New Lease of Life to The EAC Customs Union


The East African Community (EAC) is a regional integration bloc made up of 6 countries, namely Kenya, Uganda, Tanzania, Burundi, Rwanda and South Sudan as the newest member country. The EAC is among the regional integration blocks such as the European Union (EU), Southern African Development Community (SADC), Association of South East Asian Nations (ASEAN), Economic Community of West African States (ECOWAS) to mention but a few. The EAC is founded on the shared objective by member states to develop policies aimed at widening and deepening cooperation in political, economic, social and cultural fields, research and technology, defence, security and legal and judicial affairs. To achieve this, a Customs Union, a Common Market, a Monetary Union and ultimately a Political Federation are the milestones identified under the Treaty Establishing the East African Community (1999), to help strengthen and accelerate full integration.

The EAC Customs Union

The EAC Customs Union which has been in force since 2005 was established through the Protocol on the Establishment of the EAC Customs Union. The Protocol seeks to further liberalise intra-regional trade in goods on the basis of mutually beneficial trade arrangements among the Partner States, promote efficiency in production within the EAC, enhance domestic, cross border and foreign investment in the Community and promote economic development and diversification in industrialisation in the Community.

The main features of the EAC Customs Union include:

  • A common set of import duty rates applied on goods from third countries (Common External Tariff, CET);
  • Duty-free and quota-free movement of tradable goods among Partner States;
  • Common safety measures for regulating the importation of goods from third parties such as Sanitary and Phyto-sanitary (SPS) requirements and standards.
  • A common set of customs rules and procedures including documentation;
  • A common coding and description of tradable goods (common tariff nomenclature, CTN);
  • A common valuation method for tradable goods for tax (duty) purposes (common valuation system);
  • A structure for collective administration of the Customs Union.
  • A common trade policy that guides the trading relationships with third countries/trading blocs outside the Customs Union i.e. guidelines for entering into preferential trading arrangements such as Free Trade Area’s etc with third parties.

In essence, through the EAC Customs Union and the EAC Common Market, Partner States have agreed to establish free trade (or zero duty imposed) on goods amongst themselves and agreed on a common external tariff (CET), whereby imports from countries outside the EAC region are subjected to the same tariff when sold to any EAC Partner State. This is subject to the goods complying with the EAC Rules of Origin and with the provisions of the EAC Customs Union.

The Single Customs Territory (SCT)

To attain a full Customs Union, the EAC Summit agreed to the piloting of the Single Customs Territory (SCT) in 2014. The SCT was aimed at removing restrictive regulations/or minimizing internal border controls on goods moving between the Partner States with the ultimate goal of fostering free movement of goods. This would greatly reduce customs clearance time and cost of doing business with the EAC region. The pilot roll out was successful and consequently in July 2017, EAC Committee on Customs approved the full implementation of the SCT.

Through the SCT, goods are cleared at the first point of entry, customs declarations are made once at the destination country, taxes are paid at the country of destination when goods are still at the first point of entry, goods are moved under a single bond from the port to destination, goods are monitored via electronic cargo tracking system (Regional Cargo Tracking System (RECTS), goods are processed through Interconnected Customs systems and are not subjected to numerous internal control and border checks.

Throwback

Before the SCT, traders in the EAC had to contend with multiple internal border control; multiple bonds across the region, duplication of processes by customs offices and inspections by multiple standard assurance agencies, long delays at internal border control posts, duplication of documentation and overall high cost of doing business within the EAC region. 

Advantages of the SCT

Through the interconnectivity of customs systems in the region, information between customs stations flows seamlessly and management of transfers of revenues between Partner States is enforced. Partner States are also able to enforce customs debts on behalf of each other. In a support of the SCT, an electronic Single Windows System (eSWS) has also been developed to enable exchange of information between cargo clearance agencies and Customs Departments.

Recent developments to the SCT have been advocated for by the EAC Summit which comprises of the Heads of State of the EAC Partner States. At the 19th East African Community Summit in February 2018, (Themed: Enhancing socio-economic development for deeper integration of the development for deeper integration of the Community) the summit gave impetus towards achievement of the objectives of the EAC by directing the council and Partner States to fully implement the single customs territory by rolling out all products and all customs regimes. The summit directed the Partner States to expedite the amendment of their national policies, laws and regulations to comply with the Common Market Protocol.

To this end, the first five classes of goods which currently enjoy faster transit times from May 2018 are coffee, tea, fish, hides and skins. The EAC Customs Committee envisions the full roll out of the SCT to cover all goods from June 2018.

Towards a Borderless EAC

Regional exporters of coffee, tea, fish, hides and skins are set to enjoy faster transit times from next month, when the commodities start being cleared under the Single Customs Territory.  The new regime seeks to minimize delays and costs for goods moving across borders to export markets by having them cleared at the point of origin. The business community comprising of clearing and forwarding agents, exporters, and cross-border traders are set to reap the benefits of the SCT pursuant to the reforms set in motion that clearly demonstrate the Partner States’ commitment to implement the EAC Customs Union protocol and in particular, the creation of a borderless customs union.


1Article 5 of the Treaty Establishing the East African Community sets out the objectives creation of the EAC giving effect to the shared aspirations of Partner States to move towards attainment of sustainable growth and development; strengthening of co-operation; consolidation of the long standing political, economic, social, cultural and traditional ties and associations; promotion of peace, security, and stability; mainstreaming of gender in all its endeavours and the enhancement of the role of women in cultural, social, political, economic and technological development; promotion of sustainable utilisation of the natural resources of the Partner States; and enhancement of partnerships with the private sector and civil society in order to achieve sustainable socio-economic and political development.

2A Common Market is a merger/union of two or more territories to form one common territory in which there is free movement of goods, labour, services and capital, and the right of establishment and residence.

3A monetary Union involves two or more states sharing the same currency without them necessarily having any further integration (such as an economic and monetary union, which would have, in addition, a customs union and a single market). A good example of a monetary union is the European Union.

4The Summit is highest organ of the EAC. The other organs are: The Council of Ministers, The Coordinating, Committee, Sectoral Committees, The East African Court of Justice, The East African Legislative Assembly and The Secretariat.


Should you have any enquiries regarding this article or any general queries on the subject matter, kindly contact Carole Ayugi, Managing Partner and Caroline Maina, Associate, MMAN Advocates.


Disclaimer: This article has been prepared for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Nothing on this article is intended to guaranty, warranty, or predict the outcome of a particular case and should not be construed as such a guaranty, warranty, or prediction. The authors are not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information. Readers should take specific advice from a qualified professional when dealing with specific situations.





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