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The East African : July 7th 2014
COSTLY CASH Kenyan firms to pay more for funds from foreign markets. Page 40 BUSINESS JULY 5-11,2014 By ADAM IHUCHA Special Correspondent E AC partners have taken issue with Burundi for introducing new taxes on cigarette imports, terming the decision “discriminatory” and “contrary to the region’s Custom policy.” In the latest trade spat in the region, Uganda, Kenya, Rwanda and Tanzania say the April decision by Bujumbura to introduce a $0.25 excise duty on every pack of cigarettes imported into the country violated the EAC Customs Union Protocol. At the just-ended meeting of the Sectoral Council on Trade, Industry, Finance and Investment, Kenya argued that the move by Bujumbura equals a 28 per cent tax on cigarettes imported from regional countries, a move Nairobi sees as inconsistent with the Protocol. Under the Protocol, partner states should give preferential treatment to products from other EAC countries. The spat is the latest in a series that has seen EAC member states accuse each other of purposely using tariff and non-tariff barriers to protect their domestic companies from regional competitors. For example, Kenya has accused Tanzania of discriminating against EABL, while Kampala accuses Nairobi of requiring its sugar manufacturers and exporters to acquire licences from the Kenya Sugar Board before selling the product in the country. This requirement, while consistent with Comesa rules, is against the EAC Treaty. $0.25 TRADE SPAT Bloc uneasy as Bujumbura enacts protectionist law Uganda, Kenya, Rwanda and Tanzania say the decision by Bujumbu≥a to int≥oduce excise duty on ciga≥ettes violates the EAC Customs Union P≥otocol MANAGER Start-ups share ideas without legal protection Page 42 37 48 per cent of the total trade of its member states. The EAC’s total intra-regional trade soared from $4.6 billion in 2011 to $5.8 billion in 2012, the equivalent of a 26 per cent rise, while total intra-regional exports grew from $2.6 billion to $3.2 billion during the same period, an increase of 23 per cent. Kenya and Uganda accounted for an average of 37 and 24 per cent of the total intra-regional trade in 2011 and 2012. During the same period, Tanzania, Rwanda and Burundi accounted for an average of 20, 12, and eight per cent, respectively. This kind of protectionism not only kills competition across the region, but is also harmful to intra-EAC trade. Daniel Mghwira, trade analyst at Miradi Associates For instance, data shows that the total exports from Tanzania in 2011 and 2012 amounted to $411 and $614 million respectively, while the total imports from the region for the same period hit $376 million and $678 million respectively. The intra-EAC trade has been rising since 2002, calming fears that some weaker member states would be swamped in the customs. “Since the launch of the Customs prices for goods imported from Tanzania into Burundi, mainly rice and wheat flour. “I believe Burundi will do away Excise duty Bujumbura has introduced on every pack of cigarettes imported into the country Tanzania’s Deputy Minister for EAC Co-operation, Abdallah Sadallah said that Burundi needs to borrow a leaf from Tanzania, which trimmed truck road toll fees by 69.6 per cent for Burundi-registered lorries. Tanzania relaxed and harmonised the road toll fees for Burundiregistered trucks from $500 to $152 per truck in June, to match the fee for the other EAC partner states. Burundi’s Minister for EAC Affairs Leontine Nzeyimana said the move was critical to the business climate in her country, as it will reduce the cost of doing business there. “This came at a crucial time for Burundi since consumers and traders have started enjoying the benefits from the decision made by the Tanzanian government,” Ms Nzeyimana said. The reduction of the road toll charges is likely to result in cheaper with this discriminatory excise tax for cigarettes from the EAC partner states,” Dr Sadallah told The EastAfrican. But Burundi says that consultations have been undertaken with all the stakeholders in order to resolve the matter as soon as possible. Daniel Mghwira, a trade analyst at Miradi Associates in Arusha, said that protectionism is a hidden threat to intraregional trade. “This kind of protectionism not only kills competition across the region, but is also harmful to intra-EAC trade, a most crucial component in regional integration,” Mr Mghwira noted. Economists say that once the intra-EAC trade amounts to 50 per cent of total trade volumes, the bloc will be able to lift its over 130 million people from poverty. According to the East Africa THREAT Protectionism is seen as a threat to intra-regional trade. Intra-EAC trade currently stands at 13 per cent of the total trade volume, against the 87 per cent of the business the region offers the outside world. The EAC’s total intra-regional trade soared from $4.6 billion in 2011 to $5.8 billion in 2012, the equivalent of a 26 per cent rise, while total intra-regional exports grew from $2.6 billion to $3.2 billion during the same period, an increase of 23 per cent. Kenya and Uganda accounted for an average of 37 and 24 per cent of the total intra-regional trade in 2011 and 2012. During the same period, Tanzania, Rwanda, and Burundi accounted for an average of 20, 12 and 8 per cent, respectively. Since the launch of the Customs Union, and subsequently the Common Market, intra-EAC trade increased from about $2 billion in 2005 to $5.5 billion in 2012. Business Council executive director, Andrew Luzze, EAC intra-trade currently stands at 13 per cent of the total trade volume, against 87 per cent of the business the region does with the outside world. “We are exporting thousands of jobs to the outside world while our own people are jobless. Let the public and private sector work together to change this trend,” Mr Luzze said. Available records show that in the European Union, intra-trade accounts for 60 per cent of its total trade volume, while trade within the North America Free Trade Area accounts for Union, and subsequently the Common Market in 2005, intraEAC trade increased from about $2 billion to $5.5 billion in 2012,” according to records. Total intra-regional exports grew from around $500 million in 2000 to $3.2 billion in 2012, an increase of over 600 per cent. Looking beyond the numbers, analysts say that although intra-EAC trade is in favour of Kenya, there are promising signs that all partners are gaining from integration. This intra regional trade is made up mainly of manufactured products and services. Traded goods included oil cake and other solid residues of sunflower seeds, maize, oranges, cement, carboys, bottles, flasks, jars, pots, phials and ampoules, thermometers/ pyrometers, black tea fermented, flavoured or not, mosquito nets, liquefied natural gas, groats and maize meal, potatoe seeds, maize seed and salt. The list also included unbleached kraft liner, petroleum jelly, mineral or chemical fertilisers, sacks and bags, petroleum gases and other gaseous hydrocarbons, cane or beet sugar, unbleached sack kraft paper, solid residues of coconut, crocheted rubberised textile fabrics and seamless iron or steel casing used in oil/gas drilling.
June 30th 2014
July 14th 2014