the EAC customs union is expected to further harmonize sectoral policies, both among EAC countries, and between mainland Tanzania and Zanzibar.

Agriculture provides livelihood and employment to the majority of the EAC population; nonetheless, its contribution to GDP has decreased over the last few years.  Food insecurity in the EAC has increased recently due to several factors, including unfavourable weather conditions (drought or floods), making emergency food aid necessary.  Tariffs are the main trade policy instrument in the sector, although some non-tariff measures are still in force.  Applied MFN tariffs on agricultural products average 17.3%;  and non-tariff barriers include SPS measures, although Kenya is the only EAC country with capacity to enforce them.

Mining and quarrying is the fastest growing sector in Tanzania and an important foreign exchange source and a magnet for foreign investment; while in Kenya and Uganda, the sector remains of minor importance.  Private investment is being encouraged in the sector, but some mining activities, notably exploitation, are still dominated by state-owned companies.  Tariff protection for the sector is relatively low at 5.8% on average.

The manufacturing sector in the EAC produces largely for the domestic market, with part of the production exported to regional markets.  It continues to be relatively small and based mainly on the processing of agricultural goods in Tanzania and Uganda, and decreasing in Kenya, the most industrialized EAC country.  EAC members have various programmes to promote industrial development and exports.  The general development of the sector, however, has largely been hampered by supply-side constraints (e.g. high production costs, limited access to financing, and low quality of products). Furthermore, subject to concessions, the negative escalation of the EAC CET (with an average rate of 12.8% on manufactured products and relatively high rates on agricultural commodities, including those used as inputs) is not conducive to investment in certain manufacturing activities.

The potential of the services sector remains largely unexploited in the EAC. In tourism, for example, where the EAC's attractions are among the best in Africa, inadequacies in infrastructure and marketing/promotion, financial constraints, security issues, and lack of skilled labour have limited its development. Further liberalization and commitments under the GATS should contribute to attracting investment in services, in general, and should improve the efficiency of other economic activities and the competitiveness of EAC's exports, especially by reducing costs related to, inter alia, telecommunications, transport, and energy.

(5)   Trade Policy and Trading    Partners

The three EAC members have resident delegations in Geneva and participate actively in the WTO.  They support the Doha Development Agenda, which provides an opportunity to address some of what they consider as imbalances in the WTO Agreements, and to improve access conditions for their exports into other markets.  The EAC members have introduced or are in the process of formulating legislation that will bring their trade regimes more up to date and into greater conformity with WTO provisions.  Improvement of their multilateral commitments, through reduction of bound rates, enlargement of the scope of bindings on goods and services, elimination of applied compound tariffs (all bound duties are ad valorem), and removal of other duties and charges by Kenya and Tanzania would increase the predictability and credibility of the EAC trade regime.

Membership in overlapping preferential arrangements, notably the combination of free-trade areas (e.g. SADC)
and customs unions (e.g. EAC, COMESA), makes their trade regimes complex, and difficult to manage.  Moreover, EAC rules allow each member to sign bilateral agreements, subject to notification to the other members.  This, together with the overlapping membership, may limit the proper functioning of the EAC as a customs union. In addition, more attention needs to be paid to non-tariff measures in the full establishment of the EAC customs union (its free-trade-area and common trade-measure components). 

Continued structural reforms and further trade liberalization by EAC members would contribute to better resource allocation.  Such efforts will improve their ability to attract investment. Trading partners could help by ensuring that their markets are fully open to goods produced in EAC and by providing more technical assistance.

 

 


 

 

 

 



I.     the EAST AFRICAN COMMUNITY (eAC)

(1)               Overview

1.                   East Africa has a long history of regional integration.  Kenya and Uganda first formed a customs union in 1917, which the then Tanganyika (Tanzania without Zanzibar) joined in 1927.  Subsequently, the three countries had close economic relationships in the East African High Commission (1948-61);  the East African Common Services Organization (1961-67);  the East African Community (1967-77);  and the East African Cooperation (1993-99).[1]

2.                   The (current) Treaty for the Establishment of the East African Community (EAC) was signed on 30 November 1999, and entered into force on 7 July 2000.  The present EAC has its origins in the Mediation Agreement for Division of Assets and Liabilities of the original EAC, which collapsed for a variety of political and economic reasons in 1977.  In that Mediation Agreement, signed on 14 May 1984, Kenya, Tanzania, and Uganda agreed to explore areas of future cooperation, and to make concrete arrangements for such cooperation.  Subsequent meetings of the three Heads of State led to the signing of the Agreement for the Establishment of the Permanent Tripartite Commission (PTC) for East African Cooperation on 30 November 1993.  Full fledged cooperation started on 14 March 1996 when the Secretariat of the PTC was launched at the headquarters of the EAC in Arusha, Tanzania.[2]

3.                   In addition to the EAC, Kenya, Tanzania, and Uganda are also members of the African Economic Community (AEC), the African Union (AU), and the Regional Integration Facilitation Forum (RIFF), and participate in different regional trade agreements.  Kenya and Uganda are members of the Inter Governmental Authority on Development (IGAD), and the Common Market for Eastern and Southern Africa (COMESA);  Tanzania is considering re-entering COMESA after its withdrawal in 2000. Kenya and Tanzania participate in the Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC).  Unlike Kenya and Uganda, Tanzania is member of the Southern African Development Community (SADC).  This overlapping membership poses certain difficulties for the EAC members, mainly because of differences in, inter alia, origin criteria, and intra-regional trade liberalization scenarios under the various agreements.

4.                   Under the EAC, each member is free to negotiate new bilateral trade agreements, subject to notification to the other two members.  Only Kenya has signed bilateral trade agreements.

5.                   EAC members are also eligible for non-reciprocal preferential treatment under the Generalized System of Preferences (GSP);  the Cotonou Agreement with the EC;  and the U.S. African Growth and Opportunity Act (AGOA).  As least developed countries (LDCs), Tanzania and Uganda are eligible for the Everything-but-Arms (EBA) initiative of the EC;  Kenya is not.

6.                   Tanzania is a signatory to the Agreement on the Global System of Trade Preferences among Developing Countries (GSTP);  Kenya and Uganda are not.

(2)               Legal Framework

7.                   The EAC's legal framework consists mainly of:  the Treaty for the Establishment of the EAC; the 2001-05 EAC Development Strategy; the EAC Protocol; and the EAC Customs Management Act.  The key objective of the EAC is to develop policies aimed at widening and deepening cooperation in all fields for the mutual benefit of its members (Article 5 of the EAC Treaty).  The EAC is thus to be an economic area (including customs and monetary unions, with harmonized macroeconomic policies, and ultimately a political federation), although no timetable has been established.[3]

8.                   The EAC's specific objectives include:  (a) promoting sustainable growth and equitable development for its members, including rational use of the region's natural resources and protection of the environment;  (b) strengthening and consolidating the long-standing political, economic, social, cultural, and traditional ties of its members;  (c) enhancing the participation of the private sector and civil society;  (d) mainstreaming gender in all its programmes and enhancing the role of women in development;  (e) promoting good governance, including adherence to the principles of democratic rules of law, accountability, transparency, social justice, equal opportunities, and gender equality;  and (f) facilitating peace and stability within the region.

9.                   The 2001-05 EAC Development Strategy identifies twelve areas of cooperation: macroeconomic policies, including monetary and fiscal; trade liberalization and development; promotion of key economic sectors (i.e. agriculture and food security, investment and industrial development, tourism and wildlife, and environment and natural resources); infrastructure and supportive services; human resource development, science, and technology; social sectors, immigration, and labour policies; legal and judicial affairs; political matters, including peace, security. and defence; broad participation of women, private sector and civil society; relations with other regional and international organizations (e.g. COMESA, SADC); institutional arrangements at the level of member states and the EAC Secretariat; and managing distribution of benefits and costs as a cross-cutting issue.[4]  The 2006-10 EAC Development Strategy is currently in draft format and is expected to be adopted at the end of 2006.

10.               Under the Protocol on the Establishment of the EAC Customs Union (Article 3), the objectives of the customs union are: further liberalization of intra-regional trade in goods on the basis of mutually beneficial trade arrangements among member states; promotion of efficiency in production within the EAC; enhancement of domestic, cross-border and foreign investment in the EAC; and promotion of economic development and diversification in industrialization in the EAC. The Protocol's Annexes I to IX are on:  common external tariff (CET);  internal tariffs;  rules of origin;  anti-dumping measures;  subsidies and countervailing measures;  safeguards;  export processing zones; free port operations; and dispute settlement mechanism.

11.               In accordance with provisions of Article 75 of the EAC Treaty, the Protocol provides for: asymmetry in the liberalization of intra-EAC trade;  elimination of internal tariffs and other charges of equivalent effect;  elimination of non-tariff barriers;  establishment of a CET;  rules of origin;  anti-dumping measures;  subsidies and countervailing duties;  security and other restrictions to trade;  competition;  drawback, refund, and remission of duties and taxes;  customs cooperation; re-export of goods;  simplification and harmonization of trade documentation and procedures;  exemption regimes;  harmonized commodity description and coding system;  and freeports.[5]  However, EAC members have not yet fully implemented some of these provisions.  Areas still to be harmonized are internal taxes, customs procedures, other duties and charges on imports, and fees on production.  The EAC certificate of origin is not yet operational; the COMESA certificate is currently used.

12.               Under the Protocol, the customs union is to be established progressively over five years from the entry into force of the Protocol, which was signed on 2 March 2004, and entered into force on 1 January 2005.  The EAC CET, adopted as from 2005, has three bands (0, 10%, and 25%), although rates above 25% apply to a number of "sensitive" products (Chapter III(3)(i)).  EAC members are to review the maximum rate of the CET after 1 January 2010.[6]

13.               The free-trade area component of the EAC customs union is yet to be established. Trade in goods between Tanzania and Uganda, as well as imports from Tanzania and Uganda to Kenya, has been duty free since 1 January 2005, while goods from Kenya to Tanzania and Uganda are under either Category A (for immediate duty-free treatment) or Category B (gradual tariff reduction). Internal tariffs on Category B goods (some 880 tariff lines at the HS six-digit level in the case of Tanzania, and some 443 lines in the case of Uganda), specified in Annex II of the Protocol, are to be phased out as follows: a 10% tariff rate in 2005; 8% in 2006; 6% in 2007; 4% in 2008; 2% in 2009; and zero thereafter.[7]

14.               The EAC Customs Management Act was enacted on 16 December 2004.  It governs the administration of customs, including administrative and operational matters. According to the Act, the day-to-day operations of customs, including collection of revenue, will continue to be managed and administered by the respective national revenue authorities.  The revenue authorities in each member state, in conjunction with the ministries responsible for EAC affairs, Finance, Trade and Industry, are responsible for the gradual establishment of the EAC customs union

15.               EAC negotiations on trade in services are to commence in 2006 as part of the EAC common market. Burundi and Rwanda have applied to join the EAC, and high-level negotiations on their accession are advanced. They are expected to become EAC members before the end of 2006.

(3)   Institutional Structure

16.               The main institutions of the EAC are:  the Summit of Heads of State and/or Government;  Council of Ministers;  Coordination Committee;  sectoral committees;  East African Court of Justice; East African Legislative Assembly;  and the Secretariat.  In addition, Article 24 of the Protocol established the EAC Committee on Trade Remedies to handle:  rules of origin;  contingency trade remedies;  dispute settlement mechanism;  and any other matter referred to the Committee by the Council.  The EAC has the following autonomous institutions:  Lake Victoria Development Programme[8];  the East African Development Bank (EADB)[9];  Lake Victoria Fisheries Organization (LVFO)[10];  and the Inter-University Council for East Africa (IUCEA).[11]

17.               The Summit is responsible for, inter alia: the overall policy direction and functioning of the EAC; considering the annual progress reports and other reports submitted to it by the Council; and reviewing the state of peace, security, and good governance within the EAC, and the progress achieved towards the establishment of a political federation. Subject to the Treaty, the Summit may delegate the exercise of any of its functions to one of its members, to the Council or to the Secretary General. The Summit meets at least once a year, and may hold extraordinary meetings at the request of any member. It is chaired in turn by each member state for one year. The decisions of the Summit are taken by consensus.

18.               The Council of Ministers is the main policy decision-making institution. It initiates and submits bills to the Assembly; gives directions to the member States and to all other organs of the EAC other than the Summit, Court, and the Assembly; makes regulations, issues directives, takes decisions, and gives opinions in accordance with the provisions of the Treaty; considers the budget; submits annual progress reports to the Summit, for which it prepares the meetings agendas; establishes sectoral committees provided for by the Treaty; and implements the decisions and directives of the Summit.  The Council consists of ministers responsible for regional cooperation and any other ministers members may designate.  It meets twice a year, immediately after the Summit, or at the request of a member state or the chairperson of the Council.  It is chaired in turn by a minister of each member state.  The decisions of the Council are taken by consensus.

19.               The Coordination Committee (CC) is responsible for regional cooperation and coordinates the activities of the sectoral committees.  It also, inter alia, submits reports and recommendations to the Council either on its own initiative or upon the Council's request; implements the decisions of the Council; receives and considers reports by the sectoral committees;  and may request a sectoral committee to investigate any particular matter.  The CC consists of the permanent secretaries responsible for regional cooperation and any other permanent secretaries members may designate. It meets at least twice a year (before the meetings of the Council), and may hold extraordinary meetings at the request of the chairperson of the Committee.  It is chaired in turn by a permanent secretary from each member State.

20.               The sectoral committees formulate programmes and monitor their implementation. They meet as often as necessary and are responsible for setting out sectoral priorities; and submit, from time to time, sectoral reports and recommendations to the CC.  The CC recommends to the Council the composition of the sectoral committees.

21.               The East African Court of Justice, established under Article 9 of the Treaty, ensures that EAC law is interpreted and implemented in line with the Treaty. The Court has jurisdiction to hear and determine disputes between member states on the interpretation and application of the Treaty (if the dispute is submitted to it under a special agreement), and between the Community and its employees.  The Court became operational on 30 November 2001, and is temporarily located in Arusha, until the Summit determines its permanent seat. The six judges, two from each member, are appointed by the Summit from among sitting judges of any national court of judicature or from recognized jurists, while the Registrar is appointed by the Council.

22.               The East African Legislative Assembly provides a democratic forum for debate. It has a watchdog function, and ultimately is responsible for the legislative process. The Assembly interacts with the national assemblies of member states on EAC matters;  debates and approves the EAC budget; considers annual reports, annual audit reports, and any other reports referred to it by the Council; makes recommendations to the Council on the implementation of the Treaty; and recommends to the Council the appointment of the Clerk and other officers. The Assembly has 27 elected members, and five ex-officio members consisting of the three ministers for regional cooperation, the Secretary General and the Counsel to the Community.  A Speaker presides over the Assembly.

23.               The Secretariat, based in Arusha, is the executive organ of the EAC.  As the guardian of the Treaty, it ensures that regulations and directives adopted by the Council are properly implemented.  It is responsible for: the day-to-day administration of the Treaty;  coordinating and monitoring the implementation of Council and Community decisions;  arranging meetings, disseminating information, and keeping minutes of meetings of the EAC institutions (it is the depositary of all records of EAC); assisting in the harmonization of national policies and strategies of member states in so far as they relate to EAC;  and assisting in the negotiation of trade agreements with third parties.  The Secretariat is headed by a Secretary General, who is a citizen of a member State, and serves a fixed five-year term.  The core budget of the Secretariat is funded by equal contributions from the member states.


II.                trade ARRANGEMENTS INVOLVING EAC MEMBERS

(1)               Participation in the WTO

1.                   The EAC members became, individually, original WTO Members on 1 January 1995.[12]  They are neither signatories nor observers to any of the WTO plurilateral agreements. EAC members have not been involved directly, either as complainant or defendant, in any WTO dispute settlement proceedings. However, both Kenya and Tanzania have participated as third parties in the disputes  brought separately by Australia, Brazil, and Thailand, on "European Communities-export subsidies on sugar".[13]  The three EAC countries accord at least MFN treatment to all their trading partners.

24.               The EAC members attach great importance to the Doha Development Agenda (DDA). Their priorities in the DDA include: improved market access for their agricultural products through bound duty-free and quota-free access for all their products, and the removal of other non-tariff barriers, export subsidies and domestic support; the reduction of high tariffs and tariff escalation on non-agricultural products of interest to developing and LDCs; greater opportunities in services, particularly through the movement of natural persons, including less skilled labour; extension of geographical indications coverage beyond wines and spirits, in order to maintain the identity of indigenous export products; strengthening of S&D provisions; and the provision of meaningful technical assistance, including in capacity building, which will allow DCs and LDCs to participate fully and effectively in all negotiations, and ultimately to take advantage of the opportunities offered by the multilateral trading system. 

25.               According to the EAC members, to achieve a truly developmental outcome, the DDA must ensure that the outcome of the Doha negotiations supports poverty-reducing economic growth, and provide space for DCs and LDCs to pursue appropriate national policies that enhance welfare and foster economic development. The outcome of these negotiations must also strengthen and support the regional integration initiatives in the EAC countries and other regional trading arrangements on the African continent.  To determine how to participate fully in the Doha development process, the EAC countries have indicated that technical assistance and capacity building must support analytical and operational research at the country and regional levels, be aimed at mobilizing constituencies that have an interest in domestic policy reform, and be provided through multilateral initiatives.

26.               The EAC member states' technical assistance requirements relate to:  the harmonization of laws and regulations with WTO requirements;  notifications;  staff training, and establishment of institutional structures to facilitate the implementation and observance of Agreements;  and the formulation of policies that allow maximum benefit from trade reforms and the application of the WTO Agreements, and minimize costs.[14] A trade reference centre has been established by the WTO in the EAC Secretariat.

27.               Customs reform and capacity-building have been long-standing items on EAC countries' policy agenda.  The implementation of modern, WTO-consistent customs procedures is a priority.  Some of the main technical assistance needs in relation to customs are:  the training of officials in the implementation of the WTO Customs Valuation Agreement, including training on post-clearance auditing, and anti-fraud techniques and control; and the drafting or revision of legislation in specific areas.  The delivery of technical assistance in these areas would be part of a wider programme for the development of customs capacity, which is being supported by the IMF and bilateral donors.

28.               The development and implementation of standards and other technical requirements, including sanitary and phytosanitary (SPS) measures, are a key priority.  Regulations in these areas are still to be harmonized across EAC countries.  Technical assistance thus could focus on ensuring that revised or newly drafted legislation is in conformity with rules and practices provided for in relevant international agreements, the development of implementing legislation, and the development of institutional capacity required for enforcement.

29.               Technical assistance needs for intellectual property protection relate to the revision of existing legislation, the drafting of new legislation, the development of implementation capacity, and enforcement issues for Kenya.  As LDCs, Tanzania and Uganda were granted an extension of the transition period for the implementation of the TRIPS Agreement until 1 July 2013, which was due to expire on 1 January 2006.[15]

30.               The EAC countries are currently involved in trade negotiations with regional partners, such as the Cotonou Agreement;  and within the WTO under the Doha Development Agenda.  The different negotiating mandates and  timetables are liable to place considerable stress on EAC countries' institutional capacities.  Technical assistance could focus on helping them to identify negotiating priorities, and to anchor these in their overall programme of trade reform.

31.               Supply-side constraints affecting the EAC members are both of a generic (cross-cutting) nature and a sector-specific nature.  The former include the high cost and unreliability of certain public services – notably electricity and telecommunication services – and the high cost of private credit.  Most sector-specific constraints are discussed in detail in Chapter IV of the respective Annexes.  The most frequently identified needs are training in modern production and marketing techniques, and the provision of inputs and physical support facilities. 

32.               Despite recognition by the EAC member states of the importance of trade and trade policy reform to their development prospects, trade policy has yet to be integrated systematically into their development strategies. The discussion of trade policy tends to be dispersed across a number of policy statements whose relationship to each other is unclear.  One reason for this lack of integration is that trade-policy-making itself is not fully coordinated, as there is no operational structure to coordinate the work of the various departments and agencies involved in the formulation and implementation of trade policy, either at the national or EAC level.  A critical first step would be to achieve such coordination in trade-policy-making.

(2)               Common Market for Eastern and Southern Africa (COMESA)

33.               COMESA's aims are to deepen and expand the integration process for member countries by adopting general measures to liberalize trade.[16]  These include the removal of all tariff and non-tariff barriers and the adoption of a common external tariff;  free movement of capital, labour and goods, and the right of establishment in the region;  the adoption of a common set of standards, technical regulations, quality-control procedures, certification systems, and sanitary and phytosanitary regulations;  tax harmonization (including VAT and excise duties), and provisions on industrial cooperation in, for example, company law, intellectual property, and investment;  implementation of a harmonized competition policy;  and the establishment of a monetary union.[17]  The COMESA has been notified to the WTO under the Enabling Clause.[18]

34.               COMESA's Common External Tariff (CET) was to be in place by 2004, with rates of 0%, 5%, 15% and 30%, on capital goods, raw materials, intermediate, and final goods, respectively. However, the CET has not yet been implemented (July 2006);  and member states are conducting studies to reach a decision on the timing for its implementation.  Since most COMESA members have maximum tariff bands below 30%, discussions are under way on the possibility of reducing the agreed CET rate on final goods. On 31 October 2000, Djibouti, Egypt, Kenya[19], Madagascar, Malawi, Mauritius, Sudan, Zambia, and Zimbabwe eliminated tariffs (on a reciprocal basis) on COMESA-originating products.  Burundi and Rwanda joined this free-trade area on 1 January 2004.

35.               There are four alternative origin criteria under COMESA:  that goods are wholly produced in the region using no outside materials;  the imported content of goods is no more than 60% of the c.i.f. value of the total cost of materials used in production;  that goods contain no less than 35% ex-factory value added [20], reduced to 25% if the final product is considered to be of "particular importance" to the economic development of a member state[21];  or that there is a change of tariff classification heading following transformation.

36.               A monetary harmonization programme is to be implemented in four stages between 1992 and 2025.  The last stage should result in a full-fledged monetary union in which there will be either permanently fixed exchange rates or a single currency;  full harmonization of the member states' economic, budgetary, and monetary policies;  full integration of the financial structure;  a pooling of exchange reserves;  and the establishment of a single monetary authority.  A coordination body composed of experts from central banks and ministries of finance in the region has been set up to oversee implementation of the measures and ensure that the harmonization process makes progress towards monetary union.

37.               Several institutions have been established to assist COMESA members in their development.  The Eastern and Southern African Trade and Development Bank (PTA Bank) provides trade and project financing to public and private investors domiciled in a bank member state.[22]  The COMESA Clearing House has diminished in importance following liberalization of most members' foreign exchange regimes. Its role is being re-directed towards improving the efficiency of clearing operations to complement the services offered by commercial banks;  providing traders with some form of political insurance on intra-regional trade;  and facilitating monetary and fiscal policy harmonization within the region. Kenya and Uganda are members of the PTA Re-Insurance Company (ZEP-RE), which assists the development of the insurance and re-insurance industry in the COMESA region. The Africa Trade Insurance Agency (ATIA), launched in August 2001, is aimed at creating investor confidence by providing cover against political risk.[23]  Although promoted by COMESA, membership of ATIA is open to all the member states of the African Union (section (4)(iii)). The COMESA Court of Justice became operational in 1998.  Its general jurisdiction is to adjudicate upon all matters that may be referred to it under the Treaty.  Kenya and Uganda have not been involved in any formal disputes within this framework.

38.               The protocol on free movement of persons is to be implemented in several stages; the first stage of removing visa requirements was adopted in 2000.

(3)               SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

39.               The SADC Treaty was signed in 1992 with the objective of creating a development community that would achieve economic integration, including trade.[24]  Through regional cooperation and integration, the Community aims to provide balanced economic growth and development, political stability, and security for all 14 members.[25] Decisions and agreements are legally binding on members, and the Treaty provides for several protocols in specific areas, such as trade, finance, industry, agriculture, transport, and investment.

40.               The Trade Protocol, signed in 1996, is aimed at progressively establishing a SADC free-trade area, initially over eight years.  However, progress has been slow.  The Protocol was implemented in September 2000 after ratification by 11 members.[26]  To establish the FTA, products have been grouped under three main categories (A, B, and C).  Category A (mostly capital goods and equipment) were liberalized in the first year;  Category B (e.g. goods that constitute important sources of customs revenue) are to be liberalized gradually, by 2008[27];  and Category C (products deemed sensitive by member states), which are limited to a maximum of 15% of each member's total merchandise trade, are to be liberalized by 2012.  In addition, a fourth category of products (Category E), covers products ineligible for preferential treatment under general and security exceptions permissible under Articles 9 and 10 of the Protocol:  these are expected to make up a small list of products, so that by 2010 about 98% of intra-SADC merchandise trade will be duty-free.  The phase-down offers (i.e. under Categories B and C) are country specific. 

41.               A draft regulation on mutual assistance and cooperation in customs matters was approved on 31 March 2000;  this, inter alia, allows for joint inspections.[28]  The SADC Subcommittee on Customs Cooperation and Trade Facilitation finalized discussions on customs documentation (i.e. the format of bills of entry and certificates of origin), and commenced the monitoring process for removal of non-tariff barriers by member states by establishing systems for electronic validation of certificates of origin. Substantial progress has already been made on harmonizing customs and trade documentation. SADC rules of origin are being negotiated on a product-by-product basis. Negotiations on specific rules of origin are continuing for certain products, including wheat flour and products thereof, electrical products, and optical, photographic, measuring, and surgical instruments.[29]

42.               The long-term objective on sugar is to establish full liberalization of trade within the SADC region from 2013. This will depend on a review of the prevailing conditions five years after entry into force of the agreement. The SADC sugar market-access and cooperation agreement has now been  incorporated as an Annex to the amended Trade Protocol.

43.               A derogation for textiles and clothing has been granted to least developed members of  SADC (Malawi, Mozambique, Tanzania, and Zambia) allowing them to export (duty free but subject to quota) single-stage produced textiles and clothing, for five years starting from 1 August 2001.[30] Exports above the quota are subject to "double stage transformation" rules of origin.

44.               While the Trade Protocol has identified several non-tariff measures to be eliminated, such as import quotas, customs procedures, and export subsidies, it excludes other important non-tariff barriers (e.g. local-content requirements, levies and other charges, and import/export licensing).[31] 

45.               The SADC Protocol on Tribunal provides for a tribunal to be established to adjudicate members' disputes arising from the treaty, and from subsidiary instruments, that cannot be settled by consultation.[32]  Its composition, powers, functions, procedures, and other related matters are prescribed in the Protocol;  the rules of procedure were agreed by SADC members in August 2000.[33]  Creation of the Tribunal, however, will not take place until after the conclusion of current reorganization plans for SADC;  decisions will be final and binding.  In the meantime, Annex IV of the SADC Amendment Protocol of 2000 provides for a dispute settlement mechanism based on the WTO model.

46.               SADC intends to extend trade liberalization to services, but negotiations are yet to commence.  The SADC Free Trade Area has been notified to the WTO.[34]

(4)               Other Trade Arrangements

47.               The EAC members are eligible for various non-reciprocal trade preferences from developed partners. However, their use of these preferences remains limited.  Recent studies have attributed the under-performance of non-reciprocal preferential trade arrangement schemes to a host of external factors.  They are observed to exclude, or include on a limited basis, products in which developing countries have the greatest comparative advantages (agricultural goods (processed products in particular), textiles, clothing and footwear), and face MFN tariff peaks.  Burdensome rules of origin (e.g. a high value-added criterion) could serve as a deterrent to small countries with limited technological capacity, and may pose problems for meeting the documentation requirements;  and stringent standards and technical regulations may add to these difficulties.  In addition, these preferences may be considered uncertain because they can be revoked or modified unilaterally, and the provisions for graduating countries out of particular sectors could weaken the incentive for large-scale investment in the activities concerned.  Uncertainty is increased by the inclusion of various non-trade (political, labour, social, and environmental) concerns as conditions for accessing all or certain aspects of the available preferences. Furthermore, even without these constraints, liberalization of preferential markets (including through the increasing number of regional trade agreements) continues to erode existing preferences.[35]

(i)    Cotonou Agreement, and the Everything-but-Arms (EBA) Initiative of the EC

48.               Kenya, Tanzania and Uganda are signatories to the Cotonou Agreement (successor to the Lomé Convention) between the EC and 78 African, Caribbean and Pacific (ACP) states, which was signed on 23 June 2000 and entered into force in April 2003.[36]  The agreement builds upon three interlinked pillars with the objective of reducing poverty: a political dimension; development and finance cooperation; and economic and trade cooperation. Under the former, political dialogue is focused on, inter alia,  issues of mutual concern, such as arms trade, excessive military expenditure, drugs and organized crime, or ethnic, religious or racial discrimination. The dialogue also encompasses a regular assessment on human rights, democratic principles, the rule of law and good governance.[37]

49.               Under economic and trade cooperation, ACP countries benefit from non-reciprocal trade preferences during an interim period (2001-07).[38] These include duty-free treatment on industrial, processed agricultural, and fishery products, subject to a safeguard clause.  For certain products (bananas, beef and veal, sugar, and rice), the EC provides special market access under "commodity protocols".  The preferential rules of origin contain product-specific requirements[39], and allow for regional cumulation.  At the end of the interim period (31 December 2007 at the latest), these unilateral preferences will be replaced by WTO-compatible reciprocal economic partnership agreements (EPAs) between the EC and individual ACP countries or groups of countries.

50.               The primary objectives of the EPAs are to foster sustainable development, integrate the ACP states into the world economy and fully comply with the prevailing WTO rules.  The basic guiding principle for EPAs is to build on and reinforce ACP regional integration processes, and provide for appropriate differentiation and asymmetry to take account of the level of development and their socio‑economic impact on ACP countries.  EPAs will provide for the progressive elimination of tariffs and non-tariff measures between the parties, on both goods and services, and are expected to address other trade-related issues.[40]  Development concerns will be reflected through flexibility vis‑à‑vis depth of liberalization, its asymmetry, length of transition periods, trade coverage and exceptions, and through assistance from the EC.  All EPA negotiations started formally, in September 2002, to define the format, structure, and principles for the negotiations, and horizontal issues of interests to all parties.  Kenya and Uganda are participating in the EPA negotiations as members of the Eastern and Southern Africa (ESA) region while Tanzania is participating under SADC.

51.               The EAC countries have received financial assistance from the EC under, inter alia, the European Development Fund (EDF) through the national or regional indicative programmes;  and the European Investment Bank for commercial loans.

52.               The EC adopted the EBA amendment to its GSP scheme on 26 February 2001.  The new regulation was applicable from 5 March 2001.  The EBA extends duty- and quota-free access to all products originating in the LDCs, except for arms and ammunition.  The programme includes all agricultural products, except fresh bananas, rice, and sugar.  Extension of the programme to these three commodities will follow specific schedules:

for fresh bananas, the EBA provides for full liberalization through reduction of the EC 2001 tariff by 20% each year between 1 January 2002 and 1 January 2006;

for rice, full liberalization will be phased in by gradually reducing the EC tariff to zero between 1 September 2006 and 1 September 2009.  In the meantime, LDC rice can enter duty free within the limits of a tariff quota.  The initial quantities of the quota are based on best LDC export levels to the EC in recent years, plus 15%.  The quota will grow by 15% every year;  and

for sugar, full liberalization will be phased in between 1 July 2006 and 1 July 2009 through gradual reduction of the EC tariff to zero.  In the meantime, LDC raw sugar can enter duty free within the limits of a tariff quota.  The quota will increase from 74,185 tons (white-sugar equivalent) in 2001/02 to 197,355 tons in 2008/09.[41]

(ii)   African Growth and Opportunity Act (AGOA)

53.               Kenya, Tanzania, and Uganda are eligible for various trade preferences under the U.S. AGOA, contained in the U.S. Trade and Development Act 2000, as amended.[42]  The AGOA extends the product coverage of the U.S.  GSP scheme, but only to African countries.  Under the AGOA, eligible countries qualify for duty-free and quota-free access to the U.S. market (except for "wearing apparel" products) for a range of products, including selected agricultural and textile products until 2015.[43]  To be eligible, African countries must make progress in:  establishing a market-based economy; developing the rule of law and political pluralism; eliminating discriminatory barriers to U.S. trade and investment; protecting intellectual property; combating corruption; protecting human and worker rights;  and removing certain practices of child labour.[44] 

54.               AGOA eligibility does not automatically imply eligibility for the "wearing apparel" provisions;  these are governed by a separate set of conditions and associated rules of origin.[45]  To export apparel (and certain textile items) to the United States duty-free under the AGOA, countries must implement a "visa system" that ensures compliance with the required rules of origin.  Kenya, Tanzania, and Uganda were declared eligible for the preferences under the apparel provisions in July 2004.

55.               Measures implemented in order to better utilize the opportunities under the AGOA include:  concessionary import duties of 2.5% on industrial equipment used by the beneficiary country to produce AGOA exports, and the establishment of AGOA-dedicated desks at the country's ports.

(iii)  African Economic Community (AEC) and the African Union (AU)

56.               Kenya, Tanzania, and Uganda are members of the African Economic Community (AEC), which was established by the Abuja Treaty in June 1991.  The treaty provides for the creation of an African Common Market in six stages over a 34-year period.  A key aspect of this integration process is the coordination and harmonization of tariff and non-tariff measures, among various sub-regional trade groupings (referred to as regional economic groupings), in order to create a continental customs union.  The AEC was established under the Organization of African Unity (OAU), which was succeeded by the African Union (AU).  The EAC is accredited by the AU as a regional block.

57.               The Constitutive Act of the AU was adopted in Lomé in July 2000.  The AU was established with a view to, inter alia, accelerating the process of regional integration, in order to enable Africa to play its "rightful role" in the global economy, while addressing other forms of social, economic, and political problems on the continent.  The AU is being structured largely on the model of the European Union.  It would comprise a Council of Ministers, Commission, Parliament, Central Bank, Monetary Fund, Court of Justice, and a Security Council similar to that of the UN.

58.               One of the major initiatives under the AU is the New Partnership for African Development (NEPAD).  The goals of NEPAD are to halt the marginalization of Africa in the globalization process; to eradicate widespread and severe poverty; and to promote accelerated growth and sustainable development.  Trade and trade-related measures outlined under NEPAD to promote African exports include:  promotion and improvement of regional trade agreements;  inter-regional trade liberalization;  harmonization of tariffs, rules of origin, and product standards; reduction of export taxes, and of costs of transactions and operations; and promotion of African exporting and importing companies.  NEPAD also aims to ensure the active participation of African countries in the multilateral trading system.  In this respect, NEPAD supports the view that multilateral trade negotiations must take into account Africa's special concerns.  In addition, African States are encouraged to tackle supply-side impediments to export production; diversify exports;  give the necessary political impetus to deepen the various integration initiatives on the continent;  and secure and stabilize preferential treatment by key developed country partners.

(iv)  Regional Integration Facilitation Forum (RIFF)

59.               The Regional Integration Facilitation Forum, formerly known as the Cross-Border Initiative (CBI), aims to move member countries (including EAC member states) towards increased economic integration by facilitating private investment, trade, and payments between them, as well as cross‑border mobility of labour and capital. Member states are countries in eastern and southern Africa and the Indian Ocean.[46]

60.               The RIFF was developed in close collaboration with the economic integration organizations in the region:  as a forum, it is to reinforce and complement their efforts.  Launched in 1992, the RIFF is co-sponsored by the European Commission, the International Monetary Fund, the World Bank, and the African Development Bank. It has no Secretariat at the regional level and works on a voluntary basis.

(v)   Intergovernmental Authority on Development (IGAD)

61.               Formerly known as the Inter-Governmental Authority for Drought and Development (IGADD)[47], the IGAD was set up in January 1986 by seven east African countries:  Djibouti, Ethiopia, Eritrea, Kenya, Somalia, Sudan, and Uganda.  Its initial aim was to combat drought and desertification.  In March 1996, at a summit held in Nairobi, the IGAD adopted a new charter to revive and expand its mandate to include new priority areas, such as economic cooperation, conflict prevention, and the resolution and management of humanitarian affairs.  IGAD obtained official recognition from the Organization of African Unity (now the African Union) as a regional economic organization in June 1997, and started to focus more on economic integration.[48]

(vi)  Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC)

62.               Formerly known as the Indian Ocean Rim Initiative, the IOR-ARC was established in Mauritius in March 1997.[49]  Under its Charter, the IOR-ARC aims to build and expand mutually beneficial cooperation through a consensus based, evolutionary, and non-intrusive approach.  One of the main objectives of the Association is to eliminate tariffs, for all its members, by 2020.  Some other key objectives are:  (i) promotion of sustained growth and balanced development of the region and its members, and creation of common ground for regional economic cooperation;  (ii) formulation and implementation of projects for economic cooperation on, inter alia, trade facilitation, promotion of foreign direct investment, scientific and technological exchanges, tourism, movement of natural persons and services providers on a non-discriminatory basis;  (iii) strengthening cooperation and dialogue among its members on global economic issues, and where desirable, development of  shared strategies and common positions on issues of mutual interest;  and (iv) fostering cooperation in the development of human resources, particularly through closer linkages among training institutions, universities and other specialized institutions.

63.               The highest authority of the association is the Council of Foreign Ministers (COM), which inter alia, formulates policy, reviews progress on cooperation issues, makes decisions on new areas of cooperation and on the establishment of additional mechanisms or matters of general interest. The Committee of Senior Officials (CSO), composed of government officials, reviews the implementation of the COM decisions.  In cooperation with the Indian Ocean Rim Business Forum (IORBF) and the Indian Ocean Rim Academic Group (IORAG), the CSO also establishes economic cooperation priorities, and develops, monitors, and coordinates work programmes.  The Working Group on Trade and Investment (WGTI) was established in 1999;  its main objectives are trade facilitation, trade liberalization, and economic and technical cooperation.  An IOR-ARC Coordinating Secretariat, based in Mauritius, coordinates, services, and monitors the implementation of policy decisions and work programmes.  A High Level Task Force (HLTF) was established in April 2001 with a view to studying the future direction of the Association.

(vii) Generalized System of Preferences (GSP)

64.               The EAC countries also benefit from non-reciprocal preferential treatment from many industrialized countries under the Generalized System of Preferences.


III.             Common trade policy measures

(2)               Introduction

2.                   Applied customs tariffs, rules of origin, import prohibitions, and trade remedy regulations have been harmonized through the East African Community (EAC).  The EAC common external tariff entered into force in January 2005, with an average applied MFN rate of 12.9%.  Tariffs on agricultural goods (WTO definition) remain relatively high, with an average of 19.7%.  Around 99% of all tariff lines carry rates of 0%, 10%, or 25%;  some 58 tariff lines carry higher rates, mainly on dairy goods, wheat, and sugar.  The move from national tariffs to the common external tariff has reduced average tariff protection in Kenya and Tanzania, and increased it in Uganda. 

65.               The free-trade area component of the customs union has implied the dismantling of tariffs on most intra-EAC trade.  Nonetheless, tariffs remain in place on exports of 880 items from Kenya to Tanzania, and 443 items from Kenya to Uganda, and are to be phased out by 2010.  Members are also committed to removing non-tariff barriers on intra-EAC trade, but have been slow in dismantling them;  regulations on import prohibitions have been harmonized. 

66.               While the EAC has adopted regulations on contingency measures, no anti-dumping, countervailing or safeguard actions have yet been taken.  The EAC is increasingly adopting joint standards;  as at September 2005, 566 joint standards had been adopted by the EAC.  The EAC has also adopted provisions that allow member states  to establish manufacturing under bond schemes, export processing zones, and duty drawback schemes;  sales of goods within the customs territory, under any such scheme, is limited to 20% of production.  An EAC Competition Law is under consideration (as at July 2006).

(2)   Customs Procedures

(ii)               Customs clearance and valuation

67.               The principles of EAC customs procedures and valuation are laid down in the EAC Customs Management Act 2004.  Nonetheless, in practice, customs procedures have not been fully harmonized by EAC members. Customs valuation is based on the transaction value as provided for by the WTO Agreement on Implementation of Article VII of GATT 1994.

(ii)               Rules of origin

68.               The EAC rules of origin are laid down in Annex III to the Protocol on the establishment of the customs union.  Goods are defined as originating in the country where they are wholly produced or undergo substantial transformation.  The criterion of substantial transformation is satisfied if the imported content of the goods is no more than 60% of the c.i.f. value of the cost of materials used in their production, and the value-added resulting from the production process (that should lead to a change in tariff heading) accounts for at least 35% of the ex-factory cost of the goods.  In order to qualify as originating in the region, goods must be consigned directly from a member state.  The Annex also provides for a model certificate of origin.

(3)   Tariffs, and Other Duties and Charges

(iii)             MFN applied tariff structure

69.               The EAC tariff is based on the 2002 version of the Harmonized Commodity and Coding System (HS).  Tariffs are applied on the c.i.f. value of imports at the point of entry to the customs union.  There are few national exemptions from the EAC common external tariff:  for a period of 24 months ending on 30 June 2008, Kenya is allowed to impose lower tariffs on rice imports from Pakistan.  Over the same period, Tanzania is allowed to impose lower tariffs on imports of wheat (10% instead of 25%) and barley (0% instead of 10%).  The 2005 tariff contains 5,429 lines at the HS eight-digit level, of which 99.8% carry ad valorem duties (Table III.1);  the other lines carry compound tariffs.  There are no seasonal or variable tariffs, or tariff quotas.  Some 36.2% of tariff lines are duty free, up from 16.4% in 2000 for Uganda, 1,7% in 1999 for Tanzania, and 3.7% in 1999 for Kenya (Chart III.1).  Some 99% of all tariff lines carry rates of 0%, 10%, or 25%, with 25% being the modal rate and applicable to 40% of all tariff lines.  Some 58 tariff lines of "sensitive" items carry higher rates (Table III.2).  The products concerned include dairy goods, wheat, and sugar.

Table III.1

Structure of MFN tariffs in the EAC, 2006

(Per cent)

 

MFN
2005

U.R.

Kenya

Tanzania

Uganda

1.   Bound tariff lines (% of all tariff lines)

..

14.9

13.5

15.9

2.   Duty-free tariff lines (% of all tariff lines)

36.2

0.0

0.0

0.0

3.   Non-ad valorem tariffs (% of all tariff lines)

0.2

0.0

0.0

0.0

4.   Tariff quotas (% of all tariff lines)

0.0

0.0

0.0

0.0

5.   Non-ad valorem tariffs with no AVEs (% of all tariff lines)

0.2

0.0

0.0

0.0

6.   Simple average tariff rate

12.9

95.6

120.0

73.3

 

Agricultural products (WTO def.)a

19.7

100.0

120.0

77.5

 

Non-agricultural products (WTO def.)b

11.8

54.4

120.0

50.4

 

Agriculture, hunting, forestry and fishing (ISIC 1)

17.3

96.5

120.0

75.1

 

Mining and quarrying (ISIC 2)

5.3

..

..

..

 

Manufacturing (ISIC 3)

12.7

95.1

120.0

72.5

7    Domestic tariff "spikes" (% of all tariff lines)c

0.8

0.0

0.0

0.0

8.   International tariff "spikes" (% of all tariff lines)d

41.1

100.0

100.0

100.0

9.   Overall standard deviation of applied rates

11.9

14.3

0.0

13.1

10. "Nuisance" applied rates (% of all tariff lines)e

0.0

0.0

0.0

0.0

..              Not available.

a              WTO Agreement on Agriculture.

b              Excluding petroleum.

c              Domestic tariff spikes are defined as those exceeding three times the overall simple average applied rate (indicator 6).

d              International tariff peaks are defined as those exceeding 15%.

e              Nuisance rates are those greater than zero, but less than or equal to 2%.

Source:    WTO Secretariat calculations, based on data provided by the EAC;  and CTS database.

 

Table III.2

"Sensitive" products subject to high tariffs, 2006

 

HS code

Description

MFN duty

 

 

Milk and cream not concentrated nor containing added sugar

 

1

0401.1000

-        Of a fat content, by weight, not exceeding1%

60%

2

0401.2000

-        Of a fat content, by weight, exceeding 1% but not exceeding 6%

60%

3

0401.3000

-        Of a fat content, by weight, exceeding 6%

60%

 

 

Milk and cream concentrated or containing added sugar

 

4

0402.1000

-        In powder, granules or other solid forms, of a fat content, by weight, not   exceeding 1.5%

60%

5

0402.2110

---      Specially prepared  for infants

60%

6

0402.2190

---      Other

60%

7

0402.2910

---      Specially prepared  for infants

60%

8

0402.2990

---      Other

60%

9

0402.9110

---      Specially prepared  for infants

60%

10

0402.9190

---      Other

60%

11

0402.9910

---      Specially prepared  for infants

60%

12

0402.9990

---      Other

60%

 

 

Wheat and meslin other than durum wheat

 

13

1001.9020

---      Hard wheat

35%

14

1001.9090

-- Other

35%

15

1005.9000

-        Maize (corn) other than seed

50%

16

1006.1000

-        Rice in the husk (paddy or rough)

75% or US$200/MT whichever is higher

17

1006.2000

-        Husked (brown) rice

75% or US$200/MT whichever is higher

18

1006.3000

-        Semi-milled or wholly milled rice, whether or not polished or glazed

75% or US$200/MT whichever is higher

19

1006.4000

-        Broken rice

75% or US$200/MT whichever is higher

Table III.2 (cont'd)

20

1101.0000

Wheat or meslin flour.

60%

21

1102.2000

-        Maize (corn) flour

50%

 

 

Cane sugar

 

22

1701.1110

---      Jaggery

35%

23

1701.1190

---      Other

100% or US$200/MT whichever is higher

 

 

Beet sugar

 

24

1701.1210

---      Jaggery

35%

25

1701.1290

---      Other

100% or US$200/MT whichever is higher

26

1701.9100

-- Other sugar containing added flavouring or colouring matter

100% or US$200/MT whichever is higher

27

1701.9910

---      Other sugar for industrial use

100% or US$200/MT whichever is higher

28

1701.9990

---      Other sugar

100% or US$200/MT whichever is higher

29

2402.2010

---      Cigarettes not exceeding 72 mm in length including the filter tip

35%

30

2402.2090

---      Other

35%

31

2403.1000

-        Smoking tobacco, whether or not containing tobacco substitutes

35%

32

2523.2900

-- Portland cement other than white

55%

33

3605.0000

Matches, other than pyrotechnic articles of heading 36.04

50%

34

5208.5110

---      Khanga, Kikoi, and Kitenge

50%

35

5208.5210

---      Khanga, Kikoi, and Kitenge

50%

36

5209.5110

---      Khanga, Kikoi, and Kitenge

50%

37

5210.5110

---      Khanga, Kikoi, and Kitenge

50%

38

5211.5110

---      Khanga, Kikoi, and Kitenge

50%

39

5212.1510

---      Khanga, Kikoi, and Kitenge

50%

40

5212.2510

---      Khanga, Kikoi, and Kitenge

50%

41

5513.4110

---      Khanga, Kikoi, and Kitenge

50%

42

5514.4110

---      Khanga, Kikoi, and Kitenge

50%

43

6211.4210

---      Khanga, Kikoi, and Kitenge

50%

44

6211.4310

---      Khanga, Kikoi, and Kitenge

50%

45

6211.4910

---      Khanga, Kikoi, and Kitenge

50%

46

6302.2100

-- Bed linen, printed, other than knitted or crocheted, of cotton

50%

47

6302.3100

-- Bed linen, not printed, other than knitted or crocheted, of cotton

50%

48

6302.5100

-- Table linen, other than knitted or crocheted, of cotton

50%

49

6302.9100

-- Other toilet linen and kitchen linen than of terry towelling, of cotton

50%

50

6305.1000

-        of jute or of other textile bast fibres of heading 53.03

35%

51

6309.0000

Worn clothing and other worn articles.

45% or US$0.3/kg whichever is higher

52

8309.1000

-        Crown corks

40%

53

8506.1000

-        Manganese dioxide

35%

54

8506.3000

-        Mercuric oxide

35%

55

8506.4000

-        Silver oxide

35%

56

8506.5000

-        Lithium

35%

57

8506.6000

-        Air-zinc

35%

58

8506.8000

-        Other primary cells and primary batteries

35%

Source:    WTO Secretariat estimates, based on data provided by the authorities.

70.               The average applied MFN tariff was 12.9% in 2005 (Table III.3).  The coefficient of variation of 0.92 indicates moderate tariff dispersion.  MFN tariffs on non-agricultural products (WTO definition) are slightly lower, with an average of 11.9%;  the tariffs on agricultural goods remain relatively high, with an average of 19.7%:  tariffs are particularly high on dairy products (with an average rate of 42.5%), grains (28.3%), and tobacco (28.0%).  Tariffs are relatively low on non-electric machinery (with an average rate of 3.5%),  chemicals and photographic supplies (4.5%),  and cut flowers and plants (5.4%).  Using the ISIC (Revision 2) definition of sectors, agriculture, hunting, forestry, and fishing has the highest tariffs (17.3% on average), followed by manufacturing (12.8%), and mining and quarrying (5.8%).  The food industry is the most protected activity (Chart III.2).

Table III.3

Summary analysis of the East African Customs Union MFN tariff, 2006

Analysis

No. of linesa

Applied 2006 rates

 

Imports 2004 (US$ million)

No. of lines
used

Simple avg. tariff
(%)

Range tariff
(%)

Std-dev (%)

CV

 

Kenya

Tanzania

Uganda

Total

5,429

5,428

12.9

0-100

11.9

0.9

 

4,563.4

2,531.2

1,656.6

By WTO definitionb

 

 

 

 

 

 

 

 

 

 

Agriculture

729

729

19.7

0-100

13.9

0.7

 

494.9

391.9

283.2

Live animals and products thereof

97

97

23.2

0-25

6.5

0.3

 

1.1

3.6

1.1

Dairy products

24

24

42.5

25-60

17.9

0.4

 

3.3

3.1

2.1

Coffee and  tea, cocoa, sugar, etc.

134

134

24.6

0-100

17.2

0.7

 

102.0

69.6

56.4

Cut flowers and plants

37

37

5.4

0-25

6.8

1.3

 

10.6

0.5

0.6

Fruit and vegetables

155

155

24.8

10-25

1.7

0.1

 

11.5

5.6

15.0

Grains

21

21

28.3

0-75

27.4

1.0

 

183.8

191.6

110.3

Oil seeds, fats, oils and their products

77

77

12.6

0-25

8.7

0.7

 

116.5

82.7

68.6

Beverages and spirits

41

41

24.6

10-25

2.3

0.1

 

18.4

14.7

11.8

Tobacco

10

10

28.0

25-35

4.8

0.2

 

27.1

4.5

2.0

Other agricultural products

133

133

6.9

0-25

8.8

1.3

 

20.7

16.0

15.1

Non-agriculture (excl. petroleum)

4,673

4,672

11.9

0-55

11.2

0.9

 

2,991.8

1,738.6

1,214.7

Fish and fishery products

117

117

24.1

0-25

4.2

0.2

 

5.9

0.6

0.6

Mineral products, precious stones and precious metals

336

336

13.9

0-55

10.8

0.8

 

233.9

124.7

90.2

Metals

615

615

9.6

0-40

9.1

0.9

 

411.4

195.3

145.3

Chemicals and photographic supplies

904

904

4.5

0-25

8.6

1.9

 

585.7

306.7

220.8

Leather, rubber, footwear and travel goods

167

167

12.7

0-25

9.2

0.7

 

70.8

62.6

54.4

Wood, pulp, paper and furniture

269

269

16.5

0-25

10.7

0.6

 

265.5

105.7

95.5

Textiles and clothing

872

871

21.4

0-50

8.6

0.4

 

159.9

102.5

90.5

Transport equipment

156

156

7.3

0-25

9.7

1.3

 

458.3

254.2

158.0

Non-electric machinery

533

533

3.5

0-25

6.7

1.9

 

360.5

358.3

150.6

Electric machinery

259

259

11.2

0-35

10.1

0.9

 

264.2

148.7

149.9

Non-agricultural articles n.e.s.

445

445

15.3

0-35

10.9

0.7

 

175.7

79.2

58.9

By ISIC sectorc

 

 

 

 

 

 

 

 

 

 

Agriculture, hunting, forestry, and fishing

308

308

17.3

0-75

12.3

0.7

 

206.4

162.5

100.5

Mining

105

105

5.8

0-25

8.2

1.4

 

576.2

9.7

12.9

Manufacturing

5,015

5,014

12.8

0-100

11.9

0.9

 

3,780.8

2,359.0

1,543.3

By stage of processing

 

 

 

 

 

 

 

 

 

 

Raw materials

652

652

13.5

0-75

13.0

1.0

 

921.7

262.5

180.1

Semi-processed products

1,793

1,792

10.1

0-100

12.0

1.2

 

1,028.8

473.5

348.0

Fully-processed products

2,984

2,984

14.4

0-60

11.4

0.8

 

2,612.8

1,795.2

1,128.5

a               Total number of lines is listed.  Tariff rates are based on a lower frequency (number of lines) since lines with no ad valorem equivalents are  excluded.

b        Twenty seven tariff lines are excluded from both WTO agriculture and non-agriculture definitions (essentially petroleum products).

c        International Standard Industrial Classification (Rev.2).  Electricity, gas, and water are excluded (one tariff line).

Note:         CV = coefficient of variation.

Source:    WTO Secretariat estimates, based on data provided by the EAC authorities;  and Imports 2004 from UNSD, Comtrade database.

71.               In aggregate, the EAC's tariff shows a pattern of mixed escalation:  negative from the first stage of processing (with an average tariff of 13.5%) to semi-finished products (with an average of 10.1%), and then positive to fully processed goods on which tariffs average 14.4%.  Further disaggregation of the tariff at ISIC (Revision 2) two-digit level shows positive escalation mainly in the textiles and apparel industry, with average tariffs of 2.3% for products at the first stage of processing, 19.9% for semi-processed goods, and 24.2% for fully processed goods (Chart III.3).

72.               The EAC member states have bound their tariffs individually.  Bindings cover between 13.5% and 15.9% of all tariff lines: all tariffs on agricultural products and between 0.1% and 2.9% of non-agricultural products, depending on the member state (see Annexes).  For eleven lines, applied compound tariffs could exceed bound ad valorem rates, depending on the unit import price of the product (Table III.4).

Table III.4

Products for which applied MFN rates may be higher than the final bound rate, 2006

HS code

Description

Applied MFN tariff

Bound rates (UR)

Kenya

Tanzania

Uganda

1006.1000

-        Rice in the husk (paddy or rough)

75% or US$200/MT whichever is higher

100%

75%

75%

1006.2000

-        Husked (brown) rice

75% or US$200/MT whichever is higher

100%

75%

75%

1006.3000

-        Semi-milled or wholly milled rice,   whether or not polished or glazed

75% or US$200/MT whichever is higher

100%

75%

75%

1006.4000

-        Broken rice

75% or US$200/MT whichever is higher

100%

75%

75%

1701.1110

---      Jaggery

100% or US$200/MT whichever is higher

100%

100%

100%

1701.1190

---      Other

100% or US$200/MT whichever is higher

100%

100%

100%

Table III.4 (cont'd)

1701.1210

---      Jaggery

100% or US$200/MT whichever is higher

100%

100%

100%

1701.1290

---      Other

100% or US$200/MT whichever is higher

100%

100%

100%

6305.1000

-        Of jute or of other textile bast fibres of      heading 53.03

45% or US$0.45 per bag whichever is higher

45%

45%

45%

6309.0000

Worn clothing and other worn articles.

US$0.75/kg. or 50% whichever is higher

50%

50%

50%

Source:    WTO Secretariat estimates, based on online data;  and CTS, WTO database.

(iii)             Tariff preferences

73.               In accordance with Article 10 of the Protocol on the Establishment of the EAC Customs Union, members began eliminating tariffs on intra-EAC trade in January 2005.  Tariffs were abolished completely on trade between Uganda and Tanzania, and on exports from these two countries to Kenya.  However, various goods (the so-called Category B goods) exported from Kenya to Tanzania or Uganda continue to be subject to tariffs (Chapter I(2)).

74.               EAC members also grant tariff preferences on a reciprocal basis under trade agreements in which they participate individually.  Consequently, tariff preferences may differ from one country to another.

75.               Since 2004, negotiations on an Economic Partnership Agreement have been going on between the EAC and the European Union. 

(iv)             Duty and tax exemptions and concessions

76.               EAC members have agreed to harmonize their duty and tax exemption and concession schemes.  However, these have not yet been harmonized and are still laid down in national laws (as at July 2006). 

(v)               Other duties and charges

77.               EAC members have bound other duties and charges individually.  No import duties, other than tariffs, are provided for by the EAC trade regime.  However, members individually impose other duties and charges.  Moreover, internal taxes have not yet been harmonized.

(4)   Contingency Measures

78.               No anti-dumping, countervailing or safeguard measures have been taken by EAC members since 2000.

79.               Provisions on contingency measures are laid down in Articles 16 to 20 and Article 24 of the Protocol on the Establishment of the East African Customs Union.  Article 20 of the Customs Union Protocol calls upon member states  to cooperate in the detection and investigation of dumping, subsidies, and sudden surge in imports, and in the imposition of measures to curb such practices.  The Protocol also provides for the establishment of an East African Community Committee on Trade Remedies.  This Committee is to handle any matters pertaining to anti-dumping, safeguard, and countervailing measures.  It is composed of nine members, of which each member state may nominate three.  The Committee determines its own procedures and has the following functions:  initiation of investigations, through the investigating authorities of member states;  affirmative or negative determinations on investigations;  recommendation of provisional measures to prevent injury to a domestic industry where preliminary affirmative determination has been made;  and annual review of the implementation of measures.

80.               Dumping is prohibited if it causes or threatens to cause material injury to an established industry in any of the member states;  materially retards the establishment of a domestic industry;  or frustrates the benefits expected from the removal or absence of duties and quantitative trade restrictions between the member states.  Provisions on the implementation of anti-dumping measures are laid down in Annex IV to the Customs Union Protocol.

81.               Safeguard measures may be applied by member states  in situations where there is a sudden surge in imports of a product into a member state under conditions that cause or threaten to cause serious injury to domestic producers.  During a transitional period until 2009, member states  may propose to the EAC Council to take safeguard measures if an injury results from the imposition of the common external tariff.  Provisions on the implementation of safeguard measures are laid down in Annex VI to the Customs Union Protocol.

82.               The EAC may impose countervailing measures for the purpose of offsetting the effect of subsidies.  The countervailing duty shall be equal to the amount of the subsidy estimated to have been granted on the production or export of the good.  Provisions on the implementation of countervailing measures are laid down in Annex V to the Customs Union Protocol.

(5)   Import Prohibitions, Restrictions, and Licensing

83.               The Second Schedule to the EAC Customs Management Act contains a list of prohibited imports.  The list includes:  pornographic material, narcotic drugs, hazardous wastes and their disposal, used tyres, and various agricultural and industrial chemicals.  In addition, the Act allows EAC member states to maintain their import prohibitions in force for a transitional period.  The Second Schedule also contains an import permit requirement for 31 product groups, including arms and ammunition, worked and unworked ivory, ozone-depleting substances, genetically modified products, non-indigenous species of fish, historical artefacts, and endangered species of world flora and fauna in accordance with CITES.

(6)   Standards and Other Technical Requirements

84.               Article 13 of the Protocol on the Establishment of the East African Customs Union obliges members states  to remove all non-tariff barriers (NTBs), with immediate effect, and not to impose any new ones.  Furthermore, EAC member states must formulate a mechanism for identifying and monitoring the removal of NTBs, including standards and technical requirements.  Substantial progress has still to be achieved in this direction.

85.               The adoption of joint standards is an important objective for the EAC.  As at September 2005, 566 joint standards had been adopted by the EAC.  The East African Standards Committee develops new standards or harmonizes existing ones;  it is composed of representatives of the three national bureaux of standards and of the private sector.  It has four technical subcommittees: on standards, quality assurance, metrology, and testing.  The initiative to develop or harmonize standards may come from member states.  The common standards/technical requirements are adopted by the Council of Ministers.

(7)   Export Prohibitions, Restrictions, and Licensing

86.               The export of goods listed in Part A of the Third Schedule of the EAC Customs Management Act is prohibited.  The list does not contain any items, but refers to export prohibitions decided and enforced by individual member states.

87.               Export authorization is required for products listed in Part B of the Third Schedule.  Items on this list include:  waste and scrap of ferrous cast iron, timber from wood grown in EAC member states, fresh unprocessed fish (Nile perch and tilapia), cloves, and wood charcoal.  In addition, under legislation in force as at January 2005, EAC members may impose export authorization requirements.

(8)   Export Assistance

88.               The export assistance regime is yet to be fully harmonized at the EAC level.  Both the EAC Customs Management Act and the Protocol on the Establishment of the East African Customs Union contain provisions that allow member states  to establish manufacturing under bond, export processing zone, and duty drawback schemes.  Pursuant to Article 25 (3) of the Protocol, the sale of goods, in the customs territory, under any of these schemes is subject to authorization by a competent authority and limited to 20% of the annual production of the company. Pursuant to the Third Schedule of the Customs Management Act, warehoused goods and goods under duty drawback shall not be exported in vessels of less than 250 tonnes register.

89.               The Africa Trade Insurance Agency (ATIA), a multilateral agency established in 2001, provides insurance against political risk.  The participating countries are Burundi, Kenya, Malawi, Tanzania, Uganda, and Zambia.  ATIA's main objective is to facilitate access to, and improve the terms of trade finance for participating countries.  The beneficiaries of ATIA include foreign companies exporting goods or services to participating countries, companies from participating countries that are exporting goods or services, and banks engaged in export financing.

(9)   Competition Policy and Regulatory Issues

90.               Article 21 of the Protocol on the Establishment of the EAC Customs Union obliges member states  to prohibit any practice, undertaking or agreement that has as its objective or effect the prevention, restriction or distortion of competition within the Community.  This provision, however, does not apply to a practice, undertaking or agreement that improves the production or distribution of goods, or promotes consumer welfare or technical or economic development.

91.               An EAC Competition Bill is under consideration by the East African Legislative Assembly (as at July 2006).  The Bill prohibits anti-competitive practices, including price collusion, collusive tendering and market allocation, and quantitative restraints on investment or sales.  It establishes an EAC Competition Committee, composed of one representative from each member state, which has the power to investigate and to compel evidence, hold hearings, and to impose sanctions and remedies.  The Bill also contains provisions on mergers and acquisitions, consumer welfare (including unfair competition), and subsidies.

 



REFERENCES

Coughlin, P. and S. Undenge (2001), Study of the Textile and Garment Industries:  Malawi, paper commissioned by SADC, April, Gaborone.

European Commission (2005), Information Note on the Revision of the Cotonou Agreement.  Available at:  http://ec.europa.eu/comm/development/body/cotonou/pdf/
negociation_20050407_en.pdf.

Imani Development (Malawi) Ltd. (2001), Drafting Briefing Paper on Regional Trade Agreements, September, Lilongwe.

IMF (2005), Trade Integration in the East African Community: An Assessment for Kenya.  Available at:  http://www.imf.org/external/pubs/ft/wp/2005/wp05143.pdf.

WTO (2003), Trade Policy Review – Southern African Customs Union, Geneva.

WTO (2005), Trade Policy Review – Nigeria, Geneva.

 

 


 



[1] IMF (2005).

[2] East African Community Secretariat online information.  Available at: www.eac.int/history.htm.

[3] The Committee on Fast Tracking East African Federation, established on 26 November 2004, is examining ways and means to expedite the process of EAC integration so that a political federation is achieved as quickly as possible (The Community, Issue 3, June 2005).

[4] East African Community Secretariat online information.  Available at: www.eac.int/strategy.htm.

[5] Article 2 of the Protocol.

[6] Article 12 of the Protocol. However, the Council of Ministers of the EAC is mandated to review the CET structure, and approve measures to remedy any adverse effects, on any member state, induced by the implementation of the CET or, by exceptional circumstances.

[7] Internal tariffs must not exceed the CET on any of the specified products (Article 11 of the Protocol).  The EAC Council may decide, at any time, that tariff rates may be reduced more rapidly or abolished earlier than provided for by the schedule.

[8] The Lake Victoria Development Programme, established in 2001, provides a mechanism for coordinating the various interventions on the lake and its basin, and serves as a centre for promotion of investments and information sharing. It is focusing on, inter alia, harmonizing policies and laws on the environmental management of the lake and its catch area (East African Community Secretariat online information.  Available at: www.eac.int/programme.htm).

[9] The EADB was first established in 1967 under the former East African Community. Following the break up of the EAC in 1977, the Bank was re-established under its own Charter in 1980. It offers a broad range of financial services to EAC members (EADB online information.  Available at: www.eadb.org/background).

[10] The LVFO, established in 1994, aims to foster cooperation amongst EAC members in matters regarding Lake Victoria;  harmonize national measures for the sustainable use of fisheries and other resources;  and develop and adopt conservation and management measures to assure the lake's ecosystem health and sustainability (LVFO online information.  Available at: www.inweh.unu.edu/lvfo/Default.htm).

[11] The IUCEA, established in 1980, aims to facilitate contact between the universities of East Africa, provide a forum for discussion on academic and other matters relating to higher education, and help maintain high and comparable academic standards (IUCEA online information.  Available at. www.iucea.org).

[12] Kenya joined the GATT on 5 February 1964, Tanzania on 9 December 1961, and Uganda on 23 October 1962.

[13] WTO documents WT/DS265/R, WT/DS266/R, and WT/DS283/R, 15 October 2004.

[14] Tanzania and Uganda were two of five countries (with Bangladesh, Haiti, and the Gambia) to have held trade-related roundtables under the first version of the Integrated Framework for Trade-Related Technical Assistance and Capacity Building for LDCs.  The main outcome from this roundtable has been the preparation of an Export Development Strategy and specific-sector studies on fisheries, groundnuts, horticulture, niche manufacturing, and tourism.

[15] WTO document IP/C/40, 30 November 2005.

[16] The COMESA members are: Angola, Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.  Lesotho, Mozambique, and Tanzania have withdrawn.

[17] COMESA online information.  Available at http//:www.comesa.org/obj.htm.

[18] WTO document WT/COMTD/N/3, 29 June 1995.

[19] Kenya has been allowed to continue to apply a non-preferential tariff on sugar from other COMESA members, until 28 February 2008, to protect its local industry.

[20] Value added is defined as the difference between the ex-factory cost of the finished product and the c.i.f. value of material inputs imported from outside the COMESA sub-region.  The minimum level of value added was reduced from 45% to 35% in 2000.  Egypt maintains the 45% ex-factory value-added level.

[21] A long list of approved products is specified in the COMESA Treaty as being of particular importance to the economic development of the members.

[22] Not all COMESA members are members of the PTA Bank:  Angola, Namibia, the Seychelles, Swaziland, Uganda, and the Democratic Republic of the Congo are not members.  Egypt joined the Bank in 2000.  Since 1994, non-COMESA members have been permitted to become PTA Bank members;  these are Somalia, Tanzania, and, since 2001, China (P. R.).

[23] Founding members of the ATIA are Burundi, Kenya, Malawi, Rwanda, Tanzania, Uganda, and Zambia.  Only Tanzania is a non-COMESA member. 

[24] SADC replaced the Southern African Development Coordination Conference (SADCC).

[25] Angola, Botswana, the Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, the Seychelles, Tanzania, South Africa, Swaziland, Zambia, and Zimbabwe.

[26] By September 2000, Angola, the Democratic Republic of Congo, and the Seychelles had not ratified the Protocol.

[27] Category A and B products cover an estimated 85% of goods traded among SADC members.

[28] Appendix I to Annex II of the SADC Protocol on Trade as amended.

[29] For example, for electrical machinery, some members want to prevent "single assembly" of white goods, while for plastics they want to prevent the use of imported plastic waste (See WTO, 2003).

[30] Coughlin, P. and S. Undenge (2001).

[31] Imani Development (Malawi) Ltd. (2001).

[32] Article 32 of the Treaty.

[33] SADC online information.  Available at:  http://www.sadc.int/overview/works.htm.

[34] WTO documents: WT/REG176/N1/Rev.1, 27 August 2004; WT/REG176/1, 8 October 2004; and WT/REG176/Rev.1, 19 November 2004.

[35] WTO (2005).

[36] The ACP states comprise 48 African states, covering all sub-Saharan Africa, 15 states in the Caribbean, and 15 states in the Pacific (the Democratic Republic of East Timor acceded to the Cotonou Agreement in May 2003).

[37] As part of the first revision of the Cotonou Agreement, concluded on 23 February 2005, the parties agreed, inter alia, that additional financial and technical assistance will be granted for cooperation on non-proliferation of weapons of mass destruction, which will not be funded from resources intended for ACP-EC development cooperation;  and to include, in the revised agreement, a clause confirming their cooperation in the fight against terrorism, as well as a provision relating to the prevention of mercenary activities (European Commission, 2005).

[38] The agreement is currently under a WTO waiver that was approved at the Doha Ministerial Meeting and will expire on 31 December 2007 (WTO document WT/MIN(01)/15, 14 November 2001).

[39] The requirements relate to maximum import content, specific processing criteria, and change in tariff headings.

[40] These may include sanitary and phytosanitary measures, intellectual property rights, public procurement, competition policy, investment, trade and environment, trade and labour standards, consumer policy regulation and consumer health protection, standardization and certification, and food security.

[41] Europa online information.  Available at:  http://europa.eu.int/comm/trade/miti/devel/eba4_sum.htm.

[42] The AGOA was revised in November 2003.

[43] Until its amendment in 2004, the AGOA was due to expire in 2008.

[44] African Growth and Opportunity Act online information.  Available at: http://www.agoa.gov/
index.html.

[45] Under the AGOA amendments, the waiver from the normal rules of origin for wearing apparel, as applicable to "lesser developed beneficiary countries", has been extended from September 2004 to September 2007.

[46] The RIFF currently comprises:  Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, the Seychelles, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.

[47] In March 1996, at a summit in Nairobi, the IGADD was renamed the Intergovernmental Authority on Development (IGAD).

[48] For further details, see IGAD online information.  Available at:  http://www.igad.org/ [7 March 2006].

[49] Currently, the IOR-ARC members are:  Australia, Bangladesh, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, United Arab Emirates, and Yemen.  China, Egypt, France, Japan, and the United Kingdom were accepted as official dialogue partners, while the Seychelles withdrew as a member on 1 July 2003.  For further details, see Department of Foreign Affairs online information.  Available at:  http://www.dfa.gov.za/
foreign/Multilateral/inter/iorarc.htm [8 March 2006].

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