Proposed 35 percent CET aims to boost East Africa trade to $6.8 billion

What you need to know:

  • This means the trade among the six partner states - Tanzania, Uganda, Kenya, Burundi, Rwanda and South Sudan, will increase by $18.9 million.
  • Enforcement of the proposed maximum CET for goods entering the region is, however, subject to adoption by the EAC member countries.

Arusha. The proposed 35 percent common external tariff (CET) for imported goods, will boost intra-East African Community (EAC) trade to $6.8 billion.
In 2020, the total trade within the six nation bloc stood at 11.8 percent, amounting to $6.39 billion.
This means the trade among the six partner states - Tanzania, Uganda, Kenya, Burundi, Rwanda and South Sudan, will increase by $18.9 million.
Enforcement of the proposed maximum CET for goods entering the region is, however, subject to adoption by the EAC member countries.
The expected trade gains are revealed in an analysis done by the Arusha-based EAC secretariat.
The analysis proposed the CET rates of 30 percent,33 percent and 35 percent for products classified under the fourth band (maximum band).
The East African Business Council (EABC), an apex body of private sector associations, believes the new tariff structure would spur trade.
The EAC partner states are urged to adopt them also in a bid to promote industrialisation and strengthen the regional value chain.
Under the current EAC CET structure, the maximum tariff is 25 percent while the other bands are 0 percent and 10 percent with few sensitive products attracting higher tariffs ranging from 30 percent and 100 percent.
The 35 percent maximum CET rate is central to boosting the competitiveness of East African manufactured products in the continent and the globe. The analysis shows if EAC Partner States adopted 30 percent or 33 percent or 35 percent as the maximum CET rate, total tax revenues will increase by 3.9 percent,4.9 percent and 5.5 percent respectively.
The 35 percent maximum CET rate for products categorised under the 4th Band will divert trade from global trading partners in favour of the EAC intra-regional trade. Uganda will accrue the highest trade creation at $ 8,456,681 followed by Kenya and Rwanda at $ 5,099,829 and $ 3,714,495 respectively.
Employment generation is set to increase marginally with 0.02 percent (5,055 persons) under the maximum rate of 30 percent; 0.03 percent (6,089 persons) with a maximum rate of 33 percent applied; and 0.03 percent (6,781 persons) increase in average EAC formal employment under the maximum rate of 35 percent.
On industrial development, industrial production increases under each of the proposed maximum CET rates of 30 percent, 33 percent and 35 percent, with the highest rate of 35 percent conferring the greatest gains in industrial output.