Kenya, Uganda and Rwanda agreed to implement the Single Customs Territory (SCT) in January 2014. They have since been test-running the procedures for a select group of intra-EAC traded goods, like cement, cigarettes, neutral spirits, milk and milk products, and confectionary since April 1.

Under this arrangement, an importer needs to electronically lodge import declaration forms in his home country following which the relevant exporting tax authority will issue him with a road manifest for his cargo to depart from the EAC country of export.

This is referred to as the destination model of goods clearance where taxes are assessed and collected at their first point of entry into the SCT.

The SCT envisions free flow of goods within the territory, making it similar to the more advanced European Union which is virtually borderless.

Under full implementation of the SCT, commodities that are produced within the EAC would still enjoy zero import duty when crossing borders but with no more need for a certificate of origin.

This removal of tariff barriers has been a major milestone for the regional bloc and has led to a significant rise in trade between the partner states.

The SCT also envisages minimum border controls, improved ICT interconnectivity among partner states and the timely exchange of customs information.

Reforms

Some of the notable gains made by partner states include Kenya’s implementation of an electronic cargo tracking system that is integrated to the Kenya Revenue Authority’s Simba System to curb illicit diversion of export-cargo into the local market without payment of taxes.

Such reforms clearly demonstrate the partner states’ political commitment to the EAC protocol and in particular, the creation of a borderless customs union.

But there still remains a lot of work to be done in the resolution of non-tariff barriers that often cause delay of cargo in transit such as weighbridges, customs checkpoints and police roadblocks.

Other problems bedevilling the SCT are the differing political and development priorities that partner states find themselves in. Political will drives the agenda of the community and particularly the proposed SCT, dictating the pace at which integration is done.

Lastly, it is clear that most EAC partner states are members of other regional bodies such as Comesa, Igad and SADC, which all come with both financial and human resource demands from their members.

In a region in dire need of technical capacity, these bodies place a huge human resource burden. Even more urgent is the challenge posed by conflicting CET and preferential trade rules from these diverse regional bodies.

Source: Business Daily

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.