The East African Community countries on Friday, February 18, made a huge step forward by adopting the bloc’s tariff offer for Category A products amounting to 90.2 per cent to be liberalised in 10 years after the start of trading under the African Continental Free Trade Area (AfCFTA).
Category A products are those from sectors including agro processing, agriculture, transport or the automotive industry, pharmaceuticals, and textiles.
The new development was announced during an extraordinary meeting of regional Ministers of Trade, Industry, Finance and Investment at the EAC Headquarters in Arusha, Tanzania.
According to officials, this means that the EAC is now among the State Parties that have met the minimum requirements for Category A to start trading on a provisional basis.
The EAC is negotiating AfCFTA as a bloc.
Kenya’s Permanent Secretary EAC, Kevit Desai who chaired the meeting told The New Times that "this is a very exciting and profound new development with respect to EAC’s development agenda.”
He explained that the AfCFTA has so far verified 29 tariff offers to ensure that they meet the modalities and this will increase to 34 once the EAC Partner States offers are verified.
"This also means that together, as EAC, we have the potential to raise our standards collectively by investing in technology transfer and industrial capacity now we have the market which spurs investment and this has a huge bearing in terms of employment creation,” he added.
Growth in the region, he said, will be spurred by the value addition in sectors including agro processing, agriculture, transport or the automotive industry, pharmaceuticals, and textiles.
The EAC Partner States tariff offers will now be subjected to verification by the AfCFTA Secretariat, which is based in Accra, Ghana. Verification of the tariff offers will ensure that AfCFTA member states that meet the minimum requirements start trading under the Continental Free Trade Area Agreement.
Friday’s meeting also directed the EAC Secretariat to submit the EAC tariff offer for Category A to the AfCFTA "as soon as possible.”
Desai said: "Industrialisation is the resolve of all six partner states. We are encouraging are our commerce to engage in solidarity immediately within this opportunity.”
Good precedent
Andrew Mold, Chief of the regional integration and AfCFTA cluster at the United Nations Economic Commission for Africa Office in Kigali, referred to the Arusha meeting’s outcome as an important development for the region and implementation of the AfCFTA.
Mold said: "This is a very important development because it means that, once this joint offer has been accepted by the AfCFTA Secretariat, the EAC will be able to start trading properly under AfCFTA rules.”
"And it is a good precedent that the EAC has negotiated this as a bloc. Of course, as a Customs Union, to do otherwise would have been problematic. So, it is great news, in the sense that it means that EAC countries will enjoy market access to the other 29 member states under AfCFTA terms, with 90 percent of tariffs removed over the next five to 10 years, depending on whether the countries involved are LDCs or not.”
Mold explained that that five to 10 years might seem slow, but in actual fact "both the EAC and the AfCFTA Secretariat should be congratulated on the speed of getting to this stage.”
Implementation has been delayed a little by the Covid-19 crisis, he noted, but in actual fact, "the rate of progress is impressive by the standards of other international trade agreements."
The meeting on Friday also directed the EAC Secretariat to convene an experts meeting by April 15 to consider categories B and C of the EAC tariff offer.
The AfCFTA will give the bloc access to an extended market of more than 900 million people.
Desai said that the Community would also benefit from increased opportunities for trade, employment creation, industrialisation and economic prosperity.
"The expanded opportunities include manufactured products, value addition, regional value chains, agro-processing, motor vehicle assembly, pharmaceuticals, auto spares industries and mineral processing among other areas,” said Dr. Desai.
On the determination of the maximum rate for the Common External Tariff (CET), the meeting directed Partner States to consult on the analysis undertaken by the Secretariat on the proposed maximum CET rates and submit comments on the analysis and the proposed maximum CET rates of 30%, 33% and 35% to the Secretariat by March 15.
The Ministers directed the Secretariat to convene another extra-ordinary meeting on March 18 to deliberate on the maximum CET rate.
Desai said that it had been agreed that Partner States consult key stakeholders on the proposed maximum CET rates and submit comments to the Secretariat by March 15.
"I am confident as the chair of the coordination committee that at our next meeting we will as partner states have consensus on the CET there by nurturing value addition through industrialization in EAC,” he told The New Times.
The EAC Secretariat made a presentation to the Ministers on the analysis it had undertaken on the proposed rates of 30%, 33% and 35% for products classified under the fourth band.
The Secretariat noted that indicators of measure of benefit for products identified to be covered in the maximum tariff band are positive except for welfare loss, which is transitory.