Tanzania February 2007 |
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| EAC States to introduce common work permits, (Standard, 2007-02-06):-That residents of East Africa can make mobile calls across the region at affordable rates was unimaginable three years ago, but it’s now real. And come September another goody is on the offing. Common work permits will be issued to citizens of the three states, effectively allowing them to work in any country. Unknown to many is that these were some of the benefits the East African Community (EAC) envisaged to avail to an estimated 90 million people in the three East African states. At East African Customs Union (EACU) inception two years ago, the three states had a vision to enhance cross-border trade, boost export base and attract foreign investment. "The Customs Union presents traders with an expanded single market of over 91 million people commanding a combined Gross Domestic Product (GDP) of $30 billion," East African Business Council (EABC) vice chair and former Kenya Association of Manufacturers (KAM) Chairman Mr Arun Devani said in an interview. Indeed Devani throws a challenge for banks eyeing growth in the region to develop standard products for the region, like standard money clearing charges to ease the cost of doing business. Harmonisation and simplification of customs procedures was seen as the foundation stone of boosting trade amongst the states. To reap from the expanded market, the partner states were to trade under common external tariffs, customs regulations, procedures and documentation. "One single customs territory allows partner states to enjoy economies of scale, with a view to supporting the process of economic development. Unlike in developed countries, economic integration is not just for purposes of trade per se, but as a vehicle for bringing about faster economic development," Bidco Group Managing Director Mr Vimal Shah The Standard. Although the balance of trade between the three EAC countries has been in favour of Kenya, the three countries have recorded increased trade volumes, thanks to the Customs Union’s mutually beneficial trade agreements among partner states. In 2005, Kenya exported goods worth Sh19.8 billion to Tanzania, up from Sh17.9 billion in 2004 against Sh2.8 billion worth of imports from Tanzania in 2005 and Sh2 billion in 2004. During the same period Kenya’s exports to Uganda hit the Sh42.5 billion mark up from Sh37 billion in 2004, against imports of Sh1.3 billion and Sh1 billion in 2005 and 2004 respectively. This is a clear reflection that Kenya’s trade with its partners has increased since the launch of the Customs Union. With Rwanda and Burundi having joined the Customs Union, trade volumes can only rise. Despite the optimistic outlook, concerns are being raised over the speed of the Customs Union implementation and that traders are yet to reap the full benefits that were envisaged. "Two years down the line, at least 40 per cent of the tariffs should have come down. This should have been achieved were it not for some players trying to derail the process," Devani laments. Tanzania’s dual membership to two trading blocs, over-protectionism tendencies by some traders, reneging of tariff rates and corruption top the list of concerns threatening to scuttle gains. It is alleged that some Tanzanian traders have resorted to over-protectionism tendencies to defend their turfs, by lobbying their government to levy taxes on raw materials for foreign countries operating in the country. Under the Customs Union protocol, raw materials are zero-rated. Top on the list of allegations against Tanzania is the use of the South African Development Community (SADC) letter for agents to bring goods into the country and re-export them, effectively breaking the customs law. According to the customs laws, a country’s exports must conform to the rules of origin. Tanzania is seen as the biggest hurdle due to its dual membership to two trading blocs, EACU and SADC, making it difficult to conform to common external tariffs. The Customs Union protocol, envisaged a three band 0-10-25 per cent common external tariff (CETs) regime for the next five years. This means that raw materials from outside EAC were to be zero-rated, intermediate goods would attract a 10 per cent levy, while finished goods would be the most punitively taxed at 25 per cent. However, Devani and Shah only hope that the teething problems will soon be overcome for businesses to reap full benefits from the Customs Union. In December, last year, the EAC Council of ministers moved to avert a looming trade crisis between the three states over what was clearly a breach of CETs. The Customs Union is the first step towards regional integration. According to the EAC integration plan, the Customs Union would be followed by a common market, then a monetary union and subsequently a political federation. The EAC is set to become a political federation in 2013. The setting up of the federation will see East Africa operate like one big country with a central government that will control national decisions of the three states. The federation will have one president for the three countries. A single currency for the three East African countries is expected to be in circulation in 2009. | |
South African Migration Project (SAMP) - Queen's University - http://www.queensu.ca/samp |