RRA signs Comesa bond

Rwanda Revenue Authority (RRA) has signed a Comesa Customs Bond.

Rwanda Revenue Authority (RRA) has signed a Comesa Customs Bond.

The Comesa Customs Bond Guarantee Scheme is a customs transit regime designed to facilitate the movement of goods under Customs seals in the Comesa region. It also provides the required customs security and guarantee to the transit countries.

The signing was presided over by the Deputy Commissioner and Commissioner for Customs and Excise of RRA Eugene Torero at Hotel La Palace, Nyandungu.
Torero revealed that Comesa Regional Customs Bond Agreement that was signed by the Heads of State and governments the Preferential Trade Area, now Comesa Summit, in Mbabane, Swaziland, in November 1990, is a component of the Comesa Protocol on Transit Trade and Transit Facilitation. It shall only be availed to carriers that use the Comesa Customs Document (COMESA-CD) which are issued with the Comesa carrier licence.

He noted that the objective of customs bond guarantees is to ensure that the government is able to recover duties and taxes from the guarantors, should the goods in transit be illegally disposed of for home consumption in the country of transit.

Trade barriers
Under the current nationally executed bond system, when goods cross the customs territory of one or more states, in the course of goods in transit by road, the customs authority in each state applies national controls and procedures.

These frequently involve the inspection of the load at each national frontier and the imposition of national security requirements (guarantee, bond and cash deposit or both etc.) to cover the potential duty or taxes at risk while the goods are in transit through each territory.  Such measures applied in each country of transit therefore, cause considerable expense, delays, and interference with the regional transport and trade.

He said that to address these difficulties and also for the protection of revenues of each state through which goods are carried, member states agreed to introduce a regional customs bond guarantee scheme. “The Comesa bond provides, inter-alia, for all member states to implement transit and customs measures to remove trade and transport barriers in the region,” he noted.

Mr. Gidey Berlane, senior expert of Comesa revealed that the scheme should have been in place by now, but the Seventh Meeting of the Council of Ministers that was held in Nairobi, Kenya, from 20th to 22nd May 1999, resolved that a working group be established to work out the modalities of how the RCTG scheme could operate, taking into account the fact that the insurance and reinsurance companies could constitute the guarantee chain of sureties, in line with the Yellow Card Scheme mode of operations.

He also added that to get to the decision, a series of national and regional stakeholders’ workshops were held and extensive consultations made between the three groups involved in the RCTG overall governance: the financial institutions (banks, insurance companies, etc) customs authorities, and traders (the importers, who employ as their agents, carriers, freight forwarders and clearing agents,.

Single bond
For goods in transit across several countries within the Comesa region, only one bond will be issued and thus doing away with the current practice under which a bond is required to be issued for every country in which the goods are in transit.

Torero revealed that the scheme will be able to work best in a situation where the tariffs are uniform within the Comesa region and Rwanda being a member enables it to harmonise its tariff with those of other member states of Comesa. He however added that for the time being the consignee shall be expected to take a customs bond for a value based on the country with the highest tariff.

He also disclosed that transporters of merchandise  will be issued with a Comesa Carnet; a document that indicates that a security of goods has been provided and is bound in book form of tear-out foils and counterfoils to present to each border post for customs officers to endorse up to the point of destination of the transited merchandise.

The deputy Commissioner for RRA also disclosed that RCTG will enables transit operators to execute guarantees for customs duties by providing adequate security to customs authorities in transit Comesa member states so that customs duties on the goods in transit will be paid, should the transit operation fail, for whatever reason, and thereby facilitate the trade and transport in the region.  

He also added that the adoption of this trade and transport infrastructure will make the management and administration of the scheme much more easy and economical to manage.
“The RCTG scheme provides significant transport savings and contributes to trade and transport efficiency by eliminating the current practices of customs bond guarantee that have to be executed in each transit country,” Torero said, adding that the scheme will be of great importance in many ways, including quicker clearance of vehicles unlike currently where vehicles carrying goods are delayed at border crossings, among other reasons, to raise customs security/bonds at each and every border entry post and this will also increase the vehicle turn around time, reduction of administrative barriers and speeding of the carriage of goods thus lowering transit costs to at least 15 per cent to 25 per cent of the current estimated 50 per cent freight rate for a given corridor; a truck delayed at the border costs over $200 daily.

Reduced costs
Other benefits to be realized from the scheme as the Commissioner for Customs and Excise at RRA says include reduction of the costs of raw materials and inputs for industries, reduces costs of imported goods thus reduction of prices for consumers.
The release of colossal sums of money of Clearing and Forwarding Agents, which would be tied up as a guarantee and/or collateral in commercial banks and insurance companies will be channeled for other investments and further providing a simple and economical mechanism for sureties (financial institutions) to issue and manage customs bond and creating an opportunity to extend their cooperation. Torero added.

While closing the signing ceremony, Torero said that the scheme is envisaged to eliminate and streamline unnecessary bureaucratic procedures and requirements and facilitate the smooth flow of transit traffic among member states and furthering their physical cohesion.

He also called upon stakeholders to give a firm commitment and overwhelming support during the implementation of the Scheme.

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