The East African Community has waived external tariffs on sugar, wheat and rice imports for Rwanda to help the country address domestic shortages.
The waiver was approved by EAC Ministers of Trade, Industry, Finance and Investment on condition that Rwanda would not export the commodities to Burundi, Kenya, Tanzania and Uganda lest the duties revert to the Common External Tariff (CET) charged on the three items.
Following the waiver, wheat grain will now enjoy duty free entry into Rwanda while duty on sugar imported from outside the region will drop to 25 per cent. The rate on imported rice has been slashed from 75 per cent to 45 per cent.
“The request was granted to allow Rwanda cover up for the shortages on condition that Rwanda will at no point export these commodities to the other EAC partner states. If Rwanda exports the same goods to the other EAC countries then they attract full CET,” said Peter Kiguta, a regional trade expert.
Rwandan Finance Minister Claver Gatete announced the duty reductions in the budget speech last week, stoking fears that the waivers contravened the EAC Customs protocol.
Rwandan Trade and East Africa Co-operation Minister Francois Kanimba told The EastAfrican that the concessions did not violate any regional protocol and that Rwanda had applied some of them for as long as seven years, with approval of the EAC.
“The measures announced about rice, wheat and sugar were simply a restatement of policy which has been applied for a number of years and are not new. It is a continuation of existing tax policy within the agreed CET framework,” Mr Kanimba said.
According to Mr Kiguta, a former EAC trade and Customs director, finance ministers discussed the waivers before the budgets. Rwanda negotiated for the specific changes on the common external tariff on the sensitive goods because of shortages of the commodities in the country.
Technically known as a stay period, the window allowed countries to waive the application of the common external tariff for items such as sugar, wheat, maize, and rice for up to six months, cushioning consumers from supply-driven price increases.
Under the regime, a partner state would request the secretariat to be allowed to import sensitive goods duty-free to plug deficits in domestic output. The motivation was to help the affected country manage inflation and keep the cost of essential goods from getting out of the reach of the common consumer during scarcity.
The CET rates on the sensitive products will however continue to be substantially higher than the 25 per cent maximum rate for non - sensitive products.
The CET on rice in the region is 75 per cent in Uganda, Tanzania and 35 per cent in Kenya. Wheat attracts between 60 and 35 per cent CET in both countries and sugar 100 per cent.