Some manufacturers associations and business councils within the East African Community (EAC) want the external tariffs on imported finished products to be increased to 35%.
According to the stakeholders, it has become imperative to increase the fourth band of the Common External Tariff (CET) of the EAC's Customs Union Protocol. They argued that doing this would discourage dumping and help protect local manufacturers. amid economic hardship.
Business Insider Africa understands that importers of beauty products (especially human hair), motor vehicles, textiles, steel, foot wear, etc., would be directly affected by the tariff hike. These are some of the products under the fourth band of the Common External Tariff (CET).
It should be noted that the CET is a very important instrument used by the EAC's Customs Union Protocol to determine how much taxation should be imposed on imported goods. The CET has different bands, with the fourth band containing finished products which currently attract the maximum CET rate of 25%.
In the meantime, ministers of trade and finance from across the region are deliberating/negotiating as they seek to reach a consensus with regards to the percentage of increase. While land-locked countries like Uganda remain adamant on a CET rate of 35%, the likes of Kenya and Tanzania are pushing for 33%.
Local media quoted the Chief Executive Officer of the Kenya Association of Manufacturers, Phyllis Wakiaga, to have said:
“Among the EAC partner states, it is only Uganda that has proposed a 35 percent tariff. Kenya and Tanzania propose the maximum rate to be 33 percent, while Rwanda and Burundi propose 30 percent. We as manufacturers have already agreed on a proposal by the Kenyan private sector of 35 percent as the fourth CET tariff band... Textiles and textile articles, footwear, headgear, artificial flowers and articles of human hair are among the items listed under the fourth band.”
Meanwhile, the private sector across the East Africa Community have put up a united front in support of a 35% tariff rate. John Kalisa, CEO of the East African Business Council, said:
“The private sector in the EAC has proposed 35 percent tariff rate because it provides an adequate tariff differential which is required to encourage industrial development in the EAC region. Some of the products have a long value chain and face unfair competition from cheap imports from Asian countries hence need higher rates to safeguard their production.”
As expected, not everyone is in support of this development. First, importers of these products are disgruntled, seeing as it would entail them paying more taxes. Asides that, some consumers have also expressed dissatisfaction. According to them, higher taxes on imported products would force them to use local substitutes which can be more expensive and offer lesser value for money.
UPDATE: Business Insider Africa understands that East African ministers of trade and finance have finally agreed on the adoption of 35% CET rate.
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