Discussions on rules of origin, tariffs hold up free trade pact
Sunday December 24 2017
Presidents Paul Kagame, Uhuru Kenyatta and Yoweri Museveni during an EAC heads of states summit in Uganda. FILE PHOTO | NATION
Protracted negotiations on tariffs and rules of origin are holding back the planned implementation of a free market of more than 600 million people, two years since the Tripartite Free Trade area (TFTA) was launched in Egypt.
The heads of state for Comesa, EAC and SADC had given member-states a year from June 2015 to conclude negotiations on rules of origin, trade remedies and tariffs.
The 12 months elapsed on June 30, 2016 and the Council of Ministers extended it to June this year. But so far only 19 of 27 states have signed the agreement and only two — Egypt and Uganda — have ratified the protocol.
The pact requires at least 14 countries to ratify it before it takes effect.
EAC states were expected to ratify it by February 2017 but they asked for more time till December 2017 to resolve pending issues on rules of origin and tariffs.
Prioritised list
However, The EastAfrican has learnt that the EAC is yet to reach an agreement with the South African Customs Union (Sacu) and Egypt on tariff offers even though Uganda has gone ahead and ratified the treaty.
“We are still negotiating with Sacu and other countries that do not have a free trade area such as Ethiopia, Eritrea, Angola and Mozambique while Tanzania is still negotiating with Egypt,” a source familiar with the discussions told The EastAfrican.
A report by the East African Community Sectoral Council on Trade, Industry, Finance and Investment (EAC-SCTIFI) based on a meeting held in Arusha from May 29 to June 2, 2017 shows that the EAC had made important progress in reaching an agreement on tariffs with Egypt and Sacu.
The EAC had presented to Sacu its prioritised requests of 403 tariff lines, of which 283 were for immediate liberalisation and 112 to be liberalised on a phasedown basis.
Sacu responded ‘positively’ to the 112 tariff lines. The EAC then requested for more time to consult on the remaining tariff lines on Sacu’s prioritised request list as it was not submitted on time.
“At this stage, Sacu has offered to immediately liberalise 66.7 per cent of its tariff lines while EAC’s offer stands at 61.4 per cent of tariff lines. As the negotiations are on reciprocal basis EAC has identified an additional 158 tariff lines for immediate liberalisation which would lift the offer to 64.25 per cent of tariff lines which is beyond the 63 per cent mandated by SCITIFI,” according to the report.
Tanzania which belongs to both EAC and SADC) but not Comesa provided a tariff offer to Egypt (a Comesa member) comprising 96.89 per cent for immediate liberalisation and the remaining tariffs to be gradually phased out in five years.
Although Egypt had initially provided an offer of 100 per cent tariff liberalisation to all the EAC partner states it is reviewing its offer on the basis of reciprocity.
Tariff lines
The TFTA member states had agreed that up to 85 per cent of the tariff lines be liberalised, with the remaining 15 per cent negotiated over five to eight years.
Negotiations on the rules of origin, tariff offers and trade remedies form Phase 1 of the TFTA treaty while Phase II negotiations cover trade in services and all other trade-related matters.
The EAC is negotiating the agreement as a bloc while Comesa and SADC are negotiating their positions as individual countries.
Quota restrictions
Under the TFTA Protocol each regional bloc is expected to remove duty on 60 per cent to 85 per cent of the tariff lines.
Sacu agreed to remove duty on 60 per cent of its 7,000 tariff lines, offering opportunity for 4,200 goods to be exported to southern Africa.
Comesa has 5,000 tariff lines but its members who are neither in EAC or SADC have been allowed to negotiate individually because the bloc does not have a Customs union.
Under TFTA pact, members of the three trading blocs are required to ignore sensitive products and subject them to duty and quota restrictions in order to ensure fair competition.
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