East Africa's industrial sector to gain from revised import tariff

Arusha. The industrial sector in the East African Community (EAC) is set to benefit from a new tariff for imported goods.

This follows adoption of a 35 percent common external tariff (CET) by the partner states for goods that are imported into the bloc. This will be the fourth band of the tariff for the imported goods and whose implementation will start on July 1, this year.

The current maximum CET for goods that are imported into the Community is 25 percent.

The agreement to the effect was made during a comprehensive review of the CET held in Mombasa, Kenya on Thursday.

It was attended by the ministers holding the Finance docket with Tanzania represented by the Finance and Planning minister Mwigulu Nchemba.

Ms Betty Maina, the chairperson of the EAC Council of Ministers said the decision will benefit the industrialisation drive in the region.

“The new tariff will also safeguard consumer welfare on products where the region is net importing,” said Ms Maina who is the Kenya Cabinet Secretary for Trade, Industrialisation and Enterprise Development.

EAC Secretary General Peter Mathuki echoed saying the new tariff would encourage the local manufacturing and safeguarding locally made goods.

“It is also a positive step towards the realisation of the benefits of the African Continental Free Trade Area (AfCFTA),” he pointed out.

This, he noted, would in the long run spur intra-regional trade “by encouraging local manufacturing, value addition and industrialisation”.

The CET is one of the key instruments under the Customs Union pillar which justifies regional integration through uniform treatment of goods imported from third parties.

Among the tariff lines in this fourth band include; dairy and meat products, cereals, cotton and textiles, iron and steel, edible oils, and beverages and spirits.

In addition are furniture, leather products, fresh-cut flowers, fruits and nuts, sugar and confectionery, coffee, tea and spices.

There are also the likes of textiles and garments, head gears, ceramic products and paints, among others. The ministers concurred that the maximum tariff band at 35 percent was “the most appropriate rate”.

It also emerged that the reviewed CET will address the requests for stays of application which distort the CET that was enforced in 2005.

The EAC CET is currently structured under three bands of 25 percent for finished goods, 10 percent for intermediate goods and 0 percent for raw materials and capital goods.

The tariffs which were enforced the moment the EAC Customs Union protocol came into force in 2005 was last reviewed in 2020.

The East African Business Council (EABC), an apex body of private sector associations based here, has welcomed the move.

Besides safeguarding locally produced goods, the proposed CET will attract new investments into the region.

An analysis made by both the EABC and EAC indicate that the partner states will benefit from increased revenue generation by 5.5 percent.

The analysis further shows that if enforced the new CET will boost intra-EAC trade which currently stands at $18.9 million.