EAC adds additional tariff band to its Common External Tariff

The EAC Common External Tariff (CET), that currently relies on 3 bands (0%, 10%, and 25%, applicable respectively to raw materials, intermediate and final goods), will be soon expanded with a further (4th) band that will hit with a 35% ad valorem customs duty the imports in the EAC of a series of goods from non-member States. Precisely, the 35% duty rate will be applicable to dairy and meat products, cereals, cotton and textiles, iron and steel, edible oils, beverages and spirits, furniture, leather products, fresh-cut flowers, fruits and nuts, sugar and confectionery, coffee, tea and spices, textiles and garments, head gears, ceramic products and paints.

The introduction of a 35% tariff rate in the EAC CET was proposed for the first time by Uganda to the EAC Secretariat on 27th September 2018 in relation to a total of 227 products that were indicated as available or produced in adequate quantities in the EAC. The Uganda’s proposal also advocated the introduction of an additional 5^th band for products imported in the EAC that had minimal levels of transformation and value addition, with a view of aligning the structure of the EAC CET to those adopted by most Customs Unions in Africa (ECOWAS, UEMOA and CEMAC all adopt a 5-band structure in their CETs). However, the EAC partner States never reached an agreement on this substantial revision of the EAC CET.

In 2020, the East African Business Council (EABC), the umbrella body of the Private Sector in the EAC, brushed up the proposal of introducing a fourth band to the EAC CET, proposing the adoption of 32.50% as a maximum rate. In the end of 2021, the EABC revised its proposal, by urging the EAC Partner States to adopt a 35% maximum tariff rate with the purpose of discriminating the import of the above products from countries outside the EAC, in an attempt to stimulate their production in the region and therefore promote the industrialization in the area, strengthening the development of regional value chains with regard to the targeted products.

The decision of adopting a 4^th 35% band to the EAC CET has been taken by the EAC Ministers in charge of trade and finance on Thursday, May 5, who decided that its implementation will commence on July 1.