East Africa: States Must Address Non-Tariff Barriers to Promote EAC Trade

PUBLISHED ON June 10th, 2016

East Africa: States Must Address Non-Tariff Barriers to Promote EAC Trade

East African Community regional integration has not evolved as envisaged. However, it is still achievable, given that the EAC partner states have harmonised most of their policies and internal and external tariffs.

As EAC governments unveil their annual budgets, it is essential for the respective proposals to boost cross-border trading, movement of goods and manpower, and address the fundamental issue of non-tariff barriers across the region.

Non-tariff barriers are restrictions and limitations that are obstacles to trade. They are not tariffs but rather take different forms of government participation. These include restrictive trade practices, administrative and custom entry procedures, charges on imports, technical barriers, sanitary and phytosanitary measures, institutional corruption, tedious licensing procedures, and transport, clearing and forwarding procedures.

Non-tariff barriers have positive and negative effects and present a major stumbling block to full EAC integration.

They trim the magnitude of imports in a country by promoting and cushioning local manufacturers and producers against dumping of sub-standard goods in the local markets. However, they also limit the movement of goods across the region and lead to increased cost of doing business, unnecessary delays at border points, and restricted opportunities for business expansion.

The EAC committee on the elimination of non-tariff barriers reported that there were 40 unresolved barriers and three new ones in 2012. In 2014, the number of unresolved barriers had increased to 56 and the new ones to five.

Insufficient infrastructural services have been identified as a major barrier that increases the cost of doing business and commodity prices.

Respective EAC governments should address inadequacy of financial resources allocated to infrastructural services at the border points. They should also take into consideration the development and integration of the rail and road transport across the region.

UNFAVOURABLE DELAYS

Congestion at the ports is another worrying barrier that results in unfavourable delays. Business owners fault the government for the slow pace of clearing goods, although the challenge is the facilities at the ports, which are old and overwhelmed. Additionally, the port procedures are not harmonised, leading to varying grace periods and increased demurrage charges for importers.

Delays are still being experienced at the Malaba border despite efforts to strengthen the single market regime. These delays affect efficient collection of revenue and hamper movement of goods to Uganda and Rwanda.

Elimination of non-tariff barriers would speed up movement of goods and people across the EAC states, thus promoting efficiency and boosting trade. The EAC governments should increase funding to improve transport systems and development of infrastructure and create the necessary institutions to ease the cost of doing business in the region.

In the 2013/14 Kenyan budget, a 1.5 per cent levy was imposed on all imported goods to mobilise Sh15 billion to fund construction of the standard gauge railway. In the 2014/15 financial year, Sh118.1 billion was allocated to the same project.

The government also allocated Sh3.7 billion for the construction of the Lamu Port Southern Sudan-Ethiopia Transport Corridor and exempted import duty on items used to facilitate railway operations. These initiatives are aimed at reducing congestion at the port of Mombasa and facilitating the expansion and development of the railway network across the region.

We expect that the EAC governments in their 2016/2017 budgets will put in place measures to prevent more non-tariff barriers from cropping up and resolving the existing ones. The measures should include coordination of the departments that offer services at border points and harmonisation of charges. We also expect increased budgetary allocations for the improvement of infrastructure.

Source: All Africa

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.