After joining the East African Community (EAC) in mid- 2007, Rwanda alongside Burundi will on Wednesday implement the region Customs Union protocol.
This follows the EAC Directorate of Customs and Trade confirming the two countries’ readiness to join Customs Union on July 1 2009, a key step in realisation of a common market for the trading bloc of some 120 million people.
This means that Rwanda and Burundi will from Wednesday charge Common External Tariffs (CET) and Internal Tariffs (CIT) for extra regional imports and intra-regional trade.
Under the EAC Customs Union, the products attract CET for third country sourced products which ranges between 0 percent, 25 percent, 50 percent and 60 percent for sensitive products.
For intra regional trade, the import duty (CIT rate) ranges between 0 percent and 25 percent, with a gradual phase down to 0 percent by 2011.
Launched in Uganda, Kenya and Tanzania in 2005, reports demonstrate that the Customs Union has triggered remarkably positive change, including boosting trade and revenue levels ii and among EAC member countries.
Trade statistics show that neither trade diversion nor erosion of revenue has been experienced by any of the partner states. For example, information ranging from 2000-2004 shows that the liberalisation of the trade regime resulted in an overall rise of 55 percent in trade volumes between Kenya and its two EAC partner states.
However, Rwanda’s 2009/10 budget estimates a revenue loss of Rwf12.4 billion under the EAC Customs Union, which the Finance Minister, James Musoni said that will be compensated by the COMESA compensation fund.
Though the Customs Union protocol implementation starts Wednesday, its official launch in Rwanda will take place on 6th July at Kigali Serena Hotel.
The regional bloc Secretary General, Ambassador Juma Mwapachu said that the concurrent launch in Rwanda and Burundi is a turning point for their full integration into the EAC.
“The Customs Union is a tangible integration springboard that will accumulate into benefits for both the public and private sector.”
The statement also indicates that the commencement of the Customs Union for the new entrants further enlarges the market of the region and provides an incentive for increased production and trade by the private sector.