Kenya pushes for review of CET rates on sensitive goods

Sunday October 16 2016

Kenya wants the Common External Tariff on items

Kenya wants the Common External Tariff on items like sugar, wheat, rice, leather and textiles revised to a level that East African Community members would be comfortable with and which would not be subject to exemptions. PHOTOS | FILE 

By JAMES ANYANZWA

Kenya is lobbying for strict enforcement of duties on sensitive products imported into the East African Community, saying frequent exemptions threaten the survival of local industries.

Trade officials said the country wants the Common External Tariff on items like sugar, wheat, rice, leather and textiles revised to a level that members would be comfortable with and which would not be subject to exemptions.

“Kenya is striving to have the CET rates for sensitive items reviewed; the partner states are always requesting the Council of Ministers to grant them exemptions or stay of application,” Kenya’s Principal Secretary in charge of Trade Chris Kiptoo told The EastAfrican.

He said Kenya was consulting key stakeholders across the EAC before presenting the proposal to the Secretariat for discussion by the Council of Ministers.

Burundi, Rwanda, Tanzania and Uganda are also working on their positions. A team of experts from the EAC is expected to review the proposals for each country and reach a common position before the revised CET takes effect on July 1, 2017.

Officials privy to the discussions said Kenya wants sugar, maize, wheat and rice removed from the list of sensitive goods altogether but experts fear this would be detrimental for industries, job creation and poverty reduction.

“I would go with reducing the rates on these goods but not removing them from the list of sensitive items until our industries stabilise. A drastic move would render industries inoperable,” said Eliazar Muga, regional integration and trade consultant and managing director of MAP Advisory Services.

At a meeting in Arusha in September, the EAC Council of Ministers decried the frequent stays of applications by the partner states, which create distortion and erode the harmonisation of the tariff regime.

“The EAC has not responded to the dynamic business environment at the regional and global level,” according to the Council of Ministers report dated September 5.
The current CET came into effect on January 1, 2005.

According to the USAid East Africa Trade and Investment Hub, the region’s preferential tax treatment of sensitive goods could put its CET at risk.

For example, in June, Kenya secured a one-year approval of 35 per cent duty on rice instead of 75 per cent; LPG containers at 25 per cent duty instead of 0 per cent; revenue stamps at 25 per cent duty instead of 0 per cent; and paper and paperboard products at 25 per cent duty instead of 0 per cent. Sugar is also among products being regularly granted stay of applications in the bloc.