‘Unfair’ EAC common external tariffs worry Kenyan traders

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Flag of Kenya

Kenyan manufacturers are calling for a review of tariff regimes in the East African Community to protect its industries against harsh common external tariff that came into effect in 2005, a new report by the Kenya Association of Manufacturers (KAM) says.

KAM says, “Since the EAC Customs Union came into effect in January 2005, a number of decisions passed in Arusha have compromised the position of Kenyan industries.”

The association pointed out, in a memorandum to East African Legislative Assembly (EALA), that duty waiver on fabric that was reduced from 25 per cent to zero per cent favoured Tanzanian textile industries, but was harmful to Kenya manufacturers.

KAM is therefore appealing for a review of a number of decisions, among them, the reduction of import duty on 25-seater buses and above from 25 per cent to 10 per cent.

“Although duty on buses exported from Kenya to EAC partner states reduced from two per cent in 2005 to zero per cent last year under the asymmetrical arrangement, Tanzania prefers to source from outside East Africa thereby pushing for duty rates similar to intermediate products,” KAM lamented.

On crude palm, palm stearin and RBD (refined, bleached and deodorised oil), Kenya says it favours zero per cent duty, 10 per cent and 25 per cent.

However, with Tanzania pushing for 10 per cent duty on crude palm oil to protect its farmers and industries, Kenya laments that it has been forced to import the intermediate product – palm stearin – directly as it stands at zero per cent duty and therefore refiners would not gain by adding value to crude palm oil.

Kenyan tyre makers are also awaiting an appeal on duty on tyres that was reduced from 25 per cent to 10 per cent in favour of transporters in partner states.

Other pending decisions KAM wants resolved include the EAC agreement on avoidance of double taxation and prevention of fiscal evasion, and the rules of origin on the change in tariff heading.

“The ratification of the Uganda list of industrial inputs or raw materials did not go down well with Kenyan industries, for which most of the products were either intermediate or finished goods,” KAM says in its complaints to EALA.

They said the customs union protocols should not be violated.

Last year Uganda requested over 500 items it wanted exempted from duty.

Kenya has questioned the list, arguing that Uganda had violated the rules of origin, as most of the items it wanted exempted from duty were actually imported.

KAM is also calling for improvement in coordination and feedback mechanism between the ministries of finance, EAC and trade and industry to enable the manufacturing sector to sort out tariff issues.

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