Private sector calls for urgent removal of non-tariff barriers

“The gains from the implementation of the customs Union cannot be fully realised if we do not eliminate non-tariff barriers in the region”

“The gains from the implementation of the customs Union cannot be fully realised if we do not eliminate non-tariff barriers in the region”

East African Community partner states and their statutory bodies must urgently remove Non-Tariff Barriers (NTBs) if they are increase to intra-EAC Trade, Rwanda’s private sector has said.

The business community through the Private Sector Federation (PSF) says that the NTBs also pose the biggest challenge to the implementation of the Customs Union. 

“The gains from the implementation of the customs Union cannot be fully realised if we do not eliminate non-tariff barriers in the region,” Emmanuel Hategeka, the CEO of the PSF told The Business Times.

The NTBs  increasingly hurtin g  traders in the region include; customs documentation and administrative procedures, Immigration procedures, Inspection procedures, police road blocks, weigh bridges, varying trade regulations, varying transiting procedures and duplicated functions.

Hategeka said despite the fact that some many issues were raised by PSF study on the assessment of NTBs along the Northern and Central corridors, nothing much has been done to remove the trade barriers  due to absence of political will in some partner states. 

The PSF study notably found that corruption in Uganda and Kenya is a major obstacle to trade, particularly at police roadblocks, weighbridges and border gates.

The study discovered that on average a truck paid about $900 in petty bribes on the export route alone, accounting for 21 percent of the shipping cost.

“What it means it that the shipper pays $ 4500 for the 40 meter container and an additional $900,” Hategeka said.

In addition to the wasted time, corruption costs also increase the cost of transport and subsequently drive up the production costs.

“Consumers pay highly and locally manufactured products end up being uncompetitive due to high prices,” Hategeka said.

The business community also mentioned that the progress reported by partner states is not the reality on
the ground.

For instance, Kenya reported that transit cargo is now weighed from the source and exit as directed by the President Mwai Kibaki “but on the ground things are different.”  

The remarks come after a recent Arusha joint regional meeting to review progress on elimination of NTB’s in EAC. In the meeting the EAC multi-sectoral council also adopted Rwanda PSF‘s report on NTBs.

However, PSF will be conducting another study later this year as a means of monitoring and evaluation, to verify whether the recommendations are being implemented.

Peter Kiguta, the EAC Director of Customs admitted that NTBs continue to exist mainly because of administrative measures and regulations put in place by governments. 

“Some of them are legal measures which have been passed by National parliaments. The problem is the way they are implemented. This is what has been causing problems, for instance in terms of delay in clearance of cargo,” he explained.

While some of the NTBs like infrastructural challenges require huge funds to be removed, he said most of them are related to government policy.

“It is difficult to change government policy. But we are asking governments to change the way they are enforcing them.  NTBs affect both National and intra-regional trade,” he said.

In December last year EAC member states agreed on creating a joint mechanism to address the existing NTBs. However progress has been slow.

“The problem has been sluggishness in terms of monitoring the removal of these trade barriers,” Kiguta said.

He also pointed out that absence of sanctions and penalties on member states upon failure to take action makes it difficult to eliminate trade barriers. 

“Implementation of the decisions of the Council (Ministers) depends on the good will of the Partner States,”

However Kiguta is optimistic with the joint monitoring mechanism in place, which meets every six months to monitor removal of the NTBs, these trade barriers will be addressed gradually.

Treaty for the establishment of the East African Community and the Protocol for Establishment of The East African Community Customs Union outlaws imposition of Non-Tariff Barriers. 

The Protocol also provides for the development of a mechanism to identify, monitor and eliminate Non-tariff barriers.  

Ends

 

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