eac drs study draft final 112013

of 122

Draft Report

Prepared For

East African Community Customs Directorate

by

COMPREHENSIVE STUDY ON DUTY REMISSION SCHEMES,

EXEMPTIONS REGIMES AND PREFERENTIAL TRADE SCHEMES

APPLIED BY THE PARTNER STATES IN THE EAC

Dr. Patrick Machyo, Team Leader

Mr. Charles Nuwagaaba, National Consultant, Uganda

Mr. Valerie Siriremera, National Consultant, Burundi

Mr. Nchooro M’mwenda, National Consultant, Kenya

Mr. Steve Mugisha, National Consultant, Rwanda

Prof. Godwin Mjema

Intergrated Development Consultants Ltd Surveyors Court, Westlands, Nairobi

P.O BOX 1963-06060 Sarit NAIROBI Tel/Fax : 254-020-4442420

[email protected]

November 2013

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TABLE OF CONTENT

LIST OF ACRONYMS .......................................................................................................................... v

EXECUTIVE SUMMARY ................................................................................................................... vi

1.0 Background .......................................................................................................................... vi

2.0 Summary of Recommendations ......................................................................................... vii

1.0 Introduction .......................................................................................................................... 1

2.0 Approach/methodology applied in the study ..................................................................... 2

3.0 Duty Remission on imported goods for use in manufacture of goods in EAC Partner

States 3

3.1 Legal basis ............................................................................................................................. 3

3.2 Economic rationale for duty remission ................................................................................. 3

3.2.1 Economic rationale for duty remission on goods imported for manufacture of goods

for exports and home consumption .............................................................................................. 3

3.2.2 Economic rationale for duty remission granted under export promotion schemes –

export competitiveness.................................................................................................................. 4

3.3 Customs management practises .......................................................................................... 5

3.3.1 Institutional arrangement ................................................................................................ 5

3.3.2 Monitor of end use of subject raw material/industrial input ........................................... 7

3.3.3 Customs Controls ............................................................................................................ 7

3.2.3 Recommendations on customs management practices ................................................. 10

3.2.3.1 Recommendation on Institutional Arrangement ....................................................... 10

3.2.3.2 Recommendation on Customs Control ..................................................................... 11

3.2.3.3 Recommendation on EAC capacity building support to Duty Remission Scheme .. 11

4.0 Duty remission on imports for manufacture of goods for Home Consumption ........... 12

4.1 Scope of coverage ................................................................................................................ 12

4.2 Analytical framework for duty remission on goods imported for use in manufacture of

goods for home consumption ......................................................................................................... 13

4.3 Duty Remission on imports of sugar for industrial use for use in manufacture of

finished products for home use ...................................................................................................... 14

4.3.1 Policy objective for granting sugar for industrial use duty remission ........................... 14

4.2.2 Quota Allocation for importation of sugar for industrial use under EAC DRS ............ 14

4.3.3 Quota utilization in production of approved finished products using sugar for industrial

use 15

4.3.4 Impact Assessment of DRS on sugar for industrial use on EAC Economies ............... 17

4.3.5 Regional availability of sugar for industrial use ........................................................... 18

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4.3.5 Recommendation arising from DRS for Sugar for industry use towards harmonization

of EAC DRS ................................................................................................................................. 19

4.4 Duty Remission on Paper products for use in manufacture of finished products for

home use ........................................................................................................................................... 19

4.4.1 Policy objective for granting paper products duty remission ........................................ 19

4.4.2 Quota Allocation for importation of paper products under EAC DRS ......................... 20

4.4.3 Quota utilization in production of approved finished products using DRS paper

products 20

4.4.4 Impact Assessment of DRS paper products on EAC Economies ................................. 21

4.4.5 Regional capacity to produce paper and paper products ............................................... 22

4.4.5 Recommendation arising from DRS paper products towards harmonization of EAC

DRS 23

4.5 Duty Remission on CKDs for motorcycles for use in manufacture of finished products

for home use..................................................................................................................................... 23

4.5.1 Policy objective for granting motorcycle CKDs duty remission .................................. 23

4.5.2 Quota Allocation for importation of CKD under EAC DRS ........................................ 23

4.5.3 Quota utilization in production of approved motorcycles using DRS CKD sets .......... 23

4.5.4 Impact Assessment of DRS motorcycle CKD sets on EAC Economies ....................... 25

4.5.5 Regional capacity to supply motorcycle CKDs ............................................................ 25

4.5.5 Recommendation arising from DRS motorcycle towards harmonization of EAC DRS

26

4.6 Duty Remission on Wheat and wheat products for use in manufacture of finished

products for home use .................................................................................................................... 27

4.6.1 Policy objective ............................................................................................................. 27

4.6.2 Impact assessment ......................................................................................................... 28

4.6.3 Regional capacity to supply hard wheat and other wheat grain .................................... 28

4.6.4 Recommendation arising from DRS for hard wheat and other wheat grain towards

harmonization of EAC DRS ......................................................................................................... 29

4.7 Duty remission on assorted items for manufacture of transformers ............................. 29

4.8 Duty Remission on Raw Material for use by approved manufacturers under Uganda

Lists 29

4.8.1 Policy objective and Scope of coverage ........................................................................ 29

4.8.2 Impact assessment of the Uganda List on Uganda’s economy and the economy of

other EAC Partner States .............................................................................................................. 30

4.8.2.1 Impact on production ................................................................................................ 30

4.8.2.2 Impact on Exports ..................................................................................................... 31

4.8.2.3 Impact in other EAC economies ............................................................................... 32

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4.8.3 Assessment of regional supply capacity of products in the Uganda List of June 2013 33

4.8.4 Recommendations for harmonization of EAC duty remission scheme arising from the

Uganda List of Raw Materials of 2007 and June 2013 ................................................................. 34

4.9 Rwanda’s access and utilization of Duty Remission for manufacture of goods for home

use under various EAC Gazette Notices and under Uganda List ............................................... 34

4.9.1 Policy objective and scope of coverage ........................................................................ 34

4.9.2 Impact assessment of the Rwanda List on Rwanda’s economy and the economy of


4.9.2.1 Impact on production ................................................................................................ 35

4.9.2.2 Impact on Exports ..................................................................................................... 35

4.9.2.3 Impact in other EAC economies ............................................................................... 36

4.9.3 Assessment of regional supply capacity of products in the Rwanda List ..................... 38


Rwanda List of Raw Materials ...................................................................................................... 39

4.10 Duty Remission on Raw Material for use by approved manufacturers under Burundi list

40

4.10.1 Policy objective and scope of coverage ........................................................................ 40

4.10.2 Impact assessment of the Burundi List on Burundi’s economy and the economy of


4.10.2.1 Impact on production ........................................................................................... 40

4.10.2.2 Impact on Exports ................................................................................................ 41

4.10.2.3 Impact in other EAC economies .......................................................................... 41

4.10.3 Assessment of regional supply capacity of products in the Burundi List ..................... 42


Burundi List of Raw Materials ...................................................................................................... 44

4.11 Duty Exemptions and Duty Remissions under National Laws ....................................... 44

4.11.1 Duty Exemptions under the EAC CMA (2004) ............................................................ 44

4.11.2 Duty Remissions under National Laws ......................................................................... 45

5.0 Duty remission for manufacture of good for exports ...................................................... 47

5.1 Analytical framework for duty remission on goods imported for use in manufacture of

goods for exports ............................................................................................................................. 47

5.2 Impact assessment .............................................................................................................. 48

5.2.1 Threat to EAC industries producing similar raw material/industrial inputs ................. 48

5.2.2 Impact on export growth and regional market potential ............................................... 49

5.2.3 Recommendation on duty remission on imported goods for use in manufacture of

goods for export ............................................................................................................................ 50

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6.0 Duty Remission through Stay application of CET Rate ................................................. 51

6.1 Legal basis ........................................................................................................................... 51

6.2 Customs management practice .......................................................................................... 51

6.3 Analytical Framework, impact Assessment and proposed harmonization measures .. 52

6.3.1 Analytical framework and proposed principles for harmonization of the stay of

application category of duty remission ......................................................................................... 52

6.3.2 Impact Assessment and proposed harmonization measures ......................................... 53

6.3.2.1 Product coverage ....................................................................................................... 53

6.3.2.2 Rice ........................................................................................................................... 54

6.3.2.3 Wheat and wheat flour .............................................................................................. 56

6.3.2.4 Sugar ......................................................................................................................... 59

6.3.2.4 Motor vehicle for transport of more than 25 persons ................................................ 60

6.3.2.4 Motor vehicles for transport of goods (Gross weight exceeding 5 tons but less than

20tons and gross weight exceeding 20 tons ............................................................................. 61

6.3.2.5 Impact assessment and proposed policy measures on other products that benefited

from the stay of application category of duty remission ........................................................... 63

6.4 Recommendation on stay of application of the CET rate ................................................... 65

7.0 Preferential trade schemes ................................................................................................. 68

7.1 Analytical framework for PTA scheme ................................................................................ 68

7.2 COMESA FTA trade regime with EAC Partner States ................................................. 68

7.2.1 EAC Partner States relationship with COMESA trade regime ..................................... 68

7.2.2 Trade distorting Effect of COMESA FTA in EAC ....................................................... 69

7.3 SADC Trade regime .............................................................................................................. 70

7.3.1 EAC Partner States relationship with SADC trade regime ........................................... 70

7.3.2 Trade distorting Effect of SADC FTA .......................................................................... 71

7.4 Recommendations on harmonization of the trade regime between EAC and COMESA

and SADC trading blocks ............................................................................................................... 71

ANNEXES ............................................................................................................................................... 73

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LIST OF ACRONYMS

COMESA Common Market for Eastern and Southern Africa

CET Common External Tariff

CKDs Completely Knocked Down Kits

CMA Customs Management Act (2004)

DRS Duty Remission Scheme

EAC East African Community

FTA Free Trade Area

SCT Single Customs Territory .

SADC South African Development Cooperation

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EXECUTIVE SUMMARY

1.0 Background

The EAC trade regime, as defined by the EAC Customs Union Protocol and the EAC Customs

Management Act (EAC CMA) and Customs Regulations provides for various duty remission and

exemption regimes. This flexibility was to accommodate various regimes that EAC Partner States

were implementing at the coming into force of the EAC Customs Union on 1st January 2005. These

regimes include the following: -

i) Duty exemption and remission schemes under various national laws, some of which have been

maintained.

ii) Preferential treatment to trade with the respective Regional Economic Communities (RECs)

where Partner States are members.

iii) National specific duty remission and stay of application as approved by Council from time to time

in accordance with the Customs Union Protocol.

iv) Duty remission and exemption regimes granted across the region in accordance with the EAC

Customs Management Act (CMA) 2004.

Among the key justifications for this study is the concern that the application of these regimes has had

potential negative impact on EAC trade as a result of the regimes being country specific in

nature and discriminatory across sectors and between industries.

Secondly, these regimes are not sustainable in the context of the Single Customs Territory, where the

entire EAC region becomes a domestic market. Continued application of the regimes on country

specific basis undermines the tenets of the Single Customs Territory (SCT).

Taking cue from the above concerns and the dictates of the SCT, this study was commissioned to

review all the duty remissions schemes, exemption regimes and preferential trade schemes applying in

the Partner States. The findings of this review were applied in recommending a methodology to

harmonize the schemes in line with the Single Customs Territory requirements. Detailed analysis of

each of the various regimes, impact and proposed methodologies for harmonization of the regimes are

presented in the report under the following sections:

Section 3.0 – Duty Remission Scheme Legal basis and Customs Management Practise in the

implementation of the scheme

Section 4.0 – Duty Remission on imports of goods for manufacture of goods for home use,

encompassing Burundi, Rwanda and Uganda Lists of Raw Material

Section 5.0 – Duty Remission on imports of goods for manufacture of goods for exports

Section 6.0 – Duty Remission – Stay Application of CET rate Category, Duty Exemptions and Duty

Remission under National Laws

Section 7.0 – Preferential Trade Scheme and the impact on EAC economies

The EAC objectives of Regional Integration, Industrial and Agricultural Development as well

articulated in key EAC policy documents, such us the EAC Customs Union Protocol, Agricultural and

Rural Development Strategy, EAC Food Security Action Plan and EAC Industrial Development

Policy and Strategy provided a framework for guiding policy proposals on various products, raw

material and industrial inputs. At the backdrop of this study is low intra-regional trade in agro-

processed and other manufactured goods, with intra-regional imports for most of these products being

below 10%. This means that EAC has continued to trade among itself less partly due to policies that

do not reflect the regional reality about availability of certain types of raw material. While Duty

Remission is a very good initiative to assist EAC industries access globally sourced raw material and

industrial input at duties lower than the CET rate, where the region has no lacks the subject raw

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material, there lacks the basis for the duty remission and hence need to subject manufacturers to the

annual ritual of seeking approval to import a raw material or product that no one is producing. This

study applies a scientific method to identify such cases and has proceeded to recommend permanent

reduction of the CET rate, putting the burden on the producers of such products or raw material to

proof that they have sufficient output to meet the regional demand. This approach will assist in getting

the concerned producers to strategically look at the EAC market, look out for the manufacturers who

use the raw material/industrial inputs and thus forge strong networks that will drive intra-regional

trade of raw materials and industrial inputs, as well as other finished products that have been subject

of duty remission.

2.0 Summary of Recommendations

1. Customs management practices

1. Institutional Arrangement

a) Predictable cycle of duty remission committee and EAC Council meetings for approval

of duty remission applications Concerns about delays need to be resolved through fixing specific dates in a month when

applications would be considered by the Committee. With a firm cycle of meetings – national

and regional, it becomes easy for private sector to plan on their raw material requirement.

b) Private sector associations role in application for duty remission

A more explicit role of the private sector in the application process needs to be introduced in

the regulations. As a minimum requiring that applications from the private sector firms are

channelled through the private sector associations where the associations would help their

members to conform to the application requirements in order to avoid rejection of application

on procedure grounds.

2. Customs Control

1. Customs Bonds

To ensure equity in application of duty remission and especially in safeguarding risks

associated with diversion of raw material and industrial inputs to the unintended use, it is

recommended that customs bond requirement which is provided in the Duty Remission

Regulation (2008) be enforced in all EAC Partner States. This is crucial in sustaining the

integrity of the DRS and instilling confidence and trust among the Revenue Authorities in

facilitating trade of finished goods manufactured using the DRS material.

2. Payment of Duty

The provision for payment of penalty on unutilized raw material should be dropped from the

regulation because unutilized raw material imported in good faith may end up not being

utilized because of factors beyond the manufacturer and unforeseen at the time of applying

for the duty remission. After all, full duty is payable on any material not applied for the

intended purpose.

3. Quarterly Returns

Submission of quarterly returns needs to be enforced as provided for in the Duty Remission

Regulation

3. EAC capacity building support to Duty Remission Scheme

To address the challenge posed by capacity related non-compliance with the requirement for

filing of quarterly returns the following interventions are proposed: -

a) Interlinking the data processing systems within the EAC region.

b) Partner States should have an electronic monitoring mechanism e.g. in the SIMBA System,

Ascyuda, with a possibility of conducting reconciliations.

c) Mandatory Installation of stock management system by manufacturers.

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d) Mandatory submission of returns both electronically.

2. Recommendations pertaining to duty remission on imports for manufacture of goods for

home use

A) Methodology for harmonization of duty remission for home use finished products

Duty remission is primarily aimed at mitigating domestic or regional shortage of a raw material

by allowing manufacturers to import the subject raw material from the rest of the world at a tariff

lower than the CET rate. In the context of the EAC Single Customs Territory (SCT), duty

remission would only be justified on the basis of lack of the product, raw material or industrial

inputs.

To determine availability of a product, raw material or industrial input a trade flow analysis based

methodology has been proposed, combined by the argument of statistical significance of a

number. This has been used to develop a threshold that if used can guide in determining cases

where the region has adequate supply potential, which needs to be safeguarded through duty

remission regime.

For every product, it is proposed that its Intra-EAC exports for the past three years as a share of

the EAC total market size of the same product, which is defined as EAC-Intra Exports plus EAC-

Extra imports. If the share is less than 30%, the conclusion is that the region does not have

adequate supply potential of the product, raw material or industrial input to meet the regional

requirement of the manufacturing industry. Such cases require downward review of the CET rate

to reflect the regional supply reality in support of regional manufacturing processes.

On the other hand, if the share is greater than 30%, then the conclusion is that the region has

adequate supply potential meriting periodic application of the duty remission regime for periods

when manufacturer report shortage or lack.

This methodology is easy to administer, especially with the now online available EAC trade flow

data through the EAC Trade Help Desk. It was resorted to in absence of reliable data on

production and the fact that there is strong causal relationship between production and Intra-EAC

exports.

B) Universal access to the duty remission rate by all manufacturers

In order to avoid discriminatory nature of the current EAC duty remission regime, which

undermines the spirit of the SCT, it is proposed that once a product has been determined as

meriting duty remission rate, then any manufacturer in any of the EAC Partner State will be free

to import that product. Vetting of the manufacturers to be done by private sector associations who

forward eligible manufacturers to the Commissioner of Customs. Conditions of eligibility should

build on the criteria already in the EAC Duty Remission Regulation.

If this proposal is accepted, going forward, private sector associations, working with the

manufacturers and EAC Secretariat will determine cases deserving duty remission on the basis of

the threshold rule on raw material that the industry feels is in short supply. The list will be

forwarded to the Council for approval. Uganda June 30, 2013, follows this procedure.

C) Free circulation of finished products for home use manufactured using raw material

imported under duty remission scheme

Given that duty remission rate will be accessible to all manufacturers in the region, irrespective of

which country had submitted the application to EAC, the finished product manufactured using the

subject raw material should be allowed to be trade within the EAC region freely. Universal access

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of the duty remission rate removes the sensitivity that has in the past led EAC Partner States to

erect barriers on finished goods benefiting from duty remission.

D) Proposed harmonization of duty remission on various products that have been granted duty

remission between 2007 and June 2013

The above rule has been applied in determining cases where duty remission should continue or

where the CET rate should be reviewed on account of lack of regional supply potential.

i) Sugar for industry use towards harmonization of EAC DRS

a) The CET for Sugar for Industrial Use (HS Code 1701.99.10) be reduced to zero or 10%.

b) An impact assessment of the sugar industry producers be undertaken to ensure their input to

this policy proposal, especially in view of the regional industrial requirements and the huge

unexploited potential that dictates the required levels of supply. The objective will be to agree

on 0% or 10% but not to retain sugar for industrial use as a sensitive product and to agree on

conditions which once attained, the CET of 0% or 10% can be reviewed upwards.

c) The EAC identifies all manufacturers in the EAC region that use this raw material and register

them as approved manufacturers, for purposes of customs applying the above duty rate for

importation by these firms.

d) The EAC establishes a monitoring system to monitor application of the sugar for industrial use

in manufacturing the approved finished products.

e) Heavy penalty by tied to diversion of the sugar to any other use other than the intended

purpose.

f) Mandatory monthly reporting on level of utilization of the imported products and volume of

finished products produced and used in the domestic market or exported.

g) All products produced using DRS for sugar for industrial use be allowed into all EAC markets

on duty free basis, provided they meet the EAC Rules of Origin.

ii) Paper products towards harmonization of EAC DRS

a) Reduce CET rate for paper and paper products that are shown in Annex 2 to 0% due to

inadequate supply potential

b) Industry consultation be held to ensure a consensus view on the proposed CET rate modality

for future review once the suppliers demonstrate their capacity to meet the regional

requirements.

iii) Motorcycle towards harmonization of EAC DRS

The platform on which the proposed recommendation for the motorcycle CKDs is based is the

over US$100m regional market potential which motorcycle assemblers are targeting. The

proposed motorcycle CKDs recommendation is based on the regional market potential of over

US$100m, forming a target market for motorcycle assemblers. This coupled with regional lack of

requisite parts to support motorcycle assembly plants calls for the following policy measures:

a) Introduce tariff lines, through tariff splits, to accommodate various categories of motorcycle

CKDs in the EAC Tariff book and assign a CET rate of 0% (refer the main report for the

proposed splits).

b) To ensure that the CKDs are imported by genuine motor cycle assemblers, it is recommended

that only motorcycle assemblers registered with the customs through the association of

motorcycle assemblers or private sector association should be allowed to import the CKDs.

c) Among the conditions that the assemblers should meet are industry set standards that the

association will vet all assemblers to ensure compliance before registration. Periodic audit

findings to be the basis for annual renewal of registration of the assemblers.

d) In view of the above recommendations, the June 30 2013 legal notice on motorcycle

assembling should be withdrawn and instead, above policy measures be put in place.

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iv) Hard wheat and other wheat grain towards harmonization of EAC DRS

a) The CET rate on hard wheat and other wheat grain be lowered to 10%, being the rate that the

industry has been granted throughout the review period.

iv) Recommendations arising from the Uganda List of Raw Materials of 2007 and June

2013

a) Duty remission be continued on 19 tariff lines in the Uganda list, that the region has been

determined to have supply potential (refer table 4.24 of the main report)

b) In view of the huge regional market potential for the finished products that are targeted for

production using the raw material/industrial inputs in the Uganda list of 2007 and June 2030,

coupled with absolute lack of regional capacity for production of the same raw material, the

following policy measures are proposed.

CET rate on some 83 tariff lines (Refer Annex 3) in the 2007 and June 30, 2013 Uganda list

be permanently reduced to 0% on account of the region’s inadequate supply capacity and

recognition that if these goods were available from the region, manufacturers would be

obliged to pay no duty while sourcing the same from EAC Partner States.

Continuous monitoring of the regional supply capacity be undertaken regularly so that any

material that the region demonstrates as having attained the required threshold of 30% may

have the CET rate reviewed and access of the raw material during seasons of shortage be

managed through the duty remission scheme.

v) Recommendations for harmonization of EAC duty remission scheme arising from the

Rwanda List of Raw Materials

a) Duty remission be continued on 26 tariff lines in the Rwanda list, that the region has been



production using the raw material/industrial inputs in the Rwanda list, coupled with absolute lack

of regional capacity for production of the same raw material, the following policy measures are

proposed:

CET rate on some 119 tariff lines (Refer Annex 4) in the Rwanda list of approved raw

materials be permanently reduced to 0% on account of the region’s inadequate supply

capacity.

Continuous monitoring of regional supply capacity be undertaken regularly so that any




v) Recommendations for harmonization of EAC duty remission scheme arising from the

Burundi List of Raw Materials

a) Duty remission be continued on 23 tariff lines in the Uganda list, that the region has been



production using the raw material/industrial inputs in the Burundi list, coupled with absolute lack

of regional capacity for production of the same raw material, the following policy measures are

proposed:

CET rate on some 70 tariff lines (Refer Annex 5) in the Burundi list of approved raw material

be permanently reduced to 0% on account of the region’s inadequate supply capacity

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Continuous monitoring of regional supply capacity be undertaken regularly so that any




3. Recommendation arising from the review of the EAC CMA (2004) Duty General

Exemptions (Part B)

1. The following items, which qualify as raw material or intermediate goods should be removed

from the exemption regime and be managed under the duty remission scheme:

Horticulture, Agriculture or Floriculture Input

Inputs for use in the manufacture of agricultural equipment

i) Machinery, Spares and Inputs for Direct use in Oil, Gas and

ii) Unbleached woven fabrics of a width 80 inches and above imported for manufacture of textile

materials

2. The following items may need to be accommodated in the EAC Tariff book through review of

CET rate to 0% based on the objective for which they have been identified for purposes of

inclusion in the exemption regime:

i) Industrial Spare Parts

(i). Packaging Material for Medicaments

(ii). Education

(iii). Splints for use in the manufacture of matches

(iv). Seeds for Sowing

(v). Electrical Energy saving bulbs for lighting also known as Compact Fluorescent Bulbs

4. Recommendations arising from the review of Duty Remission under National Laws

a) EAC Partner States should fold their national duty remission structures under the national laws

and instead have the incentives provided under the EAC CMA.

b) EAC CMA be reviewed to accommodate any national level incentives in the context of the EAC

investment and industrial development strategy.

5. Recommendation arising from review of duty remission on imported goods for use in

manufacture of goods for export

a) Grant duty remission for exports on raw material that the region has demonstrated capacity to

supply

i) Using the above 30% rule, out of the 250 products that Kenya sought duty remission for

export, only 42 products, which appear in annex 6, would qualify for duty remission for

exports. It is recommended that these products be retained in the duty remission for exports

regime for a period of 3 years. Review of the CET rate after three years be done for cases

where regional supply will have responded to regional demand.

ii) The threshold for sale of annual production to the regional market should be raised to 40%

in recognition of the huge export potential currently being serviced by extra-regional

imports.

b) Reduce the CET rate of some 241 products (refer Annex 7), previously in Kenya duty

remission for exports schedule to 0% on permanent basis. Using 30% intra-export principle it

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was established that the region does not have adequate supply capability to warrant periodic

exemption of the CET rate through duty remission regime.

6. Recommendation arising from the analysis of the on stay of application of the CET rate category of duty remission

a) EAC Duty Remission regulation (2008) be reviewed to include temporary stay of CET rate,

pursuant to the EAC Customs Union Protocol, Articles 12(3) and Articles 39(1) (i) (c).

This revision will be based on the recognition that in EAC, certain finished products experience

seasonal shortages, thereby meriting need for the region to import the same products from rest of

the world at a duty rate less than the CET rate.

b) Proposed duty remission for current cases of the stay of application

On the basis of the 30% intra-EAC exports threshold rule the regional was found to be having

adequate supply potential that merited the following to be granted periodic duty remission

i) Rice

ii) Barley and roasted malt

iii) Sugar

iv) Motor vehicle for transport of more than 25 persons

c) Cases of stay of application of the CET rate that are recommended for permanent reduction

in the CET rate due to lack of demonstrated regional supply potential

i) Wheat – reduce to 10%

ii) EAC Motor vehicles for transport of goods (Gross weight exceeding 5 tons but less than

20tons and gross weight exceeding 20 tons – reduce to 10%

iii) Palm stearin, fractions, Sodium sulphate and Epoxide resins – reduce to 0%

iv) Hand Hoes – reduce to 0%

v) Flat-rolled products of iron or non alloy steel – reduce to 0%

vi) Stranded wires, cables, plaited bands and the like, of cooper, non-electrically insulated –

reduce to 0%

vii) Road guard rails, gabions and gabion mattresses – reduce to 0%

viii) Tractors – reduce to 0%

ix) Road guard rails, gabions and gabion mattresses – reduce to 0%

x) Aluminium conductors and cables – reduce to 0%

xi) Towers and lattice masts – reduce to 0%

7. Recommendations on harmonization of the trade regime between EAC and COMESA and

SADC trading blocks

To address the exposure that EAC Partner States are experiencing due to the implementation of

COMESA and SADC FTA, it is proposed that EAC pursues harmonization of tariff liberalization

between COMESA and SADC regional blocs under the Tripartite FTA. The following formula is

proposed: -

EAC Offer to COMESA countries under the Tripartite FTA

a) EAC Partner States to offer all COMESA countries duty free market access building on Burundi,

Kenya and Rwanda COMESA FTA commitments where duty under COMESA FTA these

countries apply 0% duty on imports from COMESA FTA countries

b) For COMESA countries not willing to offer EAC duty free market access, EAC to offer

reciprocal rate to such countries

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EAC Offer to SADC countries under the Tripartite FTA

a) EAC Partner States to offer all SADC countries duty free market access building on Tanzania

SADC FTA commitments where duty under SADC FTA, where Tanzania applies 0% duty on

imports from SADC FTA countries

b) For SADC countries not willing to offer EAC duty free market access, EAC to offer reciprocal

rate to such countries

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1.0 Introduction

The EAC trade regime, as defined by the EAC Customs Union Protocol and the EAC Customs

Management Act (EAC CMA) and Customs Regulations provides for various duty remission and

exemption regimes. This flexibility was to accommodate various regimes that EAC Partner States

were implementing at the coming into force of the EAC Customs Union on 1st January 2005. These

regimes include the following: -

vi) Duty exemption and remission schemes under various national laws, some of which have been

maintained.

vii) Preferential treatment to trade with the respective Regional Economic Communities (RECs)

where Partner States are members.

viii) National specific duty remission and stay of application as approved by Council from time to

time in accordance with the Customs Union Protocol.

ix) Duty remission and exemption regimes granted across the region in accordance with the EAC

Customs Management Act (CMA) 2004.

Among the key justifications for this study is the concern that the application of these regimes has had

potential negative impact on EAC trade as a result of the regimes being country specific in

nature and discriminatory across sectors and between industries.

Secondly, these regimes are not sustainable in the context of the Single Customs Territory, where the

entire EAC region becomes a domestic market. Continued application of the regimes on country

specific basis undermines the tenets of the Single Customs Territory (SCT).

Taking cue from the above concerns and the dictates of the SCT, this study was commissioned to

review all the duty remissions schemes, exemption regimes and preferential trade schemes applying in

the Partner States. The findings of this review are to be applied in recommending a methodology to

harmonize the schemes in line with the Single Customs Territory requirements.

The study covers all the duty remission schemes, exemption regimes and preferential trade regimes in

various EAC Partner States. The following specific tasks are articulated: -

a) Take stock of all the duty remission schemes, exemption regimes and preferential trade schemes

in existence in the Partner States.

b) Analyze all the schemes in (a) above in terms of equity, uniformity and trade distortion in the

implementation of the EAC Trade regime.

c) Assess the impact of each scheme on the economies of the other Partner States.

d) Examine the current regional Customs practices on the duty remissions schemes and propose a

policy to manage the remissions.

e) Examine the current preferential trade schemes of COMESA/SADC and its impact on EAC intra-

trade.

f) Based on outcomes (a) and (b) above, formulate the draft proposal on the harmonization of duty

remission schemes.

The rest of this report is organized as follows:

Section 2.0 details approach and the methodology applied.

Section 3.0 discusses legal basis and customs management practices for the various duty

remission schemes.

Section 4.0 focuses on duty remission for home use. It is also extended to cover exemptions and

duty remission under National laws.

Section 5.0 focuses on duty remission of exports.

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Section 6.0 focuses on the duty remission under the ‘stay of application’. In each of the latter

three sections, the study reviews customs control measures and monitor to ensure that imports

under duty remission were used as intended in the manufacture of finished goods for home use or

exports or for use as a final product to meet regional supply shortfall (in the case of stay of

application’. These section also assesses impact of the duty remissions on the beneficiary country

and the economies of the other EAC Partner. The findings are used to guide on harmonized policy

for respective duty remission scheme.

Section 7.0 Preferential trade regimes (COMESA and SADC FTA), while

2.0 Approach/methodology applied in the study

At the commencement of the study, consultations with the EAC Secretariat were undertaken, where

the scope and approach was agreed upon. Through this interface, critical documents that are outlined

in the terms of reference were obtained for review and use during the course of the study.

In depth review of the EAC Duty Remission Regulation (2008), EAC Customs Union Protocol,

Customs Management Act (2004), EAC Council Reports and EAC Gazettes for the period 2007 to

June 2013 were undertaken. This helped the study team grasp the policies underlying the duty

remission scheme and the legal framework upon which the scheme is based.

Structured questionnaires were designed and discussed with EAC before their application in the field

survey. The questionnaires were designed for the following respondents:

Revenue Authorities, Customs (because of the role Customs Play in the Duty Remission

Committee)

Ministry of Finance (because of the role they play in the policy process of the duty remission,

investment incentives and preferential trade arrangements)

Private sector associations and firms that were listed in the EAC Gazettes as beneficiaries of the

Duty Remission schemes as approved manufacturers

Field survey was conducted, following up on the questionnaires, offering clarification and guidance to

respondents. The list of respondents is appended to this report as Annex 1.

To corroborate primary data from the questionnaires, comprehensive trade flow (export and import)

analysis, using data sets provided by the Revenue Authorities, was undertaken to shed light on the

impact of duty remission and also to guide in the application of the proposed principles for

harmonization of duty remission scheme.

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3.0 Duty Remission on imported goods for use in manufacture of goods in EAC

Partner States

3.1 Legal basis

The legal basis for the EAC duty remission is Section 140 (1) of the EAC Customs Management Act

(2004) which states that ‘The Council may grant remission of duty on goods imported for the

manufacture of goods in a Partner State’. Expounding on this provision, Duty Remission Regulation

(2008) which is derived from the provisions of Article 140(2), shows that the Council may grant

remission of duty on -

i) Goods imported for use in the manufacture of goods for export;

ii) Such goods imported for use in the manufacture of approved goods for home consumption

a) Duty remission on goods imported for use in the manufacture of goods for exports

The only country seeking duty remission for exports under Section 140 of the CMA is Kenya.

This practise began in 2010 when the country mainstreamed its national law based duty remission

scheme under the Tax Remission for Export Office (TREO) scheme into the EAC framework.

The duty remission on goods imported for use in the manufacture of goods for exports is granted

on the following conditions, which are derived from Article 25 of the Customs Union Protocol: -

i) The finished goods benefiting from duty remission shall primarily be for export outside the

EAC

ii) In the event that such goods are sold in the customs territory (EAC), such goods shall attract

levies and other charges provided in the EAC Common External Tariff

iii) The sale of goods in the Customs territory (EAC) shall be subject to authorization by a

competent authority and such sale shall be limited to 20% of the annual production of the

company (manufacturer).

The Regulation, in a bid to ensure the spirit of this incentive is upheld, i.e. duty remission for

export only, requires manufacturers to: -

i) Pay duty on any imported goods that are not used in the manufacture of goods for export

or where the goods so manufactured are not exported;

ii) Submit returns quarterly, to the Commissioner to facilitate monitor of the application of

the raw material or industrial input and production of the approved finished products.

b) Duty remission on goods imported for use in the manufacture of approved goods for

home consumption

To encourage production of approved goods for home consumption, duty remission is granted to

EAC Partner States for raw material/industrial input, of which they face significant shortage or

complete lack.

The Regulation, in a bid to ensure the spirit of this incentive is upheld, i.e. duty remission for

promotion of competitiveness of approved goods for home use, requires manufacturers to: -

i) Pay duty on any imported goods that are not used in the manufacture of goods for which such

goods were approved

ii) Submit returns quarterly, to the Commissioner to facilitate monitor of the application of the

raw material or industrial input and production of the approved finished products.

3.2 Economic rationale for duty remission

3.2.1 Economic rationale for duty remission on goods imported for manufacture of goods for

exports and home consumption

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According to EAC Customs Union Protocol, Article 25, the aim of duty remission is to support EAC

industries in production of competitive exports. The fundamental point to note here is that the

duty remission on raw material or industrial input is premised on unavailability or shortage of

the raw material in the EAC Partner State, which gives credence for remission of the CET rate.

Hypothetically, if the raw material was available in the EAC region, the industry would resort to

regional sourcing at the intra-regional duty of 0%. There would be no justification remission of the

CET rate, as this would be causing injury to industries that are producing the raw material or

industrial input.

On the other hand, duty remission on raw material/industrial input is granted to EAC Partner States to

encourage production of approved goods for home consumption. As is the case with duty remission

for use in manufacture of goods for export, the fundamental point to note is that the duty remission is

granted on raw material/industrial inputs which are in short supply or unavailable in the EAC Partner

States. This policy enhances competitiveness of EAC industries finished products thus making them

competitive, not only in the EAC market against extra-regional imports of similar finished products,

but also in the external markets, should a manufacturer get some market opening.

Going by this analysis, there is no economic justification for distinguishing between duty remissions

on imported goods for use in manufacture of goods for exports or goods for home consumption. From

an economic point of view, the common denominator is regional availability of the subject raw

material/industrial input at the intra-regional duty rate of 0%. Shortage or non availability of the raw

material/industrial input from the region is what triggers the application for duty remission, because

importation of the same from outside the EAC region renders EAC finished products, whether for the

home consumption or exports outside the EAC region less competitive.

Duty remission granted on the basis of shortage in supply or lack of the specific raw material in the

region will be granted under Duty Remission for industrial competitiveness scheme.

3.2.2 Economic rationale for duty remission granted under export promotion schemes – export

competitiveness

EAC Customs Union Protocol encourages export promotion through the following export promotion

scheme: -

a) Duty and value added tax remission schemes

b) Manufacturing Under Bond Schemes

c) Export Processing Zones

d) Any other export promotion scheme that the EAC Council may from time to time approve

The cross cutting principles that govern administration of export promotion scheme include the

following: -

i) The schemes support acceleration of development, promotion and facilitation of export oriented

investments, production of export competitive goods, development of an enabling environment

for export promotion schemes and attraction of foreign direct investment

ii) Goods benefiting from export promotion schemes shall primarily be for export.

iii) In the event that such goods are sold in the customs territory such goods shall attract full duties,

levies and other charges provided in the Common External Tariff.

iv) The sale of goods in the customs territory shall be subject to authorisation by a competent

authority and such sale shall be limited to 20 per centum of the annual production of a company.

Out of the above three specific schemes, the one that relates to the subject of this study is Duty and

Value Added tax remission scheme, and to be specific, the duty remission component of the scheme.

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In order to avoid confusion with duty remission on manufacture of goods for home use, which as is

evidenced in this study also get’s sold in the EAC market or is exported outside the EAC region, there

is need for clear distinction from the duty remission on goods for manufacture of goods for export.

Duty remission for export should be limited to raw material/industrial inputs which are in

sufficient supply in the region but which industries would still wish to import from outside the

EAC for purposes of producing for the export market. The rationale for firms to seek duty

remission on raw material/industrial inputs which the region has sufficient supply would include

client preference in the destination market, quality, requirements of large volumes within a very short

period as dictated by export orders, among others. Clearly, products produced using these raw

material/finished products would primarily be for exports, as envisaged in the EAC Customs Union

Protocol Article 25.

Companies which have this type of export business would then be required to be registered under

EAC Duty Remission for Export Scheme. Before gazetting of the companies under this scheme, an

assessment of the region’s availability of the raw material/industrial input will have been undertaken

through a web enabled portal where users and producers of the raw material post their requirements

and production estimates. Where statistics demonstrate that the region has sufficient supply, then

concerned industry will be alerted and informed that the duty remission is purely for production of

goods for export only or sale of up to 20% of annual production into the EAC market. Once the

industry has consented then the specific raw material/industrial input gets gazetted for importation

under Duty remission for export scheme for a period of 3 years without need for quota allocation

because of the customs controls governing the use of the raw material, further to the provisions

of Article 25 of the EAC Customs Union Protocol.

3.3 Customs management practises

The EAC Duty Remission Regulation (2008) sets out the procedure for administration, monitoring

and control of the duty remission scheme. Critical provisions relate to: -

a) Institutional set up and responsibility – the Duty Remission Committee

b) Customs controls, which include: -

i) Security for duty waiver in form of customs bond, (pursuant to EAC CMA Section 106 and

107) until proof that the raw material has been applied in production of approved goods for

exports or home use.

ii) Import duty payment for raw material not applied in production of goods for exports or

production of approved goods for home use. Manufacturers are liable to pay penalty of 10%

of value of DRS raw material that is not used in the production of approved goods for export

or home use.

iii) Mandatory quarterly returns

iv) Firm level book keeping subject to customs inspection

The study sought to establish customs management practises in all EAC Partner States in the context

of the above provisions of the Regulation. The findings are detailed in the sections below.

3.3.1 Institutional arrangement

The regulation provides for establishment of National Committee on Duty Remission to consider duty

remission issues including recommendation of new applications, renewals, appeals as may be required

under the regulations and any other issues as the Commissioner may consider necessary.

With exception of Uganda, Duty Remission Committees have been established in the rest of the EAC

Partner States. The committees are constituted as prescribed by the Regulation by representatives

from the following institutions: -

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The ministry responsible for Finance;

The ministry responsible for Trade and Industry;

The body representative of Manufacturers;

The Customs.

It was also established that the Committees meet regularly to process duty remission request from the

private sector. In all countries the representative from Customs played the role of the secretary to the

Committee and was responsible for custody of the records of the Committee.

Procedure for lodgment of application to the Commissioner varied across the EAC region as

illustrated in the table below. In Burundi, Kenya and Uganda, applications are channeled through

private sector associations, while Tanzania and Rwanda, private sector firms apply directly to the

Commissioner.

Table 3.1: Procedure for lodgment of duty remission application

EAC Partner

State

National level DRS application process Criteria for evaluating

applications

Burundi Companies apply through Private Sector Association

which forwards the applications to the Commissioner

through Ministry of EAC

Being developed

Kenya Companies apply through Kenya Association of

Manufacturers which forwards the applications to the

Commissioner

Yes. Very

comprehensive and

objective, touching on

companies capacity to

cope with the rigorous

DRS reporting

requirements

Rwanda Individual private sector firms submit their application

direct to the Commissioner

Yes. Duty Regulation

2008 based

Uganda Companies apply to the Commissioner through

Uganda Manufacturers Association. The

Commissioner undertakes due diligence and forwards

successful applications to EAC for the EAC Council

approval process

Customs has inspection

checklist

Tanzania Private sector firms apply through the Ministry of

Industry and Trade, which submits the application to

the National Tax Force at the Ministry of Finance

Yes.

The Duty Remission Regulation is silent about the role of private sector associations in the application

process. The private sector never raised an issue with this omission. There is however a strong case

for duty remission applications to be channelled through private sector associations.

First, is their statutory responsibility to participate in the Duty Remission Committee, as provided for

in the Duty Remission Regulation (2008).Since one of their roles role at this committee is to defend

the applications submitted by private sector firms, bringing industry specific angle to the committee to

ensure that the decisions to be made are based on industry realities, there is a case for the applications

to be channelled through the associations.

Secondly, given that the association are petitioned by the aggrieved firms when the firms are denied

the quotas they apply for or when the goods that have been manufactured using DRS raw material

face EAC market access challenges, there is need for the associations to be involved during the

application process.

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There were specific concerns raised during the study on the institutional arrangement of the Duty

Remission Scheme. These concerns include the following: -

Delays getting timely approvals for the duty remission application associated with infrequency of

the National Duty Remission Committees and The EAC Council meetings for approving the

applications submitted by EAC Partner States.

Reduction of duty remission quotas by the committee was a source of concern to the private

sector firms who argued that “The quota applied for should not be reduced because the users

know their capacity and therefore it is unfair for the Duty Remission committee to reduce the

quantities applied for”.

Vetting and approval of duty remission application is an operational matter that does not

necessitate formation of a Duty Remission Committee. These were views from Uganda Customs

Office responding to the DRS questionnaire.

This view is however weakened by the reality that customs may not have the entire purview of the

economy that would need to be taken into account in order for the country to forgo the duty that

was to be collected from the raw material. An all inclusive committee, as foreseen in the Duty

Remission Regulation (2008) remains valid.

3.3.2 Monitor of end use of subject raw material/industrial input

In all cases of duty remission for approved manufacturers, with exception of the Burundi, Rwanda and

Uganda list, the Council stipulates the specific raw material that is subject of duty remission by

description of the good and applicable HS Code. Further, pursuant to Section 140 (3), the Council also

stipulates the quantity to be imported and the period. The Council also specifies the finished product

to be produced using the DRS raw material. The description of the finished product is however

general, being name only without reference to appropriate HS Code. To appreciate the gravity of this

omission, we have a case of raw material such as sugar for industrial use (HS Code 1701.99.10)

where the finished product is identified as confectionery. According to customs nomenclature,

confectioneries are many and have several HS codes.

The effect of this omission is that it makes it hard to monitor exports manufactured using raw

material/industrial input that has benefitted from duty remission. This ambiguity fuels mistrust on the

EAC duty remission scheme, leading to frustration of intra-trade in goods produced using the DRS

raw material.

It is therefore recommended that the EAC Gazette specifies the finished goods in terms of customs

nomenclature (Description and HS Code) as is the case with raw material. This will make it easy to

facilitate tracking of goods produced under the DRS for purposes of assessing impact and introducing

transparency in the regional trade of such products.

3.3.3 Customs Controls

Customs control in the three areas that are stipulated in the Duty Remission Regulation varied across

the EAC Partner States, despite there being no legal basis for variation. The status as reported by

Customs during the study is as follows: -

Table 3.2: Customs control measures for cases of duty remission

Customs control measure Status in EAC Partner States

Burundi Kenya Rwanda Uganda Tanzania

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Customs control measure Status in EAC Partner States


Customs Bond on:

Raw material for manufacture goods

for exports

N/A Yes N/A Yes N/A


for home use

No Yes No Yes No

1. Payment of import duty for unutilized

raw material or bi-product, scrap or

waste material1

In all countries, this ensured through inspection audits

or comprehensive audit through Post Clearance Audit

procedure where there is suspicion of irregularity

2. Quarterly Returns for:


for exports

N/A Yes N/A Yes N/A


for home use

No Yes No Yes No

3. Control of

Goods manufactured for exports that

end up being exported to EAC

N/A No N/A No N/A

Goods manufactured for home use

that end up being exported to EAC

No No No No No

1. Customs Bonds

Customs bond to secure raw material imported for manufacture of goods for exports or home use

is only applied in Kenya and Uganda in fulfilment of the Duty Remission Regulation (2008)

requirement. The rest of the EAC countries are not observing this requirement.

The effect of this is to create uneven playing field, with private sector in Kenya and Uganda

complaining about the cost associated with customs bond for DRS raw material, which firms in

other EAC countries are not subjected.

Failure to apply the customs bond requirement also fuels suspicion on possible diversion of raw

material to unauthorized end use that may threaten other industries in the region. The omission

also creates suspicion of possible diversion of unapproved finished products produced using the

1 This is in accordance to the provisions in the Duty Remission Regulation (2008) “Where a by-product, scrap

or waste of commercial value results from a process of manufacture or production utilizing goods subject to

duty remission, duty shall be payable on the prevailing value of the by- product, scrap or waste in

accordance with the Act, unless the by-product, scrap or waste is exported or destroyed under the

supervision of the proper officer”.

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raw material into the EAC region to the detriment of industries that are usually protected through

the CET.

2. Control of end use of raw material and industrial inputs imported under DRS

In all EAC Partner States, control of end us application of DRS raw material is ensured through

inspection audit of firms granted duty remission for importation of approved raw material. Post

Clearance Audit is administered in cases that are considered irregular.

Human resource constraint was however mentioned in Burundi, where Customs finds

administration of duty remission scheme among firms that are granted import quotas rather

difficult due to shortage of customs officials to conduct site visits.

3. Quarterly returns

Although the regulation requires the manufacturers to submit quarterly returns, this requirement is

not enforced. With exception of Kenya and Uganda, responses from customs indicated that such

returns are not obtained.

This compromises the effectiveness of monitoring and control of duty remission, which as

stipulated in the duty remission manual entails: -

Need to ensure that the manufacturer maintains proper records

Committee’s access to production, import and export related records

Quarterly returns on utilization of goods imported under these regulations indicating stock of

raw materials, work in progress, finished goods at hand and goods exported.

This lapse undermines the integrity of duty remission schemes and denies Partner States data to

assess the impact of the schemes in terms of promoting production of goods for home use and

exports. The gravity of this problem is evident in the field survey, where in all Partner States there

was no data on production and export of goods benefiting from duty remission. While the customs

were efficient in capturing data on raw material and industrial inputs imported under duty

remission schemes, they did not have system of capturing output data – production and exports.

This creates avenue for possible diversion of goods imported under duty remission for unintended

use purely due to weak/lack of effective reporting and monitoring system.

The lapse is attributed to lack of capacity within Customs to manage duty remission schemes to

the standard required by the regulation. In Kenya, for instance, the Customs indicated that such

returns are submitted in hard copies but are never analyzed.

Given the noble goal of duty remission scheme in enhancing competitiveness of the EAC Partner

States exports and goods for home consumption, it is recommended that this lapse be addressed

through a robust system linking customs administration and duty remission user firms to facilitate

online submission of records. This linkage should be a condition tied to the granting of duty

remission.

4. Customs control of exports to EAC of finished products manufactured for exports or home

use, using DRS raw material

i) Customs control of goods for manufactured for exports that end up being exported into

the EAC

Kenya is the only EAC country that applies and is granted duty remission on raw material or

industrial inputs that are explicitly meant for production of goods for exports. The other

countries reported using export incentive schemes such as Duty Draw Back, Manufacturing

under Bond (MUB) Scheme, which do not require duty remission.

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The duty remission is granted to Kenya approved manufacturers for production of good for

exports is granted under the following conditions, which pursuant to EAC Customs Union

Protocol Article 25: -

a) The finished goods benefiting from duty remission shall primarily be for export outside

EAC

b) In the event that such goods are sold in the customs territory (EAC), such goods shall

attract duties, levies and other charges provided in the EAC Common External Tariff

c) The sale of goods in the Customs territory (EAC) shall be subject to authorization by a

competent authority and such sale shall be limited to 20% of annual production of the

company (manufacturer).

Customs officials responding to questions on how customs enforces the above conditions

revealed challenges that have made it hard to ensure effective enforcement. These challenges

were cited as follows: -

There is no arrangement for facilitating exports of the 20% of production that is allowable

by law to the EAC market. Firms use export declaration without distinction of whether the

goods being exported are in the 20% category or normal exports. Customs comes in at the

point of bond discharge where they will require proof of export through export certificate

so that the bond can be cancelled. While this is a good measure for protection against

revenue loss, it would have been very helpful if measure to help firms export the 20% of

production is put in place by customs so that it instils faith in the goods that firms declare

as 20% of their production among customs authorities in the destination market.

This omission has created problems for approved manufacturers of exports that benefit

from DRS raw material and industrial goods in the destination EAC market, where they are

denied market access, merely because they are listed in the EAC Gazette.

Logistical and manpower challenges.

Manufacturers do no isolate raw materials imported under the Duty Remission and those

duty paid

4. Customs control of goods for manufactured for home use that end up being exported into

the EAC

In all EAC Partner States, there was no specific measure taken to distinguish exports of finished

goods manufactured for home use through duty remission raw material/industrial input. Instead,

the monitor was same as that of all other exports, where the declaration system was used. There

was no condition requiring the exporter to indicate whether the finished product was

manufactured using duty remission raw material.

3.2.3 Recommendations on customs management practices

3.2.3.1 Recommendation on Institutional Arrangement

1. Predictable cycle of duty remission committee and EAC Council meetings for

approval of duty remission applications Concerns about delays need to be resolved through fixing specific dates in a month when

applications would be considered by the Committee. Monthly meetings should suffice so

that private sector firms plan with specific and known dates. EAC Council meetings to

approve applications for duty remission should also be programmed to take place

quarterly to consider applications processed at Partner States in the last three months.

With a firm cycle of meetings – national and regional, it becomes easy for private sector

to plan on their raw material requirement.

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2. Private sector associations role in application for duty remission

A more explicit role of the private sector in the application process needs to be introduced

in the regulations. As a minimum requiring that applications from the private sector firms

are channelled through the private sector associations where the associations would help

their members to conform to the application requirements in order to avoid rejection of

application on procedure grounds.

3.2.3.2 Recommendation on Customs Control

4. Customs Bonds

To ensure equity in application of duty remission and especially in safeguarding risks

associated with diversion of raw material and industrial inputs to the unintended use, it is

recommended that customs bond requirement which is provided in the Duty Remission

Regulation (2008) be enforced in all EAC Partner States. This is crucial in sustaining the

integrity of the DRS and instilling confidence and trust among the revenue authorities in

facilitating trade of finished goods manufactured using the DRS material.

5. Payment of Duty

The provision for payment of penalty on unutilized raw material should be dropped from

the regulation because unutilized raw material imported in good faith may end up not

being utilized because of factors beyond the manufacturer and unforeseen at the time of

applying for the duty remission. After all, full duty is payable on any material not applied

for the intended purpose.

6. Quarterly Returns

Submission of quarterly returns needs to be enforced as provided for in the Duty

Remission Regulation

3.2.3.3 Recommendation on EAC capacity building support to Duty Remission Scheme

To address the challenge posed by capacity related non-compliance with the requirement for filing of

quarterly returns the following interventions are proposed: -

a) Interlinking the data processing systems within the EAC region.

b) Partner States should have an electronic monitoring mechanism e.g. in the Simba System,

Ascyuda, with a possibility of conducting reconciliations.

c) Mandatory Installation of stock management system by manufacturers.

d) Mandatory submission of returns both electronically and in hard copy.

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4.0 Duty remission on imports for manufacture of goods for Home Consumption

4.1 Scope of coverage

A review of EAC Gazette shows that all EAC Partner States have throughout the review period, 2007

– 2013, accessed duty remission on various raw materials for production of a variety of approved

finished products.

An analysis of the duty remission under the ‘home use’ category reveals two broad classifications of

the duty remission granted. The first is short term duty remission which runs for one or two years. In

all cases, the Council approves manufacturers, raw material (including specific volume to be imported

during the period) and finished goods to be produced using the raw material.

The principal raw material that have been gazetted over the years for importation on duty remission

basis include: -

a) Sugar for industrial use, approved for importation by approved manufacturers for manufacture of

an assortment of approved finished products

b) Paper and paper products

c) Completely Knocked Down Kits (CKDs) for motorcycles and bicycles

d) Wheat grain and Hard Wheat

e) Assorted parts for manufacture of transformers.

The other category is long term spanning five years. This appears in the Uganda, Burundi and

Rwanda lists. One key feature with these lists, which distinguishes the long term duty remission from

the annual duty remission, is that there are no annual quotas as is the case with annual duty remissions

schemes.

We also note in the case of Burundi and Rwanda lists a rider in the Legal Notice relating to export of

the finished products into the EAC region, where such exports are expected to attract CET: ‘The sale

of the above finished products shall be subject to the condition that in the event that such goods are

sold in the Customs territory (EAC), such goods shall attract duties, levies and other charges

provided in the EAC Common External Tariff (EAC Gazette 30 June 2011 Legal Notice No. 26 and

27 respectively’. By definition, therefore, finished products under Burundi and Rwanda lists can be

sold into the EAC market provided the CET rate is paid. This is in contrast to the condition given for

duty remission on raw material for use in production of exports, where the sale to the domestic (EAC)

market is restricted to only 20% of the finished goods produced using the DRS raw material. As an

example, we have this stipulation in the EAC Gazette of 24th May 2011, Legal Notice No.13: ‘The

sale of goods in the Customs territory (EAC) shall be subject to authorization by a competent

authority and such sale shall be limited to 20% of the annual production of the company

(manufacturer)’.

Responses from Customs Departments in all the five EAC Partner States indicate that duty remission

sought under Section 140 of the CMA is meant for home use. However, as evidenced in the case of

Rwanda and Burundi, it is an acknowledged fact that there may be possibility of the export of the

finished products into the regional market. This fact is further collaborated by responses from

Customs during the field survey, where it was indicated that such a possibility does exist.

The issue of concern in regard to the possible sale of finished products produced using DRS raw

material is whether there is a system to monitor such sales and thus give appropriate certificates of

origin to facilitate exports of these products with a caveat that triggers application of the CET in the

destination country. There was no such system in all EAC Partner States. This leaves the region

exposed to possible diversion of such goods on duty free basis.

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In the context of the EAC SCT framework, goods manufactured for home use should not be subjected

to any CET because the region is one domestic market. The concern that underpins the policy that

motivated charging of CET rate to such goods is addressed in this study through appropriate policy

measures that make such a policy irrelevant on account of a level playing field that the new policy

measure introduces.

4.2 Analytical framework for duty remission on goods imported for use in

manufacture of goods for home consumption

Duty remission on raw material/industrial inputs for use in manufacture of goods for home use, as

observed earlier, is motivated by the need to promote competitiveness of the finished product in the

domestic market. The argument that upholds the case for the duty remission on the raw

material/industrial input is that the region is facing periodic shortage or lack of the raw material

requiring complementary supplies from imported sources at the duty rate of 0% instead of the EAC

CET rate.

Presently any EAC Partner State that projects periodic shortage of the raw material in its economy

applies for the duty remission. The application is usually granted. The processing of the application is

not subjected to assessment of regional availability of the raw material as would be required in the

context of a Single Customs Territory. As a result, products manufactured under duty remission for

home consumption are treated with suspicion if exported to any of the countries, often being charged

duty at the CET rate. This challenge requires a regional approach, which is built on the SCT

framework.

To facilitate this process, we have adopted the following conceptual framework; leading to principles

which if applied will ensure equity in the use of duty remission on imported goods for manufacture of

goods for home consumption.

The fundamental point in evolving an objective policy for duty remission for home consumption is

determination of the region’s supply capacity. As already observed elsewhere in this report, regional

production/supply data is not readily available to facilitate an objective analysis. In absence of this

data, trade flow data is used as proxy. EAC countries intra-exports to the EAC region is used as a

proxy for the region’s supply capacity, while EAC intra and extra EAC imports of a specific product

is used as proxy for the regional market size that has to be met through international trade sourcing.

The choice of trade flow is influenced by availability of data and the reality that a country is able to

trade on the basis of established supply capacities.

Using intra-EAC exports as a basis for determination of the region’s supply capacity, and the

statistical significance threshold of 30% of the EAC market size (intra-EAC exports plus extra-EAC

imports) the following principle is proposed to guide on the decisions of whether to grant duty

remission on a specific raw material/industrial input or not:

i) If the share of intra-EAC exports in total EAC market size is less than 30% for the last three

consecutive years, then the region is considered as not having sufficient capacity to meet regional

demand. In view of this, all raw material/industrial inputs that fall under this category need not be

subject of duty remission. Instead, and in the interest of promotion of manufacture of these

products, whether for exports or domestic consumption, the Council should reduce the CET rate to

0%, being the rate that the industry would have sourced the raw material/industrial input from

within the EAC region had the supply been sufficient.

Application of this principle helps identify raw material which needed not be subjected to duty

remission for home consumption, mainly because the region has no production capacity and there

is no threat to any industry.

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ii) If the share of intra-EAC exports in total EAC market size is equal to or greater than 30% for the

last three consecutive years, then the region is considered as having sufficient capacity to meet

regional demand and hence the Council should grant duty remission on the raw material for

manufacture of goods for home use. The duty remission should be 0%, being the rate that would

have been applicable if the raw material were to have been sourced from within the EAC.

To ensure equity in terms of universal access of duty remission throughout the EAC region, the

following principles are proposed: -

Any manufacturer, who meets criteria set in the EAC Duty Remission Regulation, will be

eligible to import the subject raw material on duty free basis. Approval of manufacturers will

be premised on the Gazetted raw material. This introduces flexibility that presently lacks in the

current duty remission, where manufacturers who wish to be approved have to wait for

considerable time, often at the risk of missing duty remission based production cycle.

Finished products manufactured for home consumption using duty remission raw

material/industrial inputs should be sold in any EAC Partner State without being subjected to

any import duty. The only condition that such products should be subjected to is the EAC

Rules of Origin, which if met, the products should then be sold on duty free basis.

These principles are applied in analysing the duty remission for home consumption in EAC to

establish the impact and propose recommendations to ensure a harmonized approach throughout the

EAC countries.

4.3 Duty Remission on imports of sugar for industrial use for use in manufacture of

finished products for home use

4.3.1 Policy objective for granting sugar for industrial use duty remission

Sugar for industrial use, which in customs classification is assigned HS Code 1701.99.10, is classified

in the EAC Tariff Book as sensitive and therefore attracts a CET rate of 100% or US$200/MT

whichever is higher.

Responses from the field survey among the revenue authorities of the beneficiary countries and firms

that were granted duty remission to import sugar for industrial use on preferential basis gave the

following as the rationale in support for the duty remission: -

Lack of sufficient and quality supplies from within the regional market.

Need to ensure the finished products are competitive. The duty remission confers the

competitiveness through reduced cost of raw material as a result of the import duty waiver.

The applicable duty after duty remission was 10%.

4.2.2 Quota Allocation for importation of sugar for industrial use under EAC DRS

As evidenced in the table below, over the review period, a total of 911,391 metric tonnes had been

allocated for importation by 149 approved manufacturers from Burundi, Kenya, Uganda and

Tanzania.

Table 4.1: EAC DRS allocation for sugar for industrial use for use in manufacture of finished

products for home use

Country 2007 2008 2009 2010 2011 2012 2007 - 2012 No of

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period total Approved

Manufacturers

Uganda 701 0 0 0 0 28073 28,774 57

Kenya 50100 26170.

5

145151 132964 151611 9000 514,997 53

Tanzania 0 73000 0 30550 110571 142400 356,521 37

Burundi 0 0 0 0 0 11,100 11,100 2

Regional total 50,801 99,171 145,151 163,514 262,182 190,573 911,391 149

As depicted in the above table and the chart below, the level of allocation varied across the three EAC

countries, with Kenya taking the lead, followed by Tanzania, Uganda and Burundi. The variation is

explained by the country level industrial demand for the raw material and sugar industry sensitivity.

In Uganda, for instance it is worth noting that DRS for sugar for industrial use has been utilized for

two years only and at a very limited scale compared to Kenya and Tanzania.

4.3.3 Quota utilization in production of approved finished products using sugar for

industrial use

A review of the various EAC Gazettes revealed that a total of 149 approved manufacturers were

allocated quotas for importation of industrial sugar for use in manufacture of several types of finished

products for home use.

The types of finished products varied widely across the three EAC Partner States, with exception of a

few that were similar.

Table 4.2: Number of approved manufacturers and types of approved finished products

Count

ry

Number

of

approved

manufact

urers

Years Finished products

0

20000

40000

60000

80000

100000

120000

140000

160000

2007 2008 2009 2010 2011 2012

EAC DRS Quota allocation for sugar for industrial use, 2007-2012 (figures in MT)

Uganda

Kenya

Tanzania

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Count

ry

Number

of

approved

manufact

urers


Ugand

a

57 2007

&

2012

1. Confectionery

products

2. Sweets

3. Soft drinks

4. Dairy

Products

5.

6. Soft

beverages

7. Beverages

8. Biscuit

Manufacturin

g

9. Alcoholic

Beverages

10. Juice and

Wines

11. Beer

Bakery

products

12. Water

13. Pharma

ceutical

s

14. Ice-

Cream

Kenya 53 2007 -

2012

1. Tomato

sauces

2. Various

Medicaments

3. Carbonated

soft drinks

4. Bread

5. Boiled

Confectionery

and Powdered

Tablets

6. Juices

7. Medicinal

products

8. Processed

Pineapple

Products

9. Quencher

cordials,

ready to drink

and Juices

10. Medicines

11. Energy

Drinks,

12. Squash syrup

13. Biscuits

14. Confecti

onary

Bubble

gums,

hard

boiled

candy

toffees,

icing

sugar

15. Beer &

Non

alcoholi

c drinks

16. Cerelac

17. Jams,

18. Sauces,

19. Desserts

and

canned

products

20. Cordials

Tanza

nia

37 2008,

2010,

2011

and

2012

1. Biscuits

2. Juices

3. Sukaritamu

KK

4. Candies

5. Soda syrup

6. Confectioneri

es

7. Ice cream, Ice

lolly,

8. Fresh Fruit

juices,

9. Artificial

juices

10. Carbonated

soft drinks

11. Biscuits,

breads and

14. Jams &

Chutney

15. Chilli sauces

16. Malt based

drinks

17. Sparkling

water, Still

water,

Flavoured

sparkling

water &

mixes

18. Hard boiled

candies,

19. Plumpynut,

Nutributter &

Supplementar

y plumpy

20. Coffee

candies

&

Toffees

21. Pressed

sweets

Mintos

&

Bubble

gum

22. Milk/But

ter

candies

23. Cookies

&

chocolat

e

24. Flavou

25. Tablets,

dry

syrups

& oral

liquids

26. Powder

ed

drinks

27. Beer

28. Tablets,

dry

syrups

& oral

liquids

29. Carbona

ted

drinks

30. Biscuits

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Count

ry

Number

of

approved

manufact

urers


wafers

12. Juice

concentrated

13. Tomato sauce

red

candies

Milk/But

ter

candies,

31. Beer

32. Bubble

gum,

Candies

&

sweets

Burun

di

2 2012 1. Beer

2. Juices

4.3.4 Impact Assessment of DRS on sugar for industrial use on EAC Economies

a) Production of approved finished products

Industry wide data to demonstrate volume of finished products that were produced by approved

manufacturers using the DRS sugar for industrial use was not available. This is attributed to the

weakness in the DRS monitoring system as pointed out earlier in this report.

Efforts to get this information from the industry were limited by poor response from the target firms.

For instance only 13 firms that were allocated quotas for importation of sugar for industrial use over

the period 2007 to 2008 responded by completing the structured questionnaire seeking to establish the

utilization of the raw material in production. The distribution of these firms by country is as follows:

Burundi (2 firms), Kenya (5 firms), Uganda (3 firms) and Tanzania (3 firms).

The findings from these firms illustrate the following points which are crucial in determining the

future DRS policy for sugar for industrial use:

i) Necessity of sugar for industrial use in manufacture of the target finished products for home use

due to regional shortage. One of the respondents indicated that: ‘This is a pharmaceutical grade

sugar used only in the manufacture of specific medicines. Since all pharmaceutical raw materials

are duty exempt, this one should too’. Another respondent decried: ‘Non availability of refined

industrial sugar manufacturer in the EAC region’

ii) As a primary raw material to the production of the finished product, the DRS contributes towards

enhancing competitiveness of EAC industries, which is crucial in ensuring that the industry

competes effectively against similar products imported from rest of the world.

iii) Impressive firm level production statistics among the few firms that provided the data shows

feasibility of a robust monitoring system that can be used in monitoring firm level application of

duty remission raw material in production of finished products.

iv) Acknowledgement among some respondent firms that even though the finished products were

meant for home use, they ended up exporting some to the EAC region. This fact is collaborated

by firm level data that was availed on their exports to the EAC and our macro trade flow analysis

of the finished products using data provided by customs. The outcome of this analysis is discussed

in the section on exports below.

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b) Exports of finished products meant for home use and produced using sugar for industrial

use

In absence of comprehensive data from a monitoring system on end use of the finished products

manufactured using sugar for industrial use, we assigned HS codes to the finished products that are

listed in the EAC Gazettes to enable an assessment of the exports using data availed by Revenue

Authorities. The assumption here is that some of the exports must be from the firms manufacturing

under the DRS. This analysis helps in the appreciation of the impact of DRS in boosting the

beneficiary countries’ exports as well as in demonstrating the necessity of the DRS in increasing the

share of regionally sourced finished products in a market that is dominated by imports from outside

the EAC.

As evidenced in the table below, the four DRS Sugar for industrial use recipient countries exports into

the EAC market of finished goods produced using this raw material increased from US$122mn in

2008 to US$231mn in 2012. Over the same period exports of these products to the rest of the world

recorded a decline from US$204mn in 2008 to US$189mn in 2012. This is a clear manifestation of

the significance of the regional market for the four countries industries that are producing under DRS

sugar for industrial use. Despite these countries making in-roads into the EAC market, their share in

the EAC market is quite small, averaging less than 15% over the review period (2008 – 2012)

Table 4.3: Exports of Burundi, Kenya, Uganda and Tanzania (DRS sugar for industrial use

countries) and EAC extra regional imports of finished products subject of

production using DRS sugar for industrial use (Refer Annex xx for the detailed

table showing product specific data)

2008 2009 2010 2011 2012

Exports to EAC (Intra-EAC Exports) 122,434,606 127,409,074 143,356,706 166,945,336 231,729,309

Exports to RoW (Extra EAC Exports) 204,898,313 131,402,695 169,991,455 153,433,957 189,022,178

Total EAC Exports 327,332,919 258,811,769 313,348,161 320,379,293 420,751,487

Imports from RoW 790,887,035 716,743,414 912,679,509 1,225,469,360 943,931,970

Total EAC Market (proxied by intra exports

and Extra Imports

913,321,641 844,152,488 1,056,036,215 1,392,414,696 1,175,661,279

EAC Exports share in the EAC market 13% 15% 14% 12% 20%

The above analysis underscores need to focus debate on DRS for industrial sugar to promotion of

intra EAC exports targeting the US$1.2bn market that is current dominated by imports from rest of

the world, to the tune of 80% or over US900m!

4.3.5 Regional availability of sugar for industrial use

Duty remission on sugar for industrial use is based on the assumption that the shortage or lack of

sugar for industrial use is a periodic phenomenon to be resolved through regional supply within a

given period, usually one to two years. This assumes existence of regional supply capability.

Using the 30% market intra-EAC export market share rule, this assumption was tested to determine,

whether indeed the region has adequate supply capability to warrant periodic duty remissions.

As illustrated in the table below, it is evident that the region does not have sufficient capacity to

supply sugar for industrial use. Intra-EAC exports accounted for only 0.4% of the EAC market

requirement for this raw material.

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Table 4.4: intra-exports and extra imports of sugar for industrial use

HS Code Description-raw

material

Trade Flow 2008-2012 Period

total in US$

% share

1701.99.10 Sugar for Industrial Use

Intra-Exports 3,231,113 0.4%

Extra Imports 769,834,859 99.6%

4.3.5 Recommendation arising from DRS for Sugar for industry use towards harmonization

of EAC DRS

As already alluded to in the above analysis, if EAC is to take advantage of the EAC market for

various finished products that are produced using sugar for industrial use, then the DRS for sugar for

industrial use should be considered as a necessity and as a rule rather than an exception. To that

extent, it is proposed as follows: -

i) The CET for Sugar for Industrial Use (HS Code 1701.99.10) be reduced to zero or 10%.

ii) An impact assessment of the sugar industry producers be undertaken to ensure their input to

this policy proposal, especially in view of the regional industrial requirements and the huge

unexploited potential that dictates the required levels of supply. The objective will be to agree

on 0% or 10% but not to retain sugar for industrial use as a sensitive product and to agree on

conditions which once attained, the CET of 0% or 10% can be reviewed upwards.

iii) The EAC identifies all manufacturers in the EAC region that use this raw material and

register them as approved manufacturers, for purposes of customs applying the above duty

rate for importation by these firms.

iv) The EAC establishes a monitoring system to monitor application of the sugar for industrial

use in manufacturing the approved finished products.

v) Heavy penalty by tied to diversion of the sugar to any other use other than the intended

purpose.

vi) Mandatory monthly reporting on level of utilization of the imported products and volume of

finished products produced and used in the domestic market or exported.

vii) All products produced using DRS for sugar for industrial use be allowed into all EAC markets

on duty free basis, provided they meet the EAC Rules of Origin.

4.4 Duty Remission on Paper products for use in manufacture of finished products

for home use

4.4.1 Policy objective for granting paper products duty remission

A review of the EAC Gazettes for the period 2007 to 2012 shows that duty remission on paper

products has been granted to 42 products/tariff lines (going by the EAC Tariff Book of 2012). Out of

this, 8 products/tariff lines attract a CET rate of 10% while the rest, 34 products/tariff lines attract a

CET of 25%.

Industry survey and responses from the customs authorities reveal the following to be the main

reasons behind the application for DRS for paper products: -

a) Lack of raw material within the region.

b) Increasing competitiveness of the final products. To quote some of the respondent firms:

‘10% duty rate on certain tariffs of paper and paper board for Non TREO transactions will

make products competitive in the region’.

c) Enhancement of cost effective production and competitiveness.

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Duty remission that has been granted over time has been 0%, meaning reduction from 10% and 25%

to 0%.

4.4.2 Quota Allocation for importation of paper products under EAC DRS

Over the review period, a total of 69 manufacturing firms from Kenya and Tanzania were allocated a

total 456,558 metric tonnes to import on duty free basis over the review period (2007 – 2012). A bulk

of these (73%) were allocations to Kenya approved manufacturers.

Table 4.5: Quota allocation for importation of paper and paper products under duty remission

2007 2008 2009 2010 2011 2012 Period (2007 – 2012)

total

Number of

firms

Kenya 15,520 95,528 126,517 83,868 8,269 3,835 333,537 49

Tanzania 34,430 0 0 47,908 40,683 0 123,021 20

Total 49,950 95,528 126,517 131,776 48,952 3,835 456,558 69

The paper and paper products were to be used in the manufacture of finished products for home use.

The various types of finished products that were approved for production are listed in the table below.

Table 4.6: Number of approved manufacturers and approved finished products for

manufacture using paper and paper products imported under EAC DRS

Country Number of approved

manufacturers

Finished products

Kenya 49 1. Books

2. Text books

3. Exercise books

4. Booklets

5. Book Covers

6. Exam Papers

7. Exercise books

8. Inner boxes

9. Cartons

10. Boxes

11. Packing Material

Scratch cards

Tanzania 20 1. Books

2. Text Books

3. Cover papers

4. Exercise Books

5. Exercise books

Book Covers

4.4.3 Quota utilization in production of approved finished products using DRS paper

products

Data on volume of production of the finished products was not available. This is attributed to the

weakness in the DRS monitoring system, where the firms are either not required to file quarterly

returns (as is the case in Tanzania) or where even though the firms file annual returns (as is the case in

Kenya) no analysis or monitoring is done. This problem is also inherent in the DRS quota allocation

where firms are not required to give an estimate of expected volume of finished products to be

produced using the DRS raw material.

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For instance only 4 firms that were allocated quotas for importation of paper for industrial use over

the period 2007 to 2008 responded by completing the structured questionnaire seeking to establish the

utilization of the raw material in production. The distribution of these firms by country is as follows:

Kenya (2 firms), Tanzania (2 firms).

Despite this limitation, the following observations from the 4 lead regional firms in manufacture of

paper products will contribute towards policy proposal for harmonization of DRS for paper products.

a) DRS on the paper and paper products is crucial to reduction of the cost of producing the finished

products. This contributes towards enhancement of competitiveness and supporting regional

industrial capacity for production of essential paper products such as exercise books for use in the

education sector. DRS therefore contributes towards making learning material affordable.

b) Contradiction in tariff regime where finished products and products used by regional industries to

manufacture the finished products in the region are subjected to the same tariff rate of 25%. This

has the effect of killing the regional industries and making EAC import dependent on products

that the region has capability of producing. Through DRS, manufacturers have been spared and

are clamouring for rationalization of CET to reflect this reality.

c) There are cases of finished products for home use that have ended up being exported to the

regional market. This should be accommodated under the EAC SCT framework, where such

goods should be allowed to be traded intra-regionally freely.

d) The significance of DRS in EAC industrial and trade development is evidenced in firm level

responses. The following is a quote from one of the respondents on the perceived benefits from

the DRS:

“We have benefited from the reduction of production costs due to our firms procurement of

100% inputs imports under EAC duty remission scheme.

We have been able to compete internationally with other firms from within and without.

We have been able to use our installed capacity due to the affordability of the inputs under

this scheme.”

4.4.4 Impact Assessment of DRS paper products on EAC Economies

The EAC intra regional exports of raw material paper and paper products that benefit from duty

remission averaged around US$25m over the review period, with total exports in 2012 standing at

US$21m.

Table 4.7: Exports of DRS raw material paper and paper products to EAC region, figures in

US$

2008 2009 2010 2011 2012

Kenya 13,021,264 4,092,060 2,369,862 1,955,630 1,674,829

Rwanda 149 172,297 3,276 5,173 531

Uganda 324,375 292,002 268,163 88,421 2,243,626

Tanzania 19,723,819 20,379,388 19,344,060 25,555,409 17,244,736

Total 33,069,607 24,935,747 21,985,361 27,604,633 21,163,722

The analysis of the performance of EAC’s finished paper and paper products in the EAC market

shows the need to address the industry’s capacity to compete with extra regionally sourced finished

products. As indicated in the table below (Table 4.8), EAC’s share of the regional market averaged

39% over the review period.

This finding implies that although EAC Partner States are trading intra-regionally on the raw material

for production of finished paper and paper products, there exists market potential for over 61% of

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finished products in the EAC region, which is currently being serviced from extra regional imports

(i.e imports from rest of the world). The DRS policy for paper and paper products needs to be driven

by the need to capture and grow this potential. As illustrated by responses from the firm level survey,

competitiveness is one single most factor in support of EAC paper and paper products to capture this

market potential.

Until now, the policy response to this need has been through DRS for paper and paper products for

manufacture of the finished products for home use and if such goods were to be exported to the EAC

region, only 20% of the amount produced would be off loaded to the regional market, where a CET

rate would apply, irrespective of whether the Rules of Origin were met.

Table 4.8: Total exports of Burundi, Kenya, Uganda and Tanzania of finished paper and paper

products subject of production using DRS paper and paper products raw material

and imports of similar products from the Rest of the World (Refer Annex xx for the

detailed table showing product specific data) – Figures in US$

2008 2009 2010 2011 2012

Exports within the EAC (Intra-EAC

Exports)

30,680,588 36,153,030 37,189,726 43,606,962 39,237,411

Exports to the Rest of the World (Extra

EAC Exports)

22,766,416 18,727,631 15,824,705 23,942,683 23,719,924

Total EAC Exports 53,447,004 54,880,661 53,014,431 67,549,645 62,957,335

Imports from Rest of the World (Extra EAC Imports)

54,802,923 55,295,229 61,848,154 74,297,122 45,032,226

Total EAC Market (proxied by intra

exports and Extra Imports

85,483,511 91,448,259 99,037,880 117,904,084 84,269,637

EAC Exports share in the EAC market 36% 40% 38% 37% 47%

4.4.5 Regional capacity to produce paper and paper products

Duty remission on paper and paper products is based on the assumption that the shortage or lack of

these products is a periodic phenomenon to be resolved through regional supply within a given period,

usually one to two years. This assumes existence of regional supply capability.

Using the 30% market intra-EAC export market share rule this assumption was tested to determine,

whether indeed the region has adequate supply capability to warrant periodic duty remissions.

The analysis shows that out of the 42 products/tariff lines, the region has supply capability in only the

following 2 product/tariff lines where the share of intra-EAC exports was higher than 30%.

Table 4.9: Intra-EAC exports and Extra-EAC imports of paper and products for which EAC

has demonstrated supply capacity

HS Code Description-raw material CET

Rate

Duty Remission

Rate

Trade Flow Period Total % share

48042100 Coverboards 25% 0% Intra-Exports 51,447,021 59%

Extra Imports 36,236,244 41%

48101100 Art paper 25% 0% Intra-Exports 14,203 99%

Extra Imports 101 1%

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4.4.5 Recommendation arising from DRS paper products towards harmonization of EAC

DRS

The platform which is recommended for harmonization of DRS for paper and paper products is the

EAC regional market potential, which is currently being serviced by imports from rest of the world.

To support regional industries that can compete with imports from rest of the world, the following

policy measures are proposed: -

a) Reduce CET rate for paper and paper products that are shown in Annex 2 to 0% due to inadequate

supply capacity to meet requirements of manufacturers of the various finished products be

reduced permanently to 0%.

b) Industry consultation be held to ensure a consensus view on the proposed CET rate modality for

future review once the suppliers demonstrate their capacity to meet the regional requirements.

4.5 Duty Remission on CKDs for motorcycles for use in manufacture of finished


4.5.1 Policy objective for granting motorcycle CKDs duty remission

Duty remission for motorcycle CKDs is granted for purposes of assembling motorcycles for use in

public transport with an engine capacity not exceeding 50cc or an engine capacity exceeding 50 cc but

less than 250cc. Importation of fully assembled motorcycle attracts an import duty of 25%. The policy

objective for granting motorcycle CKDs was the need to encourage regional value addition through

assembling of the motorcycles for home use to meet the ever growing need of the motorcycles for

public transport – i.e. boda boda. Duty waiver served to ensure affordability of the motorcycle.

4.5.2 Quota Allocation for importation of CKD under EAC DRS

Over the review period, a total of 2.2million sets of CKDs for manufacture of motorcycles for home

use were allowed under the EAC DRS. The lead country that has taken advantage of this opportunity

is Tanzania, followed by Kenya. Both countries commanded a 96% share in the allocations for use by

18 approved manufacturers in Tanzania and 40 manufacturers in Kenya. Uganda is the only other

EAC country which took advantage of the DRS for motorcycle CKDs in 2012 where allocation for

importation of 98,500 sets was granted to 8 approved manufacturers.

Table 4.10: Approved sets of Completely Knocked Down Kits (CKDs) for importation under

DRS, 2008 – 2012, figures in sets

2008 2009 2010 2011 2012 Period Total

Tanzania 359,000 164,250 114,870 349,300 157,698 1,145,118

Kenya 8,000 383,900 171,200 406,400 0 969,500

Uganda 98,500 98,500

Total 367,000 548,150 286,070 755,700 256,198 2,213,118

Source: EAC Gazettes (2008 – 2012)

4.5.3 Quota utilization in production of approved motorcycles using DRS CKD sets

Efforts to get data on motorcycles assembled using the DRS CKDs were generally fruitless because

Customs, as the Secretariat of the DRS Committee does not get this data from the motorcycle

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assemblers. This is attributed to the weaknesses in the DRS monitoring system, where the firms are

either not required to file quarterly returns (as is the case in Tanzania) or where even though the firms

file annual returns (as is the case in Kenya) no analysis or monitoring is done. This problem is also

inherent in the DRS quota allocation where motorcycle assemblers are not required to give an

estimate of the number of motorcycles that they are expected to manufacture using the DRS CKDs.


There were only four responses from Kenya (3) and Uganda (1).

Despite this limitation, the following observations from the 4 motorcycle assemblers will contribute

towards policy proposal for harmonization of DRS for motorcycle CKD kits.

a) As illustrated by the two firms from Kenya and Uganda, who gave data on units of motorcycle

assembled from the CKD kits that are imported under DRS, the CKDs have contributed towards

manufacture of motorcycles locally.

Table 4.11: Production of motorcycle by two respondent firms from Uganda and Kenya

(figures: units of motorcycles assembled)

Country 2007 2008 2009 2010 2011 2012

Kenya (data from two

respondent firm)

1,009 1,722 3,070 4,949

Uganda (data from

one respondent firm)

15,206 18,127 10,475 4,320 2,304 2,880

In Kenya, the two firms placed production value in 2012 at over US$2million, a clear demonstration

of the value that motorcycle assembly industry is contributing to the overall economic output. Given

the number of approved manufacturers in the three countries, the total output from the motorcycle

assemblies is bound to be quite high, underscoring the significance of the DRS on motorcycle CKDs

as a catalyst. The type of motor cycle being manufactured is the one used for public and goods

transport with an engine rating of a cylinder capacity exceeding 50cc but not exceeding 500cc.

b) The assembly of motorcycles through DRS CKDs kits makes motorbikes affordable to the target

population. Motorcycle assemblers have responded to the regional demand on motorcycles

through setting up assembling plants at exorbitant costs, with some valued at more than US$1m.

Viability of these firms is pegged to their ability to continue importing CKD kits for motor cycles

through waiver of the 25% import duty.

c) The following concerns/views were raised regarding the 30 June 2013 EAC Gazette policy on

motorcycle assembly, which makes it mandatory for the assemblers to source specified parts2

from within the EAC: -

i) The parts which assemblers are required to buy from the region are not available. There are

no known manufacturers of these parts in EAC.

ii) These parts are very sensitive in nature and can’t be produced without thorough production

facilities and skilled labour which are not available in EAC at the moment.

iii) There are certain parts e.g. Exhaust pipe and suspension which have patent rights, making

prospects for their manufacture in the region very slim.

2 The EAC Gazette of 30 June 2013, which makes it mandatory for approved manufacturers to source the

following parts from within the EAC in order for them to qualify for DRS for motorcycle CKD kits: a) Main Frame (b) suspension; or (c) A combination of the following should be manufactured in the EAC – Seat and seat frame, mudguard, wheel rim, break gear, and exhaust pipe.

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iv) Approved assemblers, who have taken advantage of the EAC DRS on motorcycle CKDs have

expertise and skills in the manufacture of motor cycles from available parts but not

production of individual parts for use in the assembly of finished products.

v) The cost of manufacturing these parts locally is expected to be 2.5 to 3 times higher from

current costs which will make the duty remission incentive unattractive and impractical.

vi) Local/Regional manufacture of all the parts that are referred to in the EAC Gazette is not

viable due to the high cost of investment in machinery and high cost of raw material.

4.5.4 Impact Assessment of DRS motorcycle CKD sets on EAC Economies

The EAC regional market for motorcycle is over US$100m. As evidenced in the table below, the

market has been growing consistently between 2008 and 2013, where imports increased from

US$87.5m in 2008 to US$132m in 2011, before slumping to US$101.8m in 2012. Intra-EAC imports

is quite low, accounting for less than 1% of the total market throughout the review period.

Regional motorcycle assembly is motivated by the over US$100m market potential, which the

industry targets to seize through regionally assembled motorcycles instead of importation of complete

motorcycles. Gains to the region are projected to be phenomenal through job creation, low priced

regionally assembled motorcycles as a result of the zero rate duty on CKDs, making the motor cycle

more accessible as an alternative means of transport.

Table 4.12: EAC Partner States imports of motorcycles, 2008-2012 (figures in US$)

HS Code 2008 2009 2010 2011 2012

Intra-EAC imports 558,487 240,703 515,453 197,243 156,706

Extra-EAC imports 86,947,543 91,863,859 121,953,622 131,820,138 101,613,620

Total EAC Market (proxied by intra imports and Extra

Imports

87,506,030 92,104,562 122,469,075 132,017,381 101,770,326

EAC Exports share in the

EAC market

0.6% 0.3% 0.4% 0.1% 0.2%

4.5.5 Regional capacity to supply motorcycle CKDs

Duty remission on motorcycle CKD is motivated by the need to promote regional assembly of motor

cycles, in recognition of the opportunity as revealed in the EAC market potential. Analysis of intra-

regional exports of motorcycle parts reveals absolute lack of the region’s capacity to supply the

necessary parts in support of the motorcycle assembly plants. This is evidenced in the table below,

where intra-regional exports of every category of the CKD that EAC has imported over the period

2008 to 2012 was sourced from rest of the world (Extra-Imports). This finding tallies with the

industry’s view during the field survey and underscores need for the EAC to support the motor cycle

assembly through introduction of tariff lines for Motorcycle CKDs and allocating a CET rate of 0%.

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Table 4.13: Intra-EAC exports and Extra-EAC imports of Motorcycle CKDs

HS Code Description-raw material Trade Flow 2010-2012

Period total (US$)

% share

87111000 Completely knocked down (CKD)

motorcycles

Intra-Exports 4,168 0.1%

Extra Imports 4,706,984 99.9%


motorcycles


Extra Imports 720,749,033 99.8%


motorcycles




motorcycles

Intra-Exports 480 0.0%



motorcycles



87120000 Completely Knockdown (CKD)bicycles Intra-Exports 438,619 0.5%


4.5.5 Recommendation arising from DRS motorcycle towards harmonization of EAC DRS

The platform on which the proposed recommendation for the motorcycle CKDs is based is the over

US$100m regional market potential which motorcycle assemblers are targeting. The proposed

motorcycle CKDs recommendation is based on the regional market potential of over US$100m,

forming a target market for motorcycle assemblers. This coupled with regional lack of requisite parts

to support motorcycle assembly plants calls for the following policy measures:

a) Introduce tariff lines, through tariff splits, to accommodate various categories of motorcycle

CKDs in the EAC Tariff book and assign a CET rate of 0%. The following specification, based on

the analysis of demand and regional supply capacity is proposed as a starting point. Once granted,

there will be no more need for duty remission for motorcycle CKDs as the assemblers will always

import them on the basis of the CET rate.

Table 4.14: Proposed CET rates for motorcycle CKDs

HS Code (proposed split) Description-raw material CET Rate Duty Remission Rate

87.11.10.10 Completely knocked

down (CKD) motorcycles

25% 0%



25% 0%



25% 0%



25% 0%

87.11.90.10 Completely knocked 25% 0%

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HS Code (proposed split) Description-raw material CET Rate Duty Remission Rate


87.12.00.10 Completely Knockdown

(CKD)bicycles

10% 0%

b) To ensure that the CKDs are imported by genuine motor cycle assemblers, it is recommended that

only motorcycle assemblers registered with the customs through the association of motorcycle

assemblers or private sector association should be allowed to import the CKDs.

c) Among the conditions that the assemblers should meet are industry set standards that the

association will vet all assemblers to ensure compliance before registration. Periodic audit

findings to be the basis for annual renewal of registration of the assemblers.

d) In view of the above recommendations, the June 30 2013 legal notice on motorcycle assembling

should be withdrawn and instead, above policy measures be put in place.

4.6 Duty Remission on Wheat and wheat products for use in manufacture of finished


4.6.1 Policy objective

A review of the EAC Gazette Legal Notices shows Kenya to be the only country that applied for duty

remission for hard wheat and other wheat grain. Other countries have applied for the same under the

stay of application regime of duty remission, which is covered in this study under this subject.

Hard wheat and wheat grain are sensitive items under the EAC Tariff book attracting CET rate of

35%. The policy motivation for granting duty remission to allow Kenya’s approved manufacturers to

import the wheat on 0% duty rate is domestic shortage of the product. The table low gives the annual

quota allocations throughout the review period.

Table 4.15: Quota allocations for importation of hard wheat and other wheat grain on duty free

basis, 2008 to 2012

TariffNo Description Unit of

Measure 2008 2009 2010 2011 2012

10019010 Hard Wheat MT 21,500 20,000 369,100 351,610 1,500

10019090 Other Wheat MT 87,000 52,000 1,496,680 1,841,384 6,500

Grand Total MT 108,500 72,000 1,865,780 2,192,994 8,000

The number of millers who have benefitted from the duty remission allocation is as indicated in the

table below. In 2010 and 2011, when the country had the highest allocation, 16 and 18 millers,

respectively were approved for purposes of importing the wheat under the duty remission at duty rate

of 10%.

Table 4.16: Number of Kenyan millers approved to import hard wheat and other wheat grain at

10% duty under the EAC DRS

HS Code Description 2008 2009 2010 2011 2012

10019020 Hard Wheat 2 1 15 15 1

10019090 Other Wheat 2 1 16 18 1

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4.6.2 Impact assessment

Data on volume of finished products manufactured using hard wheat and other wheat grain that was

imported under the EAC DRS was not available because the weakness in monitoring end use of duty

remission raw material. We resorted to assessing the impact through review of the trade flow data for

the approved finished products.

The analysis shows that, while the aim of the import under duty remission was production for home

consumption, there were exports of the finished products to the EAC and Rest of the World, with

exports to the RoW topping the list standing at US$6.8m in 2012, compared to exports destined to the

EAC the same year, which stood at US$1.6m.

Table 4.17: Kenya Exports of finished products ‘produced using raw material benefiting from

DRS’ to the EAC and Rest of the World, 2008 – 2012 (Figures in US$)


Exports to EAC

11010000 Wheat Flour 31,653 777,796 299,481 714,370 1,692,646

23023000 Bran & Pollard - - 4,281 - -

Sub-total, exports to the EAC 31,653 777,796 303,762 714,370 1,692,646

Exports to the Rest of the World (RoW)

11010000 Wheat Flour 1,330,279 616,292 692,351 1,051,419 1,732,455

23023000 Bran & Pollard 388,279 672,879 998,757 2,299,662 5,069,608

Sub-total, export to the RoW 1,718,559 1,289,171 1,691,108 3,351,081 6,802,063

As evidenced in the table below, impact to other EAC Partner States economies may have been

negligible because over the same period, these countries recorded huge imports of the same products

from the rest of the world. This demonstrates need for continued support for regional industries to

produce these products targeting the regional market potential.

Table 4.18: EAC countries (Burundi, Rwanda, Tanzania and Uganda) imports of finished

products that Kenya produced under EAC DRS from the Rest of the World, 2008 – 2012

(Figures in US$)


11010000 Wheat Flour 1,019,514 18,504,866 32,665,614 23,424,717 1,513,437

23023000 Bran & Pollard 2,418 950,177 1,267,524 1,062,230 2,006

Grand Total 1,021,932 19,455,043 33,933,138 24,486,947 1,515,443

4.6.3 Regional capacity to supply hard wheat and other wheat grain

We used the 30% threshold of extra-EAC exports to determine the region’s capacity to supply

industrial requirement of this crucial raw material. As revealed in the table below, the EAC region

does not have this capacity. This is further confirmed from all the EAC country’s perpetual imports of

these products on duty remission basis throughout the review period.

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Table 4.19: EAC Partner States Intra-EAC exports and Extra-EAC imports of hard wheat and

other wheat grain

HS Code Description-raw material Trade Flow 2008 – 2012 Period total (US$) % share

10019020 Hard Wheat


Extra Imports 408,063,028 99.7%

10019090 Other Wheat


Extra Imports 2,784,741,162 99.9%

4.6.4 Recommendation arising from DRS for hard wheat and other wheat grain towards

harmonization of EAC DRS

The platform on which the proposed recommendation below is based is the perpetual regional

shortage of hard wheat and other wheat grain and clear demonstration of lack of regional capacity

supply regional millers’ requirements.

It is therefore proposed as follows:

a) The CET rate on hard wheat and other wheat grain be lowered to 10%, being the rate that the

industry has been granted throughout the review period.

Table 4.20: Proposed new CET rate for hard wheat and other wheat grain

HS Code Description-raw

material

CET Rate Proposed New CET

rate

10019020 Hard Wheat 35% 10%

10019090 Other Wheat 35% 10%

b) The finished product should be allowed free circulation in EAC without being subjected to the

CET rate.

4.7 Duty remission on assorted items for manufacture of transformers

Duty remission on some 92 assorted items for manufacture of transformers was granted to only one

approved manufacturer in Tanzania in 2011. An analysis of the region’s capacity to supply this raw

material demonstrates existence of huge capacity as in all items, Intra-EAC exports far exceeds extra-

EAC imports. It is therefore recommended that the current CET rate on these items be sustained.

4.8 Duty Remission on Raw Material for use by approved manufacturers under

Uganda Lists

4.8.1 Policy objective and Scope of coverage

According to the responses from the Ministry of Finance, the Uganda List of Approved Manufacturers

and Raw material for manufacture of approved finished products was motivated by the reality that at

the inception of the Customs Union, Uganda was not at the same level of development as the rest of

the EAC Partner States. It was therefore expected that within five years, key sectors would have

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adjusted to compete favourably with other Partner States before applying the EAC CET fully. This

was meant to compensate Uganda in terms of economic imbalances.

Therefore, the EAC Council granted duty remission to 94 approved manufacturers to import specified

raw material and industrial inputs amounting to 117 tariff lines free of duty under Legal Notice

No.EAC/10/2007 of 18th June 2007 ‘Approved Uganda List of Raw Materials and Industrial Inputs’.

In 2011, under Legal Notice No.EAC/24/2011 of 30 June 2011 for one year and for a further one year

by Legal Notice No.EAC/29/2012 of 30 June 2012. On 30 June 2013, Uganda list was replaced by a

schedule of approved 48 products for importation under duty remission as raw material or industrial

input at rates of either 0% or 10%. The list was open to all Uganda companies that use these raw

materials for manufacture.

4.8.2 Impact assessment of the Uganda List on Uganda’s economy and the economy of

other EAC Partner States

4.8.2.1 Impact on production

Data on production of approved finished products by approved manufacturers was not available from

Customs, which according to the Duty Regulation (2008) is the custodian of returns containing such

information. This was explained by the weak administration of the duty remission scheme, to the

extent that such a fundamental requirement of the Regulation goes unheeded for years. This

weakness is not peculiar to Uganda. It cuts across all EAC Partner States as no one country tracked

production of approved finished products under the EAC Duty Remission Scheme.

Field surveys among 17 companies that are in the Uganda List saved the day by giving data and

information that built our appreciation of the impact of the Uganda List in the manufacturing industry

in Uganda. Data from two of the respondent firms in the table below serves to show this impact. For

instance, cement production rose from US$105m in 2007 to 152m in 2012. This contributed towards

the firm’s export of cement to the EAC region, reaping the benefits of EAC regional integration

through increasing exports of cement from US$16m in 2007 to US$27m in 2012. The firm producing

Aluminium windows, doors, panels and similar products had same experience.

Table 4.21: Uganda list of select respondent firms production and exports of finished products

to EAC

Tariff Nos. Description 2007 2008 2009 2010 2011 2012

Firm A: Production – Value in US$

25230000 Cement 105,894,634 160,273,922 150,968,140 145,355,687 124,528,655 152,788,849

74092900 Galvanised sheets 22,666,456 26,318,926 24,789,229 26,581,565 22,785,795 23,326,611

Firm A: Exports to EAC – Value in US$

25230000 Cement 16,269,422 30,317,224 23,590,469 24,932,465 24,747,650 27,003,052

74092900 Galvanised sheets 2,865,376 3,359,245 2,322,502 2,002,115 873,504 6,601,055

Firm B – Production, value in US$

76101000 Aluminium

windows, doors, panels and similar

products

$976,148 $1,083,542 $967,077 $904,505 $867,935

Firm B – Exports to EAC in US$

76101000 Aluminium

windows, doors,

panels and similar products

$174,645 $158,322 $45,087 222,761 $261,904

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4.8.2.2 Impact on Exports

Total Uganda exports of products which manufacturers in the Uganda list indicated as having

exported amounted to US$678m over the period 2008-2012. The total products exported as indicated

by the manufacturers in the Uganda list amounted to…. Exports destined to EAC accounted for 54%

or US$369m, while exports destined to the Rest of the World accounted for the difference, 46% or

US$309m.

Table 4.22: Uganda exports of finished products produced by companies in the Uganda list to EAC

and Rest of the World, 2008-2012 (figures in US$) HS Code (from

questionnaires

summary)

Description (from

questionnaires summary)

Uganda Exports to EAC Uganda Exports to the Rest of

the World

Total: 2008 to

2012 (figures in

US$)

%

share

Total: 2008 to 2012

(figures in US$)

% share

07049000 Confectionery products - 0% 11,207 0%

15119030 Edible oil 82,294,951 22% 15,043,819 5%

19053100 Sweet Biscuits 10,401,910 3% 22,545,068 7%

20081900 Fruit Juices 18,486 0% 77,915 0%

22030000 Beer 1,808,404 0% 45,535,005 15%

25230000 Cement 244,280,078 66% 204,014,973 66%

32081000 Paint 636 0% - 0%

33049100 Cosmetics 6,793 0% 12,816,362 4%

48190000 Packaging materials -

cartons and boxes

12,953,937 4% 5,663,142 2%

48202000 Exercise books 14,980,219 4% 671,233 0%

48211090 Labels 1,134,219 0% 1,749,872 1%

49011000 Stationary 751,051 0% 873,356 0%

74092900 Galvanised sheets 1,546 0% 49 0%

96032100 Tooth brush 489 0% 1,230 0%

Total 368,632,721 100% 309,003,231 100%

It is therefore evident that the duty remission scheme played a key role in the approved

manufacturers’ ability to produce for the export market, with more focus being on the regional

market. This is collaborated by firm level responses through structured questionnaires among the 17

firms that appear in the Uganda list.

There were, however, some concerns raised in regard to Uganda’s products access to the EAC

regional market. These concerns include:

a) The requirement that only 20% of annual production be sold in the domestic market was

considered limiting and thus denying manufacturers full benefit of the regional market.

b) The non tariff barriers such as rejecting the goods produced locally by alleging that they fall under

the scheme and yet the rules of origin are clear in determining the origin of any goods within

EAC, and

c) Unpredictability of the duty remission scheme which discourages long term planning for

production because of the fear that should the duty remission be denied, the finished products may

lack a market on account of being uncompetitive.

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4.8.2.3 Impact in other EAC economies

Total EAC Partner States (Burundi, Kenya, Rwanda and Tanzania) imports from within the EAC

(excluding Uganda) and rest of the world of manufactured products in the Uganda list for the period

2008-2012 stood at US$2.3bn. Imports from within the EAC accounted for 30% or US$682m, while

the bulk or 70% (US$1.6bn) was sourced from Rest of the World.

The above analysis demonstrates that EAC firms that are responsible for exporting a total of

US$682m finished products are competing in the market with finished products from Uganda which

may have been produced using raw material that had import duty waiver under the EAC DRS.

To level the playing field, and using the principle that ‘where other EAC countries have regional

market interest, as demonstrated by their export trends of similar products to the region ensure duty

remission applies horizontal for all firms in the region producing similar products’, it is

recommended that duty remission on raw material used in production of the products be sustained and

be available to all manufacturers of similar products in the EAC.

The fact that the region imports over 70% or US$1.6bn of its requirements of these products from

Rest of the World is a clear manifestation of need for EAC to consider applying the horizontal

principle for application of DRS or reduce the CET to 0% to avoid need for annual/period granting of

duty remission. This policy is in line with EAC industrialization strategy. It will stimulate investments

in production of the various products targeting the EAC market and even making the final products

for the global market more competitive. If we are to go with the case of Uganda list, where exports to

the rest of the world for the period 2008-2012 amounted to US$309m, it is clear that the DRS has

contributed to the competitiveness of the finished products in the global market.

Annex 4.23: Comparative Analysis of Uganda exports of finished products benefiting from

DRS into EAC and EAC Partner States (BUR, KE, RWA and TZ) imports from

within EAC and Rest of the World

HS Code

(from

questionnaires

summary)

Description

(from

questionnaires

summary)

Uganda Exports to

EAC

EAC PS imports from within

the EAC (BUR, KE, RWA &

TZ)

EAC PS imports from Rest of

the World

Total: 2008

to 2012

%

share

Total: 2008 to 2012 % share Total: 2008 to 2012 % share

07049000 Confectionery

products

- 0% 10,050 0% 10,050 0%

15119030 Edible oil 82,294,951 22% 110,493 0% 53,385,821 3%

19053100 Sweet Biscuits 10,401,910 3% 87,777,778 13% 56,204,371 3%

20081900 Fruit Juices 18,486 0% 16,319,410 2% 18,348,391 1%

22030000 Beer 1,808,404 0% 239,478 0% 11,492,862 1%

25230000 Cement 244,280,078 66% 25,168,998 4% 284,995,420 18%

32081000 Paint 636 0% 434,966,077 64% 490,695,720 30%

33049100 Cosmetics 6,793 0% 468,304 0% 5,772,842 0%

48190000 Packaging

materials -

cartons and

boxes

12,953,937 4% 1,133,328 0% 79,404,043 5%

48202000 Exercise books 14,980,219 4% 68,005,576 10% 102,516,726 6%

48211090 Labels 1,134,219 0% 20,173,518 3% 24,431,599 2%

49011000 Stationary 751,051 0% 14,819,645 2% 20,037,607 1%

74092900 Galvanised 1,546 0% 10,083,426 1% 20,609,858 1%

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HS Code

(from

questionnaires

summary)

Description

(from

questionnaires

summary)

Uganda Exports to

EAC

EAC PS imports from within

the EAC (BUR, KE, RWA &

TZ)

EAC PS imports from Rest of

the World

Total: 2008

to 2012

%

share

Total: 2008 to 2012 % share Total: 2008 to 2012 % share

sheets

96032100 Tooth brush 489 0% 38,935 0% 4,152,608 0%

Total 368,632,721 100% 681,618,587 100% 1,610,547,252 100%

4.8.3 Assessment of regional supply capacity of products in the Uganda List of June 2013

Using the 30% threshold rule of intra-EAC exports share in the total EAC market of the raw material

that is subject to duty remission, we were able to determine that the region has capacity to supply 19

tariff lines of the raw material/industrial inputs in the June 2013 Uganda list. Application of duty

remission on these products is thus justified on the argument that the regional supply may experience

periodic shortfall which triggers request for duty remission. The remaining 83 tariff lines have been

proposed for permanent reduction of the CET rate to 0% on account of lack of regional supply

capability.

Table 4.24: Intra-EAC exports and Extra-EAC imports of raw material in the June 30, 2013,

Uganda list of raw material

HS Code Description CET Rate Duty

Remission

Rate

Trade Flow Period Total %

share

27121000 Petroleum Jelly 25% 0% Intra-Exports 52,620,145 66%

Extra-Imports 27,357,042 34%

39079100 Unsaturated polyesters, in

primary forms, nes

10% 0% Intra-Exports 46,142,032 75%


39079900 Polyester in primary

forms

10% 0% Intra-Exports 61,823,008 84%


39202000 Plates..., of polymers of

propylene, not reinforced,

etc

10%-25% 0% Intra-Exports 245 81%

Extra-Imports 58 19%

39211990 Other….unprinted plates 25% 0% Intra-Exports 17,273,523 61%


44101100 Particle board 25% 0% Intra-Exports 9,078,098 42%


44101900 board and wafer board of

wood

25% 0% Intra-Exports 3,353,636 44%


44111300 Of a thickness exceeding

5mm but not

25% 0% Intra-Exports 9,700,981 77%


48025500 Other paper and paper

board not containing

fibres of

25% 0% Intra-Exports 369,860,566 64%


48041100 Unbleached kraftliner,

uncoated, in rolls or

sheets

25% 0% Intra-Exports 49,330,617 31%


48041900 Kraftliner, uncoated

(excl. unbleached), in

rolls or sheet

0%-25% 0% Intra-Exports 12,505 89%

Extra-Imports 1,581 11%

48042100 Unbleached sack kraft

paper, uncoated, in rolls

or sheets

25% 0% Intra-Exports 51,447,021 58%


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HS Code Description CET Rate Duty

Remission

Rate

Trade Flow Period Total %

share

48051100 Semi-chemical fluting

paper

25% 0% Intra-Exports 45,569,726 45%


48081000 CorrUgandaated paper

and paperboard, in rolls

or sheets

25% 0% Intra-Exports 912,718 42%


52081100 Plain weave, weighing

not more than 1 00g/m2

25% 0% Intra-Exports 831,536 45%

Extra-Imports 999,353 55%

64062000 Outer soles and heels of

rubber or plastics

10% 0% Intra-Exports 2,463,489 34%


72091800 Coils of iron of a

thickness of less than

0.5mm

10% 0% Intra-Exports 79,753,527 33%


72106100 Irons plated or coated

with aluminium-zinc

alloys

25% 0% Intra-Exports 51,837,399 68%


76041000 Bars, rods and profiles of

aluminium, not alloyed

25% 0% Intra-Exports 16,708,244 50%



Uganda List of Raw Materials of 2007 and June 2013

In view of the huge regional market potential for the finished products that are targeted for production

using the raw material/industrial inputs in the Uganda list of June 2030, coupled with absolute lack of

regional capacity for production of the same raw material, the following policy measures are

proposed.

a) CET rate on some 83 tariff lines (Refer Annex 3) in the 2007 and June 30, 2013 Uganda list be

permanently reduced to 0% on account of the region’s inadequate supply capacity and recognition

that if these goods were available from the region, manufacturers would be obliged to pay no duty

while sourcing the same from EAC Partner States.

b) Continuous monitoring of the regional supply capacity be undertaken regularly so that any

material that the region demonstrates as having attained the required threshold of 30% may have

the CET rate reviewed and access of the raw material during seasons of shortage be managed

through the duty remission scheme.

4.9 Rwanda’s access and utilization of Duty Remission for manufacture of goods for

home use under various EAC Gazette Notices and under Uganda List

4.9.1 Policy objective and scope of coverage

Rwanda list of approved raw material for importation by approved manufacturers for a period of five

years, effective 1st July 2009, is motivated by similar considerations as those of the Uganda of 2007.

This consideration includes the need to support development of the manufacturing base through use of

duty free raw material in recognition of the fact that Rwanda industries are not at the same level as

other EAC industries. The commencement period is benchmarked to when Rwanda started applying

the EAC CET rate. Duty remission was seen as contributing to the competitiveness of the various

finished products, which Rwanda was also keen to export to the regional market.

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4.9.2 Impact assessment of the Rwanda List on Rwanda’s economy and the economy of



As is the case in all EAC Partner States, comprehensive data on production of finished products

manufactured using duty remission was not available. This is traced to the lapse in the implementation

of the Duty Remission Regulation requirement for quarterly returns.

To overcome this challenge in order to have an appreciation of the firm level and economy wide

impact of the duty remission in Rwanda, information about volume and value of production was

sought from a sample of 12 approved manufacturers. Information on exports was also sought through

the structured questionnaire.

While the data availed was in some cases incomplete or differed in terms of presentation and units

across the respondent firms, there were a few cases where coherent information assists in providing

the glimpse of the impact. The table below is based on one of the largest manufacturers in Rwanda

who benefited from the EAC DRS.

The experience of this one firm shows phenomenal impact of duty remission in production and access

to the EAC market. Total production of the three products rose from by 347% from US$3.6m in 2009

to US$16.2m in 2012. Exports of these products to the EAC recorded a 133% increase from US$0.5m

in 2009 to US%1.3m in 2012.

The firm attributed this impressive performance to the duty remission as evidenced by this direct

quote from the structured questionnaire: ‘These raw material greatly impact our production because

approximately 80% of the raw material is imported outside the EAC, while only about 15% is

imported from within the EAC’.

Table 4.25: Rwanda list of select respondent firm’s production and exports of finished products

to EAC

Tariff Nos. Description

2009 2010 2011 2012

Firm A: Production, in US$

20090000 Juices 993,881 2,932,248 3,654,446 5,203,118

22021000 Mineral water 1,009,711 2,893,807 2,874,963 3,975,476

04021000 Milk 1,625,238 1,868,895 3,597,353 7,025,138

Sub-total 3,628,830 7,694,950 10,126,762 16,203,732

Firm A: Exports to EAC in US$

20090000 Juices 317,243 417,049 571,300 785,969

22021000 Mineral water 134,594 162,234 241,023 356,104

04021000 Milk 97,072 112,238 122,790 137,664

Sub-total 548,909 691,521 935,113 1,279,737


Macro level analysis of the impact of duty remission on Rwanda’s exports reveals some impact with a

bulk of the exports, US$6.4m over the review period, 2008-2012 having been destined to the Rest of

the World. Exports destined to the EAC over the review period amount to US$1.7m. Going by the

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firm level reporting, the official data seems an understatement of total exports to the EAC region

because one firm’s declared exports of just three products is much higher than the macro level

declared exports of many more products. The discrepancy may be attributed to the unrecorded

informal trade, which the firm captures.

Table 4.26: Rwanda exports of finished products produced by companies in the Uganda list to

EAC and Rest of the World, 2008-2012 (figures in US$)

HS Code (from

questionnaires

summary)

Description (from

questionnaires

summary)

No. of Firms

(from

questionnaires

summary)

Rwanda exports to EAC Rwanda exports to Rest of

the World

Total: 2008 – 2012

(figures in US$)

%

share

Total: 2008 – 2012

(figures in US$)

%

share

04021000 Milk 1 8,173 0% 577 0%

20090000 Juices 1 378,774 22% 788,270 12%

22019000 Water 1 7,996 0% 79,206 1%

22021000 Mineral water 1 12,729 1% 2,220,796 35%

24021000 Cigarettes 1 16,162 1% 1,006 0%

29400000 Sugar 1 75,550 4% - 0%

32089000 Paints 1 86,682 5% 15,782 0%

33059000 Hair care products 1 920,901 54% 105,705 2%

34012090

Washing

preparations 1 3,481 0% 50,783 1%

48030000 Pocket tissue 1 9,004 1% 9,028 0%

48181000 Toilet paper 1 14,500 1% - 0%

48184010 Sanitary towels 1 1,162 0% 3,519 0%

48190000 Packaging

materials 1 53,657 3% 3,096,117 48%

55134900 Textiles materials 1 43,779 3% - 0%

56011090 Napkins 1 - 0% 313 0%

59000000 Textiles materials 1 - 0% - 0%

68021000 Tiles 1 - 0% 22,807 0%

68101900 Stone Slates 1 39,616 2% 25,285 0%

76101000 Chairs, Doors and

windows 1 13,401 1% - 0%

94042100 Mattresses 1 4,664 0% 4,747 0%

Total 1,690,230 100% 6,423,941 100%


Total EAC Partner States (Burundi, Kenya, Uganda and Tanzania) imports from within the EAC

(excluding Rwanda) and rest of the world of manufactured products in the Rwanda list for the period


the bulk or 79% (US$867m) was sourced from Rest of the World.


US$209m finished products in the EAC market are competing in the same market with finished

products from Rwanda which may have been produced using raw material that had import duty

waiver under the EAC DRS. Rwanda’s share of the EAC market is quite insignificant as demonstrated

by total exports to EAC that amounted to US$1.7m compared to the EAC total regional market size of

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US$1.1bn. This implies that Rwanda’s exports of finished products that benefited from the duty

remission have an insignificant impact on other EAC economies producing and exporting similar

product.

Given that over 70% of the EAC market of the subject finished products is imported from the Rest of

the World, there is need for continued support of regional production of these products. Application of

duty remission on all deserving cases should therefore be intensified.

Annex 4.27: Comparative Analysis of Rwanda exports of finished products benefiting from

DRS into EAC and EAC Partner States (BUR, KE, RWA and TZ) imports from within EAC

and Rest of the World

HS Code (from questionnaires summary)

Description (from questionnaires summary)

No. of Firms (from questionnaires summary)

Rwanda exports to EAC EAC PS (BUR, KE, UG and TZ) imports from within EAC

EAC PS (BUR, KE, UG and TZ) imports from Rest of the World

Total: 2008 – 2012, (figures in

US$)

% share Total: 2008 - 2012(figures

in US$)

% share

Total: 2008 - 2012(figures

in US$)

% share

04021000 Milk 1 8,173 0% 8,681,694 4% 27,509,857 3%

20090000 Juices 1 378,774 22% 16,803,139 8% 56,873,140 7%

22019000 Water 1 7,996 0% 1,290,574 1% 641,951 0%

22021000 Mineral

water 1 12,729 1% 10,269,515 5% 25,870,502 3%

24021000 Cigarettes 1 16,162 1% 408,538 0% 1,432,594 0%

29400000 Sugar 1 75,550 4% 3,220,761 2% 87,658,407 10%

32089000 Paints 1 86,682 5% 7,399,986 4% 25,606,530 3%

33059000 Hair care

products 1 920,901 54% 11,867,893 6% 22,847,255 3%

34012090 Washing

preparatio

ns

1 3,481 0% 20,476,819 10% 12,557,048 1%

48030000 Pocket

tissue 1 9,004 1% 3,443,874 2% 59,190,056 7%

48181000 Toilet

paper 1 14,500 1% 3,460,768 2% 8,360,094 1%

48184010 Sanitary

towels 1 1,162 0% 5,474,063 3% 123,986,308 14%

48190000 Packaging

materials 1 53,657 3% 104,245,381 50% 314,157,509 36%

55134900 Textiles

materials 1 43,779 3% 356,541 0% 5,135,565 1%

56011090 Napkins 1 - 0% 48,890 0% 4,639,104 1%

59000000 Textiles

materials 1 - 0% 4,874,662 2% 56,827,666 7%

68021000 Tiles 1 - 0% 729,034 0% 4,452,319 1%

68101900 Stone

Slates 1 39,616 2% 1,395,254 1% 3,257,454 0%

76101000 Chairs,

Doors and

windows

1 13,401 1% 3,271,996 2% 25,372,779 3%

94042100 Mattresses 1 4,664 0% 1,547,117 1% 933,710 0%

Total 1,690,230 100% 209,266,498 100% 867,309,846 100%

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4.9.3 Assessment of regional supply capacity of products in the Rwanda List



tariff lines of the raw material/industrial inputs Rwanda list. Application of duty remission on these

products is thus justified on the argument that the regional supply may experience periodic shortfall

which triggers request for duty remission. The remaining 119 tariff lines have been proposed for

permanent reduction of the CET rate to 0% on account of lack of regional supply capability.

Table 4.28: Intra-EAC exports and Extra-EAC imports of raw material in the 2007 and June

30, 2013, Rwanda list of raw material

TariffNos Descriptions CET

Rate Duty

Remission

Rate

Trade Flow 2010-2-12

Period Total

(figures in US$)

% share

04022190

Other (Not containing added sugar or other

sweetening matter :) (In powder, granules or

other solid forms, of a fat content, by weight, exceeding 1.5% )

60% 0%

Intra-Exports 21,340,719 89%


15119090

Other (other) (Palm oil and its

fractions,whether or not refined, but not

chemically modified )

25% 0% Intra-Exports 21,689,218 53%


15162000 Vegetable fats and oils and their fractions 25% 0% Intra-Exports 225,173,504 75%


15180000

Animal or vegetable fats and oils and their

fractions, boiled, oxidised, dehydrated,

sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise

chemically modified, excluding those of

heading 15.16; inedible mixtures or preparations of animal or vegetable fats or

oils or of fractions of different fats or oils of

this Chapter, not elsewhere specified or included.

25% 0%

Intra-Exports 925,102 56%

Extra Imports 725,767 44%

24012000 Tobacco, partly or wholly stemmed/stripped 25% 0% Intra-Exports 128,619,835 43%


25174900 Other granules, chippings and powder (excl. marble)etc

10% 0% Intra-Exports 1,134,738 38%


25223000 Hydraulic lime 10% 0% Intra-Exports 7,279,841 88%


28070000 Sulphiric Acid 10% 0% Intra-Exports 6,227,805 49%


32089000

Other (Paints and varnishes (including

enamels and lacquers) based on synthetic polymers or chemically modified natural

polymers, dispersed or dissolved in a non-

aqueous medium; solutions as defined in Note 4 to this Chapter )

25% 0% Intra-Exports 21,175,295 42%


32100010 Water pigments of kind used for finishing

leather 10% 0%



34021900 Other (Organic surface-active agents,

whether or not put up for retail sale ) 25% 0%



34029000

Other (Organic surface-active agents (other

than soap); surface-active preparations, washing preparations (including auxiliary

washing preparations) and cleaning

preparations, whether or not containing soap, other than those of heading 34.01 )

25% 0% Intra-Exports 10,718,091 39%

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TariffNos Descriptions CET

Rate Duty

Remission

Rate

Trade Flow 2010-2-12

Period Total

(figures in US$)

% share


35052000 Glues 25% 0% Intra-Exports 9,186,201 63%


39079900 Other (- Other polyesters ) 10% 0% Intra-Exports 7,844,127 43%


39191000 In rolls of a width not exceeding 20 cm 10% 0% Intra-Exports 5,599,778 31%


39231000 Boxes, cases, crates and similar articles 10% 0% Intra-Exports 29,642,171 54%


44109000

Other (Parcticle board, orientented strand

bboard -OSB and similar board (for example, waferboard) of wood or other ligneous

materials, whether or not agglomerated with

resins or other organic binding substances).

25% 0% Intra-Exports 1,935,223 32%


44111200 Of a thickness not exceeding 5 mm. 25% 0% Intra-Exports 5,452,375 37%


48211090 other printed paper 25% 0% Intra-Exports 23,360,429 41%


72091800 Of a thickness of less than 0.5 mm 10% 0% Intra-Exports 79,753,527 38%


72092800 Flat - not in coils 25% 0% Intra-Exports 436,794 38%


72107000 Painted, Vanished or coated with plastics. 10% 0% Intra-Exports 81,508,287 32%


72111900 Other (- Not further worked than hot-rolled) 10% 0% Intra-Exports 4,314,812 31%


73231000 Iron or steel wool; pot scourers and scouring

or polishing pads, gloves and the like 25% 0%



76041000 Of aluminium, not alloyed (Aluminium bars,

rods and profiles.) 25% 0%



83091000 Crown corks 10% 0% Intra-Exports 70,800,778 70%



Rwanda List of Raw Materials


using the raw material/industrial inputs in the Rwanda list, coupled with absolute lack of regional

capacity for production of the same raw material, the following policy measures are proposed:

a) CET rate on some 119 tariff lines (Refer Annex 4) in the Rwanda list of approved raw materials

be permanently reduced to 0% on account of the region’s inadequate supply capacity.

b) Continuous monitoring of regional supply capacity be undertaken regularly so that any material

that the region demonstrates as having attained the required threshold of 30% may have the CET

rate reviewed and access of the raw material during seasons of shortage be managed through the

duty remission scheme.

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4.10 Duty Remission on Raw Material for use by approved manufacturers

under Burundi list

4.10.1 Policy objective and scope of coverage

Burundi list of approved raw material for importation by approved manufacturers for a period of five

years, effective 1st July 2009, is motivated by similar considerations as those of the Uganda and

Rwanda List. This considerations include the need to support development of the manufacturing base

through use of duty free raw material in recognition of the fact that Burundi industries are not at the

same level as other EAC industries. The commencement period is benchmarked to when Burundi

started applying the EAC CET rate. Duty remission was seen as contributing to the competitiveness of

the various finished products, which Burundi was also keen to export to the regional market.

4.10.2 Impact assessment of the Burundi List on Burundi’s economy and the economy of



As in the other EAC Partner States data on production of approved finished products was not

available, due to the weakness in the implementation of the DRS.

To overcome this challenge, and ensure an appreciation of the firm level and economy wide impact of

the duty remission in Burundi, information about volume and value of production was sought from a

sample of 6 approved manufacturers. Information on exports was also sought through the structured

questionnaire. Questionnaire Annex ?

While the data availed was in some cases incomplete or differed in terms of presentation and units

across the respondent firms, there were a few cases where coherent information assisted in providing

the glimpse of the impact. The table below is based on one of the largest manufacturers in Burundi

who benefited from the EAC DRS.

The experience of this one firm shows phenomenal impact of duty remission in production and access

to the EAC market. Total production of the two products rose from by 45% from US$8.2m in 2011 to

US$5.2m in 2012. Exports of these products to the EAC recorded a 25% increase from US$2.6m in

2011 to US%3.6m in 2012.

Firm level responses validated this analysis as all firms indicated having experienced positive impact

on their production arising from DRS driven competitiveness. Here is a quote from one of the firms:

‘The firm level impact is high due to the affordable prices of wheat flour and that is why owners of the

firm have decided to increase the production by setting up a new wheat mill unit with high capacity,

that is to be opened in June 2013’.

Table 4.28: Burundi list of select respondent firms’ production and exports of finished products

to EAC

Tariff Nos. Description

2009 2010 2011 2012

Firm A: Production, in US$

1512.19.00 Cooking oils

3,278,688 5,245,901

3401.11.00 Soap

5,004,901 9,836,065

Sub-total

8,283,589 15,081,968

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Tariff Nos. Description 2009 2010 2011 2012

Firm A: Exports to EAC in US$

1512.19.00 Cooking oils

1,311 57,049

3401.11.00 Soap

2,692,950 3,549,508

Sub-total 2,694,261 3,606,557


Macro level analysis of the impact of duty remission on Burundi’s exports reveal some impact with a

bulk of the exports, US$13.6m over the review period, 2008-2012 having been destined to the Rest of

the World. Exports destined to the EAC over the review period amount to US$9.1m. This is a clear

manifestation of the EAC DRS impact on Burundi’s ability to produce exports for the regional as well

as the global market.

Going by the firm level reporting, the official data seems an understatement of total exports to the

EAC region because the firm level declared exports shows exports of cooking oil while official data

shows no exports. The discrepancy may be attributed to the unrecorded informal trade, which the firm

captures.

Table 4.29: Burundi exports of finished products produced by companies in the Burundi list to

EAC and Rest of the World, 2008-2012 (figures in US$)

HS Code (from

questionnaires

summary)

Description (from

questionnaires

summary)

No. of Firms

(from

questionnaires

summary)

Burundi Exports to EAC Burundi Exports to the Rest

of the World

Total: 2008 to

2012 (figures

in US$)

% share Total: 2008 to

2012 (figures in

US$)

% share

11010000 Wheat flour 1 - 0% 100,737 1%

15121900 Cooking Oils 1 - 0% - 0%

20090000 Juice & Mineral water 1 16,706 0% 1,594 0%

22029000 Soft drink 1 - 0% - 0%

22030000 Beer 1 394,603 4% 9,309,305 68%

24021000 Cigarettes 1 - 0% - 0%

34011100 Soap 1 8,681,489 95% 4,180,727 31%

48010090 Newsprint (Label

Paper)

1 - 0% - 0%

48190000 Packaging Materials 2 - 0% 137 0%

Total 9,092,798 100% 13,592,499 100%


Total EAC Partner States (Kenya, Rwanda, Uganda and Tanzania) imports from within the EAC

(excluding Burundi) and rest of the world of manufactured products in the Burundi list for the period


the bulk or 75% (US$924m) was sourced from Rest of the World.


US$319m finished products in the EAC market are competing in the same market with finished

products from Burundi which may have been produced using raw material that had import duty

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waiver under the EAC DRS. Burundi’s share of the EAC market is quite insignificant as demonstrated

by total exports to EAC that amounted to US$9m compared to the EAC total regional market size of

US$1.2bn. This implies that Burundi’s exports of finished products that benefited from the duty

remission have an insignificant impact on other EAC economies producing and exporting similar

product.

Given that over 75% of the EAC market of the subject finished products is imported from the Rest of

the World, there is need for continued support of regional production of these products. Application of

duty remission on all deserving cases should therefore be intensified.

Table 4.30: Comparative Analysis of Burundi exports of finished products benefiting from DRS

into EAC and EAC Partner States (BUR, KE, RWA and TZ) imports from within EAC and

Rest of the World

HS Code

(from

questionnaires

summary)

Description

(from

questionnaires

summary)

No. of

Firms (from

questionnair

es

summary)

Burundi Exports to

EAC

EAC Partner States

(KE, RWA, UG & TZ)

imports from within the

EAC

EAC Partner States

(KE, RWA, UG & TZ)

imports from within

the EAC

Total: 2008

to 2012

(figures in

US$)

%

share

Total: 2008 to

2012 (figures

in US$)

%

share Total: 2008

to 2012

(figures in

US$)

%

shar

e

11010000 Wheat flour 1 - 0% 10,981,788 3% 147,635,038 16%

15121900 Cooking Oils 1 - 0% 9,480,501 3% 3,233,586 0%

20090000 Juice &

Mineral water

1 16,706 0% 25,518,530 8% 57,868,249 6%

22029000 Soft drink 1 - 0% 25,272,972 8% 79,744,835 9%

22030000 Beer 1 394,603 4% 62,683,795 20% 49,412,659 5%

24021000 Cigarettes 1 - 0% 408,106 0% 1,422,983 0%

34011100 Soap 1 8,681,489 95% 41,289,057 13% 78,687,689 9%

48010090 Newsprint

(Label Paper)

1 - 0% 17,492,662 5% 292,942,456 32%

48190000 Packaging

Materials

2 - 0% 126,575,400 40% 213,226,519 23%

Total 9,092,798 100

%

319,702,810 100% 924,174,014 100

%

4.10.3 Assessment of regional supply capacity of products in the Burundi List



tariff lines of the raw material/industrial inputs in the Burundi list. Application of duty remission on

these products is thus justified on the argument that the regional supply may experience periodic

shortfall which triggers request for duty remission. The remaining 70 tariff lines have been proposed

for permanent reduction of the CET rate to 0% on account of lack of regional supply capability.

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Table 4.31: Intra-EAC exports and Extra-EAC imports of raw material in the 2007 and June

30, 2013, Burundi list of raw material

TarifNos Description of Inputs / Raw Materials CET

Rate Duty

Remission

Rate


11081200 Maize (corn) starch. 10% 0% Intra-Exports 17,242,940 47.0%


11082000 Starches, inulin. 25% 0% Intra-Exports 2,930 42.9%

Extra Imports 3,896 57.1%

12060000 Sunflower seeds, whether or not broken. 10% 0% Intra-Exports 2,917,404 40.5%


12072000 Cotton seeds. 10% 0% Intra-Exports 3,089,898 85.5%


12079900 Other oil seeds and oleaginous fruits, whether or not broken

10% 0% Intra-Exports 4,340,886 71.6%


15030000 Lard stearin, lard oil, oleostearin, oleo - oil, and tallow oil, not emulsfied or mixed

otherwise prepared

10% 0% Intra-Exports 5,301

30.2%


15162000 Vegetable fats and oils and their fractions. 25% 0% Intra-Exports 225,173,504 75.4%


21023000 Prepared baking powders 25% 0% Intra-Exports 15,941,381 84.3%


27121000 Petroleum jelly. 25% 0% Intra-Exports 52,620,145 66.2%


34011900 Other soap; organic surface-active products and preparations for use as soap.

25% 0% Intra-Exports 92,993,702

82.3%


34021900

Other organic surface-active agents, surface-

active preparations, washing preparations,

and cleaning preparations.

25% 0% Intra-Exports 5,745,675

43.0%


39191000

Self-adhesives plates, sheets, films, foil,

tape, strip and other flat shapes, of plastics,

in rolls of a width not exceeding 20 cm


30.7%


39231000 Boxes, Cases, Crates and similar articles,

Sacks and bags 25% 0%



39233000 Carboys, bottles, flasks and similar articles. 25% 0% Intra-Exports 35,543,088 50.3%


39235090

Other articles for the conveyance or packing

of goods, of plastics; stoppers, lids, caps and

other closures, of plastics.

25% 0% Intra-Exports 25,585,702

51.8%


48191000 Cartons, boxes and cases, of corrugated

paper or paperboard 25% 0%



48195000 Other packing containers, including record sleeves.

25% 0% Intra-Exports 45,913,738 75.0%


48211090 Other printed paper or paperboard labels of all kinds.

25% 0% Intra-Exports 23,360,429 40.7%


48219000 Other paper or paper board labels of all

kinds. 10% 0%



63053300 Other sacks and bags of polyethylene or

polypropylene strip or the like 25% 0%



72106100 Flat-rolled products of iron or non-alloy steel plated or coated with aluminium-zinc

25% 0% Intra-Exports 51,837,399 69.9%

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Rate Duty

Remission

Rate


alloys. Extra Imports 22,369,558 30.1%

72124000 Flat-rolled products of iron or non-alloy steel painted, varnished or coated with

plastics.


35.6%


76041000 Bars, rods and profiles of aluminium, not alloyed

25% 0% Intra-Exports 16,708,244 53.4%


4.10.4 Recommendations for harmonization of EAC duty remission scheme arising from the Burundi

List of Raw Materials


using the raw material/industrial inputs in the Burundi list, coupled with absolute lack of regional

capacity for production of the same raw material, the following policy measures are proposed:

a) CET rate on some 70 tariff lines (Refer Annex 5) in the Burundi list of approved raw material be

permanently reduced to 0% on account of the region’s inadequate supply capacity

b) Continuous monitoring of regional supply capacity be undertaken regularly so that any material

that the region demonstrates as having attained the required threshold of 30% may have the CET

rate reviewed and access of the raw material during seasons of shortage be managed through the

duty remission scheme.

4.11 Duty Exemptions and Duty Remissions under National Laws

4.11.1 Duty Exemptions under the EAC CMA (2004)

The EAC CMA provides for two broad categories of duty exemption. The first category, which is

provided in Part A of the CMA relates to specific exemptions covering goods imported or purchased

before clearance through the customs by or on behalf of privileged persons and institutions.

The second category, which we consider relevant to this study, relates to General Exemptions

covering goods imported or purchased before clearance through the customs. Goods eligible under

general exemption are as listed in the table below.

A review of data provided by all EAC Partner States, with exception of Tanzania, where the data was

not availed in time, shows that the goods that benefited from the general duty exemption were all as

listed in EAC CMA Part B.

A critical look at the list in the context of duty remission scheme, reveals the need for the review of

the exemption with a view to removing items which can be catered for under the duty remission

regime where regional interests are taken care of through consideration of regional availability of the

subject products. The products of interest here are those that qualify as raw material or intermediate

goods for use in the manufacturing process. Rationalizing the exemption regime and duty remission

regime ensures harmony in the promotion of industrial development by removing the risk of regional

process being undermined by national processes that may be pursued under the Duty Exemption

Regime.

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Table 32: Goods eligible for general exemptions

Goods Eligible for General Exemption under Part A of the EAC CMA (2004)

1. Aircraft Operations

2. Containers and Pallets

3. Deceased Person’s Effects

4. Fish, Crustaceans and Molluscs

5. Passengers’ Baggage and personal effects

6. Samples and Miscellaneous Articles

7. Ships and Other Vessels

8. Preparation for cleaning dairy apparatus

9. Mosquito nets and materials for the manufacture of

mosquito nets

10. Seeds for Sowing

11. Chemically defined compounds used as fertilisers

12. Museums, Exhibits and Equipment

13. Diapers, Urine bags and hygienic bags

14. Diagnostic Reagents and Equipment

15. Horticulture, Agriculture or Floriculture Input

16. Packaging Material for Medicaments

17. Education

18. Splints for use in the manufacture of matches

19. Inputs for use in the manufacture of agricultural equipment

20. Machinery, Spares and Inputs for Direct use in Oil,

Gas and

21. Geothermal Exploration

22. Industrial Spare Parts

23. Relief goods imported for emergency use in specific areas where natural disaster/calamity has occurred in a Partner State

24. Hotel Equipment 25. Refrigerated trucks 26. Speed Governors 27. Computer Software 28. Electrical Energy saving bulbs for lighting also

known as Compact Fluorescent Bulbs 29. Specialised Solar equipment and accessories 30. Unbleached woven fabrics of a width 80 inches and

above imported for manufacture of textile materials

31. Items imported for use in licensed hospitals 32. Motor vehicles specially designed for refuse/garbage

collection and disposal imported or purchased by

local authorities or persons contracted by the local

authorities to collect refuse/garbage

33. Motor Vehicles for Transportation of Tourists

34. Examination gloves

35. Tsetse fly Traps

36. Battery operated vehicles

Recommendations

1. The following items, which qualify as raw material or intermediate goods should be removed

from the exemption regime and be managed under the duty remission scheme:

a) Horticulture, Agriculture or Floriculture Input

b) Inputs for use in the manufacture of agricultural equipment

c) Machinery, Spares and Inputs for Direct use in Oil, Gas and

d) Unbleached woven fabrics of a width 80 inches and above imported for manufacture of textile

materials

2. The following items may need to be accommodated in the EAC Tariff book through review of

CET rate to 0% based on the objective for which they have been identified for purposes of

inclusion in the exemption regime:

a) Industrial Spare Parts

b) Packaging Material for Medicaments

c) Education

d) Splints for use in the manufacture of matches

e) Seeds for Sowing

f) Electrical Energy saving bulbs for lighting also known as Compact Fluorescent Bulbs

4.11.2 Duty Remissions under National Laws

In all the EAC Partner States, with exception of Uganda, there are national laws that are used in

granting duty remission outside of the EAC CMA. The table below gives the specific laws cited by

Ministries of Finance as the laws under which the duty remissions are granted, either as part of

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investment or export promotion incentives. The significance of the duty remission under these

schemes in terms of raw material/industrial input and finished goods coverage was not assessed due to

unavailability of data. There is also no value for a detailed study of the regimes because according to

EAC Customs Union Protocol, they all need to be folded and have all the incentives relating to duty

remission be granted under the EAC CMA.

Table 33: National laws under which duty remission is granted at country level

Country National duty remission regime

Burundi Burundi Investment Code (The following priority

sectors can benefit from incentives under this code,

which include duty remission: agriculture, fishing

and livestock, Public Health, Mining and Energy,

Tourism, Manufacturing industry, Goods and Persons

transport infrastructures, Education, Communication

and information Technology, Public Works and

Environment.

Kenya Duty remission is provided as an incentive in the

following legislations: -

Export Processing Zones Act

Investment Code

Rwanda Duty remission is provided as an incentive in the

following legislations: -

Investment Code

Tanzania Remission of custom duty, VAT and other taxes

on raw materials and goods of capital nature

related to production in EPZs.

Remission under Investment Act

Recommendations

1. EAC Partner States should fold their national duty remission structures under the national laws

and instead have the incentives provided under the EAC CMA.

2. EAC CMA be reviewed to accommodate any national level incentives in the context of the EAC

investment and industrial development strategy.

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5.0 Duty remission for manufacture of good for exports

5.1 Analytical framework for duty remission on goods imported for use in

manufacture of goods for exports

As already observed in the section on economic rationale for duty remission for exports, the policy

motivation for duty remission on importation of raw material/industrial inputs is shortage of supply,

meriting temporary application of the duty remission as the local suppliers respond to such demand.

Presently, any EAC Partner State that projects shortage of a specific raw material/industrial input

applies for duty remission for export and is usually granted. The processing of the application is not

subjected to assessment of regional availability of the raw material as would be required in the context

of a Single Customs Territory. This denies EAC industries that manufacture similar raw

material/industrial inputs that are subject to the duty remission for export an opportunity of supplying

the raw material to industries that are engaged in production for export market. This concern is the

basis for the search for ways of harmonizing duty remission of CET rates in the EAC.

To facilitate this process, we have adopted the following conceptual framework, leading to principles

that if applied will ensure equity in the use of duty remission on imported goods for manufacture of

goods for exports.

The critical issue in evolving an objective policy for duty remission for exports is determination of the

region’s supply capacity. Regional production/supply data is not readily available to facilitate an

objective analysis. In absence of this data, trade flow data is used as proxy. EAC countries intra-

exports to the EAC region is used as a proxy for the region’s supply capability, while EAC intra and

extra EAC imports of a specific product is used as proxy for the regional market size that has to be

met through international trade sourcing. The choice of trade flow is influenced by availability of data

and the reality that a country is able to export on the basis of established supply capacities.



imports) the following principle is proposed to guide on the decisions of whether to grant duty

remission on a specific raw material/industrial input or not.

iii) If the share of intra-EAC exports in total EAC market size is less than 30% for the last three


demand. In view of this, all raw material/industrial inputs that fall under this category need not be

subject of duty remission. Instead, and in the interest of promotion of manufacture of these

products, whether for exports or domestic consumption, the Council should reduce the CET rate to

0%, being the rate that the industry would have sourced the raw material/industrial input from

within the EAC region had the supply been sufficient.

Application of this principle helps identify raw material which need not be subjected to duty

remission for exports, mainly because the region does not have production capacity and there is no

threat to any industry.

iv) If the share of intra-EAC exports in total EAC market size is equal to or greater than 30% for the


regional demand and hence the Council should grant duty remission on the raw material for

manufacture of goods for exports. The duty remission should be 0%, being the rate that would

have been applicable if the raw material were to have been sourced from within the EAC.

Pursuant to the provisions of Article 25 of the EAC Customs Union, finished products that are

manufactured under the duty remission for exports should: -

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a) Be primarily for exports.

b) 20% of annual production may be sold in the EAC market upon payment of duties and

surcharges.

5.2 Impact assessment

A review of duty remission on imports of raw material and industrial inputs for use in manufacture of

finished goods for exports reveals that various approved manufacturers were authorized through

various EAC Gazettes for the period 2010 to 2012 to import a total of 250 raw material or industrial

inputs. These raw material/industrial inputs were used in manufacturer of some 78 finished products.

Impact in terms of threat to other EAC economies and promotion of exports, including prospects for

enhancing intra-regional share of the finished product in the EAC regional market is analysed below.

5.2.1 Threat to EAC industries producing similar raw material/industrial inputs

An assessment of threats posed to regional industries that produce the same raw material or industrial

inputs that the EAC Council grants duty remission revealed minimal threat in select products. The

threat is posed to the four EAC countries that do not apply DRS for exports. These are Burundi,

Rwanda, Uganda and Tanzania. In total these countries recorded exports of similar raw material into

the EAC region amounting to US$125m in 2012, having risen from US$75m in 2010.

The EAC’s capacity to produce and export these products is further revealed by the four countries’

exports of the raw material and industrial inputs to the rest of the world. By 2012 total exports from

the four countries totalled US$280m.

Table 5.1: Burundi, Rwanda, Uganda and Tanzania exports of similar raw material and

industrial inputs that are granted duty remission (figures in US$)

2010 2011 2012

Intra - Exports 75,320,490 96,706,248 125,610,523

Extra Exports 1,441,438,707 1,725,926,817 280,936,932

The decline in exports from US$1.4bn in 2010 to US1.7bn in 2011 brings the question of

sustainability and consequently the ability of the regional industries to service export industries’

needs.

Analysis of the regional exposure to the duty remission for exports revealed that out of the 250 tariff

lines which Kenya applied for duty remission for manufacture of goods for exports, only 46 tariff

lines pose a threat to the EAC. This finding is based on the analysis of the intra-EAC exports share in

the total EAC market. These tariff lines’ share in the regional market exceeds 30% and in some cases

it stands at 100%. The table below gives a glimpse of the intra-regional exports of 7 tariff lines out of

the 46, just to demonstrate the capacity of the four EAC countries to supply these raw

materials/industrial inputs to service export oriented industries.

Table 5.2: Raw material/industrial inputs under threat from imports of similar products under

DRS for exports.

HS Code Description 2010 2011 2012 Total 2010-2012 % share

17019100 Caram Sugar 4,100,710 2,363,445 8,226,339 14,690,494 5%

24012000 Un Manufactured

Tobacco

8,824,435 9,127,074 9,802,382 27,753,891 9%

39232900 Vegetable Bags 86,725 1,369,110 6,595,726 8,051,561 3%

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HS Code Description 2010 2011 2012 Total 2010-2012 % share

41019000 Raw Cow hides 1,711,909 3,057,937 4,185,784 8,955,630 3%

41039000 Raw Goat hides 905,034 5,548,978 6,996,752 13,450,764 5%

48041100 White Top 19,725,469 19,818,900 19,643,067 59,187,436 20%

48042100 Sack Kraft paper 18,932,470 29,122,666 15,556,432 63,611,568 21%

48194000 Paper Sacks 213,293 2,133,124 4,436,089 6,782,506 2%

48211090 Printed material 5,686,605 4,676,606 5,539,774 15,902,985 5%

63053300 WPP Bags 2,369,988 4,121,164 13,304,797 19,795,949 7%

70109000 Empty square jars 2,528,466 7,134,617 16,679,741 26,342,824 9%

Others 72,792,024 89,571,631 108,930,782 271,294,437 11%

Grand Total 75,320,490 96,706,248 125,610,523 297,637,261 100%

5.2.2 Impact on export growth and regional market potential

A review of Kenya’s exports of finished products that benefit from duty remission for exports scheme

shows an increase in exports from US$2.5bn in 2008 to US$3.1bn in 2012.

Table 5.3: Kenya’s exports of finished products benefiting from EAC DRS for Exports. Figures

in US$

# Trade flow 2008 2009 2010 2011 2012

(a) Exports destined to the EAC Market 415,397,327 378,835,236 424,193,113 506,031,263 562,693,870

(b) Exports destined to Rest of the World 2,135,308,947 1,948,982,852 2,263,059,535 2,404,269,832 2,497,344,554

(c) Total 2,550,706,274 2,327,818,088 2,687,252,648 2,910,301,095 3,060,038,424

(d) Exports destined to EAC as a % of total exports

16% 16% 16% 17% 18%

(e) EAC (Burundi, Rwanda, Uganda and

Tanzania Extra-Regional Imports of similar products)

1,060,004,368 998,126,233 1,250,125,057 1,472,896,085 928,197,795

(f) Revealed Regional Potential ((e) – (a)) 644,607,041 619,290,997 825,931,944 966,864,822 365,503,925

Kenya’s exports to EAC of products that benefit from DRS for exports stood at US$563m in 2012,

having risen from US$415 million in 2008. This was a 36% increase. It is therefore evident from this

analysis that DRS for export has stimulated production for export market. The bulk of these exports

are to the rest of the world, while an average of 17% is destined to EAC market, where duty at the

level of EAC CET rate for finished products is paid.

Kenya’s export of products manufactured using duty remission raw material/industrial inputs pose no

threat to other EAC countries’ export interest of similar products in the EAC market. The analysis in

the table above shows these countries to be net importers of similar products, with such imports

averaging over US$1bn during the period 2008 to 2012. The gap between Kenya’s exports and the

extra regional imports shows an opportunity that needs to be exploited through encouraging DRS for

regional exports. In 2012, the potential stood at US$365m. This potential should be exploited through

increasing of the threshold for regional sale of finished goods produced under duty remission for

export scheme from 20% to about 40%, as was strongly recommended by the industry during the

regional workshop on Duty Remission Scheme, held in September 2013.

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5.2.3 Recommendation on duty remission on imported goods for use in manufacture of goods for

export

a) For purposes of harmonizing duty remission for exports and promoting competitiveness of the

products for export the following principle is proposed: -

i) If the share of intra-EAC exports in total EAC market size is less than 30% for the last three

consecutive years, then the region is considered as not having sufficient capacity to meet

regional demand. In view of this, all raw material/industrial inputs that fall under this category

need not be subject of/to duty remission. Instead, and in the interest of promotion of

manufacture of these products, whether for exports or domestic consumption, the Council

should reduce the CET rate to 0%, being the rate that the industry would have sourced the raw

material/industrial input from within the EAC region had the supply been sufficient.

Application of this principle helps identify raw material which need not be subjected to duty

remission for exports, mainly because the region has got no production capacity and there is no

threat to any industry.

ii) If the share of intra-EAC exports in total EAC market size is equal to or greater than 30% for

the last three consecutive years, then the region is considered as having sufficient capacity to

meet regional demand and hence the EAC Council should grant duty remission on the raw

material for manufacture of goods for exports. The duty remission should be 0%, being the rate

that would have been applicable if the raw material were to have been sourced from within the

EAC.

Pursuant to the provisions of Article 25 of the EAC Customs Union, finished products that are

manufactured under the duty remission for exports should: -

Be primarily for exports.

20% of annual production may be sold in the EAC market upon payment of duties and

surcharges. If EAC trade flow demonstrates EAC as a net importer from rest of the world

of the finished products subject to production under duty remission for exports, then the

threshold of annual production that qualify to be sold in the EAC market should be raised

to 40%.

b) Grant duty remission for exports on raw material that the region has demonstrated capacity to

supply

iii) Using the above 30% rule, out of the 250 products that Kenya sought duty remission for

export, only 42 products, which appear in annex 6 would qualify for duty remission for

exports. It is recommended that these products be retained in the duty remission for exports

regime for a period of 3 years. Review of the CET rate after three years be done for cases

where regional supply will have responded to regional demand.

iv) The threshold for sale of annual production to the regional market should be raised to 40%

in recognition of the huge export potential currently being serviced by extra-regional

imports.

c) Reduce the CET rate of some 241 products (refer Annex 7), previous in Kenya duty remission

for exports to 0% on permanent basis. Using 30% intra-export principle it was established that

the region does not have adequate supply capability to warrant periodic exemption of the CET

rate through duty remission regime.

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6.0 Duty Remission through Stay application of CET Rate

This category covers duty remission which is granted to EAC Partner States, through Legal Notice

pursuant to the EAC Customs Union Protocol, Articles 12(3) and Articles 39(1) (i) (c). It is applicable

on across the board basis on the specific product which the Council suspends application of the CET

rate and instead allows temporary tariff to apply for a given period.

The specification of this duty remission in the Legal Notice reads as follows: “Item: Rice; Tariff

Measure: Kenya stay application of CET rate of 75% or US$200 per MT whichever is higher and

apply import duty rate of 25% on rice imported from Pakistan for two years”.

Any rice dealer in Kenya importing rice from Pakistan would be allowed to bring in the rice at the

prescribed duty rate during the two year period, subject to country level regulation/licensing on rice

imports.

6.1 Legal basis

According to the EAC Gazette, and as already alluded to above, the legal basis for granting duty

remission on approved goods/products, also referred to as ‘Stay application of CET measure’, is

Articles 12(3) and 39 (1)(c) of the EAC Customs Union Protocol

According to Article 12(3), “the Council may review the common external tariff structure and

approve measures designed to remedy any adverse effects which any of the Partner States may

experience by reason of the implementation of this part of the Protocol or, in exceptional

circumstances, to safeguard Community interests”. Article 39(1)(c) gives legal credence to the policy

measure through recognition of ‘Regulations and directives made by the Council’ as Customs Laws.

In the case of the stay of application, there are no regulations. Instead, the Council gives directives

through the EAC Gazette. We find this a major lapse because lack of Regulation denies the EAC

region a coherent approach to implementation of this legal provision.

Our review reveals Partner States compliance with the application of this legal provision of the

Customs Union Protocol. There were no cases of unilateral stay of application of CET that were

established by the survey. As a matter of fact, whenever a country needed temporary stay of the

application of CET, such authority was sought and granted by the EAC Council.

6.2 Customs management practice

As already observed above, there lacked a regulation to guide customs and other stakeholders on

administration of this category of duty remission. In all countries, an application of this category of

duty remission was processed by the Ministry of Finance in collaboration with the respective

Ministries under which the subject product falls. The single reason given in all countries for

application for duty remission for the various products is domestic shortage.

The customs facilitates importation of the goods that are granted stay of application of CET through

an order from Ministry of Finance which is based on the EAC Legal Notice.

No customs control is put in place to monitor the end use of the products once they are imported. For

instance, there is no mechanism to ensure that the products that are imported for home use are not re-

exported. This lapse is attributed to lack of regulation to govern this category of duty remission.

Among the glaring omissions in this scheme is the ‘open cheque’ type of remission where a country is

granted stay of application to import a specific product on duty free basis or on duty lower than the

CET without any quota. This has a threat of creating glut in the supply of the product through cheap

imports that would end up undermining the region’s productive sector. Fear that regional trade of

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certain products is infiltrated by cheap imports has led EAC countries to introduce market access

restriction for such products. The lapse has therefore fuelled suspicion among EAC Partner States

which has in turn hurt genuine trade.

Given the noble cause for this category of duty remission, there is a need to come up with a regulation

to govern its application and customs control.

6.3 Analytical Framework, impact Assessment and proposed harmonization

measures

6.3.1 Analytical framework and proposed principles for harmonization of the stay of

application category of duty remission

The policy motivation for the temporary stay of application of the CET rate on approved products is

the shortage in supply to meet projected domestic market demand. Therefore, the fundamental factor

behind the stay of application is lack of adequate supply to meet domestic demand.

Presently any EAC Partner State that projects shortage of a specific product applies for the stay of

application for the CET rate and the application is usually granted. Under the SCT framework, where

the entire EAC is a domestic market by virtue of being one customs territory, the stay of application

poses a threat to sectors producing the products that are subject to stay of application. This concern is

the basis for the search for ways of harmonizing stay of application of CET rates in the EAC.

To facilitate this process, we have adopted the following conceptual framework, leading to principles

that if applied will ensure equity in the use of the stay of application of the CET rate policy.

The critical issue in evolving an objective policy for the temporary stay of the CET rate is

determination of the region’s supply capacity. Regional production/supply data is not readily available

to facilitate an objective analysis. In absence of this data, trade flow data is used as proxy. EAC

countries intra-exports to the EAC region is used as a proxy for the country’s supply capability, while

EAC intra and extra imports of a specific product is used as proxy for the regional market size that has

to be met through international trade sourcing. The choice of trade flow is influenced by availability

of data and the reality that a country is able to export on the basis of established supply capacities.

The EAC, under the Agriculture, Rural Development Strategy and Industrial Development Policy and

Strategy has outlined a robust framework for promotion of EAC agricultural and industrial

development. This is what has motivated the Council to carefully assess every application of the stay

of application to ensure that the measures adopted do not compromise EAC agricultural and industrial

development goals. However, there has been no criteria that has been used to guide on whether the

region has adequate or prospect for adequate supply in order to determine necessity of the stay of

application or even whether the CET rate which the EAC Partner States are seeking temporary stay is

relevant. Ideally, if the region has no supply capacity, then the CET rate should be reduced

permanently to the rate that the industry is seeking temporary stay.



imports) the following principle is proposed to guide on the decisions of whether to grant stay of

application or not.

v) If the share of intra-EAC exports in total EAC market size is less than 30% for the last three


demand and hence instead of granting stay of application, the Council should reduce the CET rate

to the rate which the industry is proposing.

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Prior to this policy measure being taken, a notice through the EAC Gazette will need to be issued

so that the sectors that supply the product may be notified for purposes of their information and

possible petition to the Council through demonstrated proof that they have capacity to supply

regional requirements as will have been reported to the council through the application for stay of

temporary stay of CET rate by the EAC Partner States.

vi) If the share of intra-EAC exports in total EAC market size is equal to or greater than 30% for the


regional demand and hence the council should grant temporary stay of application of the CET rate

for the proposed quota and period.

The following procedures should be applied in the application of the temporary stay of the CET

rate: -

The producing countries (all EAC countries) to give their projected supply on the basis of the

EAC Regional Food Balance (for agricultural produce) or EAC industrial production

survey/estimates.

If the regional assessment of supply and demand shows a deficit, then the EAC Council

should grant temporary stay of the CET rate to 0%, because this is the rate at which these

products would have been obtained from within the EAC if regional supply was adequate.

EAC country which requires to be allowed to import the product on duty free basis to be

Gazetted for statistics purposes only.

The above two principles have been applied in the review of the stay of application of CET rate cases

of the period 2008 – 2013.

6.3.2 Impact Assessment and proposed harmonization measures

6.3.2.1 Product coverage

Over the review period, 2007 to 2012, the EAC Council granted stay of application of CET on

following 27 products/product categories. The allocation was country specific and for limited period

varying between 6months and 2 years.

1) Rice

2) Wheat and wheat products

3) Maize Grain and Maize flour

4) Sugar (HS Code: 17011190)

5) Barley

6) Malt and Roasted Malt

7) Crude Palm Oil

8) Motor vehicle from transport of more than 25 persons

9) Motor vehicles for the transport of goods

10) Hand Hoes

11) Palm stearin, fractions, Sodium sulphate and Epoxide resins

12) Synthetic yarn (i.e. synthetic yarn used in the manufacture of fishnets)

13) Filament yarn not put up for retail sale

14) Construction material

15) Flat-rolled products of iron or non alloy steel

16) Stranded wires, cables, plaited bands and the like, of cooper, non-electrically insulated

17) Tractors

18) Road guard rails, gabions and gabion mattresses

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19) Aluminium conductors and cables.

20) Other electrical wires

21) Acrylic polymers in primary form

22) Organic surface-active agents (Anionic, Cationic, Other) (LABSA)

23) Vacuum packaging bags used by manufacturers of fruit juices and coffee for packaging of juices

and roasted/instant coffee respectively

24) Odoriferous mixtures of a kind used as raw materials in the food or drink industries

25) Equipments used in the Telecommunication

26) Towers and lattice masts

27) Plastic bag biogas digesters

Detailed analysis of products that have featured for at least three years has been conducted and

appropriate proposal for harmonization given, using the principles described above. These products

include: Rice, wheat and wheat flour, sugar and motor vehicles. The same principle is applied on the

rest of the products but presented in a highly summarized format to assist in decision making based on

revealed regional export interest and regional market demand.

6.3.2.2 Rice

i) Allocation, utilization and equity of the policy measure

Duty remission on rice was granted to Kenya, Rwanda and Burundi, with no quota restriction. For

Kenya, duty on rice has been 10% for rice imported from Pakistan for the period June 2007 to June

2011 and 35% for rice imported from rest of the world from July 2009 to June 2013.

Rwanda’s duty remission on rice was at 30% for the period July 2009 to June 2011 and later at 0% for

the period July 2009 to June 2013. Burundi also benefited from duty remission for rice at 0% for the

period July 2012 to June 2013.

Table 6.1: Duty Remission on Rice (July 2007 to July 2013)

Beneficiary

country

CET Tariff

under

DRS

Quota Duty Remission applicable period

2007 2008 2009 2010 2011 2012 2013

Kenya

(Rice from

Pakistan)

75% or 200MT whichever

is higher

10% None

Kenya

(Rice from

RoW)

75% or 200MT whichever

is higher

35% None

Rwanda 75% or 200MT whichever

is higher

30% None

Rwanda 75% or 200MT whichever

is higher

0% None

Burundi 75% or 200MT whichever

is higher

0% None

From this table, it is clear that there is no equity or uniformity in the application of duty remission on

rice. First, only three of the EAC countries have benefited from duty remission on rice. Second,

applicable duty rates differ among the countries benefiting from the duty remission.

It is also worth noting that the duty remission on rice has been applied virtually throughout the last

five years, implying need to review the CET, on the basis that it has not been relevant for the three

countries.

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ii) Impact of duty remission on rice on other EAC Partner States

The EAC countries that are exposed to competition from rice imports under duty remission provision

are Tanzania and Uganda. The significance of this impact is assessed through trade flow analysis to

demonstrate these countries’ export interest in the EAC regional market over the same period and

their capacity to supply the regional requirement.

As evidenced in the table below, Uganda and Tanzania’s exports of rice into the EAC regional market

have been dismal, being below 7% throughout the review period, with their share being virtually zero

in 2009. This is clear evidence of limited regional supply capacity, which is far below the statistical

significance rule of 30% that warrants support of a sector through application of temporary stay of

CET rate for a limited period.

Table 6.2: EAC rice market size and the share of Uganda and Tanzania in the regional

market, 2008 – 2012, figures in US$

2008 2009 2010 2011 2012

Uganda exports to EAC 2,186,240 2,065 3,255,008 6,964,667 877,921

Tanzania Exports to EAC 602,053 10,197 13,353,710 12,547,939 4,357,515

Sub-total (UG + TZ) intra EAC exports

2,788,293 12,262 16,608,718 19,512,606 5,235,436

Total EAC Market Size (Intra-

EAC and Extra EAC imports

219,333,581 260,516,648 251,813,276 357,985,742 442,109,009

Share of Uganda and Tanzania in EAC regional rice market

1.27% 0.00% 6.60% 5.45% 1.18%

Source: Analysis from data availed by Revenue Authorities for purposes of DRS Study iii) Policy recommendation

Although trade flow data shows low intra-regional supply capability, FAO production/consumption

data shows that EAC does have surplus of rice that could feed the region.

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It is therefore recommended that stay of application CET rate be applied on the following conditions:

-

The producing countries (all EAC countries) to give their projected supply in the next one year.

Each EAC country to provide its total rice consumption/demand requirement over the same year.

If the regional assessment of supply and demand shows a deficit, then the EAC Council should

grant temporary stay of the CET rate to 0%, because this is the rate at which these products

would have been obtained from within the EAC if regional supply was adequate.

EAC country that will, from the production/consumption analysis be demonstrated to have

deficit, be allowed to import the product on duty free basis, and the same be gazetted for statistics

purposes only. There will be no need for returns by those allowed to import the products because

regional sensitivity will have been addressed through the vetting process.

6.3.2.3 Wheat and wheat flour


Wheat here refers to wheat classified as follows in the EAC Tariff Book – Hard wheat (HS:10019910)

and Other wheat (10019990). Four of the EAC countries were granted duty remission for importation

of wheat grain and hard wheat at different times and at different duty rates during the review period.

The duty rate varied between 0% and 25%. In some cases, a country was granted varied duty rates

during the review period. For instance Tanzania was granted duty rate of 10% for wheat grain and

hard wheat for the period July 2007 to June 2012. This rate was lowered to 0% in the period June

2012 to June 2013.

Burundi and Rwanda were granted duty remission for wheat flour at a duty rate of 35% instead of the

EAC CET rate of 60%.

It is also worth noting that there was no quota restriction, with exception of wheat flour for Burundi in

the period July2012/June 2013.

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Table 6.3: Duty Remission on Wheat and Wheat Flour

Beneficiary country CET Tariff

under

DRS

Allocated

quota

Duty remission applicable period

2007 2008 2009 2010 2011 2012 2013

Tanzania - wheat grain and

hard wheat

35% 10% None

Tanzania - wheat grain and

hard wheat

35% 0% None

Uganda - hard wheat 35% 0% None

Uganda - wheat grain 35% 0% None

Uganda - wheat grain 35% 10% None

Kenya - wheat grain and

hard wheat

35% 25% None

Kenya - wheat grain and

hard wheat

35% 10% None

Rwanda - wheat grain and

hard wheat

35% 0% None

Rwanda - wheat flour 60% 35% None

Burundi - wheat flour 60% 35% None

Burundi - wheat flour 60% 35% 3000MT

The above analysis reveals lack of equity or uniformity in the duty remission on wheat grain, hard

wheat and wheat flour. EAC countries, contrary to the expected SCT territory policy dispensation face

threat from importation of these products at varying duty rates, a phenomenon that would undermine

the effectiveness of the SCT through unfair competition from products imported at lower duty rates.

ii) Impact of duty remission on wheat and wheat flour on other EAC Partner States

a) Wheat

The analysis in the table below shows that the impact of duty remission on wheat on EAC Partner

States with demonstrated export interest in the regional wheat market is negligible. These countries’

export of wheat to the regional market is a paltry, accounting for less than 1% of the regional market

requirement throughout the review period.

Table 6.4: EAC wheat market size and the share of Kenya, Rwanda, Uganda and Tanzania in

the regional market, 2008 – 2012 (figures in US$)

2008 2009 2010 2011 2012

Kenya 713,521 451,546 1,128,503 317,641 1,207,478

Rwanda 10,774 - - - 6,279

Uganda 382,951

Tanzania 1,127,227 38,951 389,802 452,511 469,158

Sub-total (KE, RW, UG &TZ) intra

EAC exports

1,851,522 490,497 1,901,257 770,152 1,682,915

Total EAC Market Size (Intra-EAC

and Extra EAC imports

482,098,592 531,511,608 647,557,596 933,500,606 840,585,367

EAC countries % share in the EAC

regional market of rice

0.38% 0.09% 0.29% 0.08% 0.20%

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Source: Analysis from data availed by Revenue Authorities for purposes of DRS Study b) Wheat Flour

The analysis in the table below shows EAC intra-regional exports of wheat flour to be quite low,

signifying low regional capacity to meet the regional demand. This implies that the duty remission on

wheat flour did not have any negative impact on the countries with export interest in the regional

market.

Table 6.5: EAC wheat flour market size and the share of Kenya, Rwanda, Uganda and

Tanzania in the regional market, 2008 – 2012 (figures in US$)

2008 2009 2010 2011 2012

Kenya 31,653 777,796 299,481 714,370 1,692,646

Rwanda 688,374 - 7,214 5,446 9,015

Tanzania 2,067,756 3,505,701 6,571,968 3,780,540 2,352,051

Uganda - - 602,561 250,740 22,717

Sub-total (KE, RW, UG &TZ) intra EAC exports

2,787,783 4,283,497 7,481,224 4,751,097 4,076,428

EAC countries % share in the

EAC regional market of rice

16,735,670 43,309,858 45,522,365 53,702,973 29,405,351



17% 10% 16% 9% 14%

Source: Analysis from data availed by Revenue Authorities for purposes of DRS Study iii) Policy recommendation The FAO data on production and supply of wheat agrees with the trade flow analysis, by

demonstrating a perpetual wheat deficit scenario throughout the review period, making the region to

be dependent on extra-regional imports. This is illustrated in the chart below:

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-3,000,000

-2,000,000

-1,000,000

-

1,000,000

2,000,000

3,000,000

2008 2009 2010 2011 2012

EAC Wheat: Production vs Consumption in MT - 2008 to 2012

Production

Consumption

Surplus/Deficit - tradeable surplus

It is recommended that the CET rate on wheat be reduced to 10% considering that wheat is an

intermediate input that is in scarce supply. This will enable the region to produce sufficient flour to be

able to meet the EAC regional flour demand.

6.3.2.4 Sugar


Duty remission for stay of application of the CET rate on sugar was granted to Rwanda, Tanzania and

Uganda for limited periods ranging between 6 months and one year over the period 2010 to 2012 for

importation of a total 130,000MT tonnes at duty rate of 0%. Rwanda’s allocation in 2010 had no

quota limitation.

Table 6.6: Duty Remission on sugar

Beneficiary country CET Tariff

under

DRS

Allocated

quota

Duty remission applicable period

2007 2008 2009 2010 2011 2012 2013

Rwanda 100% or US200

per MT,

whichever is

higher

0% None

Rwanda - with quota 100% or US200

per MT,

whichever is

higher

0% 50,000MT

Tanzania 100% or US200

per MT,

whichever is

higher

0% 40,000MT

Uganda 100% or US200

per MT,

whichever is

higher

0% 40,000MT

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ii) Impact of duty remission on sugar on other EAC Partner States

An assessment of the impact of the duty remission on sugar through stay of application shows

minimal effect on EAC countries that have an export interest in the EAC region, on the basis of their

exports between 2008 and 2012. The countries are Burundi, Kenya and Tanzania, which in 2012, for

instance accounted for 0.05% of the total region’s market requirement.

Table 6.7: EAC sugar market size and the share of Burundi, Kenya and Tanzania in the

regional market, 2008 – 2012 (figures in US$)

Host 2008 2009 2010 2011 2012

Burundi 1,235,720 1,797,135 - - -

Kenya 18,151 5,973 7,038 36,264 61,624

Tanzania 57,474 76,947 5,711,974 596,834 -

Sub-total (BUR, KE &TZ) intra

EAC exports

1,311,344 1,880,054 5,719,012 633,098 61,624

Total EAC Market Size (Intra-

EAC and Extra EAC imports

42,964,695 41,598,672 101,040,720 76,580,965 112,820,150



3.05% 4.52% 5.66% 0.83% 0.05%

iii) Policy recommendation The perception in the EAC region, going by the high CET rate on sugar is that the region has

sufficient capacity to meet its demand. In view of this regional perception and lack of production and

consumption data on sugar, we recommend application of the temporary stay of CET rate on the

following conditions:

The producing countries (all EAC countries) to give their projected supply.

Each EAC country to provide its total sugar consumption/demand requirement





deficit, be allowed to import the product on duty free basis, and the same be gazetted for

statistics purposes only. There will be no need for returns by those allowed to import the

products because regional sensitivity will have been addressed through the vetting process.

6.3.2.4 Motor vehicle for transport of more than 25 persons


Duty remission through stay of application of the CET rate of 25% for motor vehicle for

transportation of more than 25 persons was granted to Uganda, Tanzania, Rwanda and Burundi. For

Tanzania and Uganda, the allocation was for special purpose projects, which indicate that regional

supplies were inadequate or the specification of the vehicles was different from what is regionally

available. For Burundi and Rwanda, the allocation was granted in 2012 and 2013. From a Single

Customs Territory point of view, where the entire EAC region is one domestic market, this selective

allocation will pose a challenge to countries with industries producing the vehicles for the same

market. A regional approach is therefore needed to balance out the regional requirement vis a vis

regional supply capabilities.

Table 6.8: Motor vehicle for transport of more than 25 persons

Beneficiary

country

CET Tariff

under

DRS

Allocated quota Duty remission applicable period

2007 2008 2009 2010 2011 2012 2013

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Beneficiary

country

CET Tariff

under

DRS


2007 2008 2009 2010 2011 2012 2013

Uganda 25% 0% Commonwealth

vehicles

Tanzania 25% 0% 2,400 for fast bus

project

Rwanda 25% 0% None

Burundi 25% 0% None

ii) Impact of duty remission on Motor vehicle for transport of more than 25 persons on other

EAC Partner States

Trade flow analysis reveals existence of regional capacity to supply the type of motor vehicles that are

subject of the duty remission. Regional demand, as illustrated by total EAC imports of this type of

motor vehicles far out strips what the region is capable of supplying.

Table 6.9: EAC Motor vehicle for transport of more than 25 persons on other EAC Partner

States market size and the share of Burundi, Kenya and Tanzania in the regional

market, 2008 – 2012 (figures in US$)

2008 2009 2010 2011 2012

Kenya 11,417,202 33,120,028 17,086,297 12,052,594 12,439,489

Tanzania 18,605 38,661 137,319 226,923 48,079

Sub-total (BUR, KE &TZ) intra EAC exports 11,435,807 33,158,689 17,223,616 12,279,517 12,487,568

Total EAC Market Size (Intra-EAC and Extra

EAC imports

60,360,562 61,906,364 66,645,546 51,168,246 68,452,520

EAC countries % share in the EAC regional market of rice

19% 54% 26% 24% 18%

iii) Policy recommendation The above analysis shows that despite Kenya and Tanzania not having been able to meet the region’s

market demand, they do have an export interest, having taken upto 54% of regional market share in

2009 and an average of 28% over the review period.

In view of this, we recommend application of the temporary stay of CET rate on the following

conditions:

The producing countries (all EAC countries) to give their projected supply in the next one year.

Each EAC country to provide its total sugar consumption/demand requirement.





deficit, be allowed to import the product on duty free basis, and the same be gazetted for

statistics purposes only. The will be no need for returns by those allowed to import the products

because regional sensitivity will have been addressed through the vetting process.

6.3.2.4 Motor vehicles for transport of goods (Gross weight exceeding 5 tons but less than

20tons and gross weight exceeding 20 tons

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Duty remission through stay of application of EAC CET rate for motor vehicles for transport of goods

gross weight >5tons but < 20tons and category with gross weight > 20tons was granted to Burundi,

Rwanda, Tanzania and Uganda between 2009 and 2013 with applicable rates ranging between 0% and

10%. This practise fails to meet equity that is envisaged under a Single Customs Territory framework,

by virtue of the allocations being country rather than regional specific.

Table 6.10: Duty remission on Motor vehicles for transport of goods (Gross weight exceeding 5

tons but less than 20tons and gross weight exceeding 20 tons

Beneficiary country

CET Tariff under DRS


2007 2008 2009 2010 2011 2012 2013

Motor vehicles for transport of goods with gross vehicle weight exceeding 5tons but not exceeding 20 tonnes

Burundi 25% 10% None

Rwanda 25% 10% None

Uganda 25% 10% None

Tanzania 25% 10% None

Motor vehicles for transport of goods with gross vehicle weight exceeding 20 tonnes

Burundi 25% 10% None

Burundi 25% 0% None Uganda 25% 10% None

Uganda 25% 0% None

Rwanda 25% 10% None

Rwanda 25% 0% None



ii) Impact of duty remission on Motor vehicles for transport of goods (Gross weight exceeding 5

tons but less than 20tons and gross weight exceeding 20 tons on other EAC Partner States

Regional demand, as indicated by total EAC imports, is quite huge standing at US$213m in 2012

against US$2.8million intra-regional exports. The low market share illustrates limited supply capacity

to meet the regional demand, a fact that implies very low negative impact of the duty remission on

industries producing for the regional market.

Table 6.11: EAC Motor vehicles for transport of goods (Gross weight exceeding 5 tons but less

than 20tons and gross weight exceeding 20 tons on other EAC Partner States

market size and the share of Burundi, Kenya and Tanzania in the regional market,

2008 – 2012 (figures in US$)

2008 2009 2010 2011 2012

Burundi - - 65,596 - -

Kenya 5,313,220 3,070,199 2,646,821 3,326,537 2,495,471

Rwanda - 9,678 - - 6,192

Tanzania 141,540 132,112 388,039 199,346 309,172

Sub-total (BUR, KE RW&TZ) intra EAC

exports

5,454,760 3,211,989 3,100,456 3,525,883 2,810,835

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2008 2009 2010 2011 2012

Total EAC Market Size (Intra-EAC and Extra EAC imports

120,755,045 145,292,672 171,126,673 222,853,980 213,029,811

EAC countries % share in the EAC regional

market of rice

5% 2% 2% 2% 1%

iii) Policy recommendation In view of the region’s inadequate supply capability, as evidence by the trade flow statistics, and lack

of data on regional production, it is recommended that the CET rate be reduced to 10%, the rate which

the EAC Council has granted for the last four years to the EAC Partner States. This will open up

importation of these vehicles to all EAC citizens at the CET rate, in conformity with the SCT

framework.

6.3.2.5 Impact assessment and proposed policy measures on other products that benefited from the

stay of application category of duty remission

Analysis of other products that benefitted from the stay of application duty remission over the review

period, reveals cases where the region lacks capacity to meeting regional demand, going by the

proposed rule for admission of a product to the stay of application regime, i.e. intra-EAC exports

regional market share equal to or greater than 25%. The products that are affected, and which we

propose to have their CET rate reduced to the Duty Remission rate that the EAC Council has granted

over the years are as follows:

Palm stearin, fractions, Sodium sulphate and Epoxide resins

Hand Hoes

Flat-rolled products of iron or non alloy steel

Stranded wires, cables, plaited bands and the like, of cooper, non-electrically insulated

Tractors

Road guard rails, gabions and gabion mattresses

Aluminium conductors and cables

Towers and lattice masts

It should however be noted that for agricultural produce, where studies have proved that the region

has capacity to meet the regional demand, if only intra regional trade was promoted and facilitated, it

is recommended that stay of application of the CET rate be used whenever there is projected supply

deficit in a predicable manner as not to disrupt regional market supply incentives. The following

procedure is recommended: -

The producing countries (all EAC countries) to give their projected supply on the basis of the

EAC Regional Food Balance.


lower the CET rate to the rates to 0%, because this is the rate at which these products would have

been obtained from the EAC.


deficit, be allowed to import the product on duty free basis, and the same be gazetted for statistics

purposes only. There will be no need for returns by those allowed to import the products because

regional sensitivity will have been addressed through the vetting process.

Table 6.12: Other select products have benefited from the stay of application and proposed

policy measures for harmonization of duty remission

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Product Beneficiary

country

Year(s) CET

Rate

DRS

rate

Intra-EAC

exports share in

total EAC

market (Average

2008-2012)

Policy proposal Rationale

Maize Grain Burundi 2012 50% 0% 12% Stay of application CET rate if the region

has projected supply

deficit

EAC Partner States demonstrated export

interest. It has also been

proved that EAC can feed itself in maize grain if only

intra-regional is promoted

and facilitated.

Maize flour Burundi 2012 50% 0% 2% Stay of application

CET rate if the region

has projected supply deficit

EAC Partner States

demonstrated export

interest. It has also been proved that EAC can feed

itself in maize grain if only

intra-regional is promoted and facilitated.

Barley, Malt

and Roasted

Malt

TZ,

KE,UG,BUR

2008,

09, 10,

11, 13

25% 0% 14% Stay of application

CET rate if the region


deficit

EAC Partner States

demonstrated export

interest. It has also been

proved that EAC can feed

itself in maize grain if only intra-regional is promoted

and facilitated.

Palm stearin, fractions,

Sodium

sulphate and Epoxide resins

UG 2008, 09

10% 0% 1% Review CET to 0% No regional supply capacity

Hand Hoes UG, TZ 2008,

09

10% 0% 0% Review CET to 0% No regional supply

capacity

Flat-rolled products of

iron or non

alloy steel

UG, RW 2010, 11,12

and 13

10% 0% 41% Stay of application CET rate if the region


deficit

Regional market share which above the 25% intra-

EAC exports regional

market share rule for nurturing regional

industries

Stranded wires, cables,

plaited bands

and the like, of cooper,

non-

electrically insulated

UG, RWA 2010, 2011


Tractors UG 2010,

2011


capacity

Road guard rails, gabions

and gabion

mattresses

BUR, RWA, TZ, UG

2011, 2012


Aluminium conductors

and cables.

UG, RWA 2011 25% 10% 0% Review CET to 0% No regional supply capacity

Odoriferous

mixtures of a kind used as

raw materials

in the food or drink

industries

UG 2012,

2013


capacity

Towers and lattice masts

KE 2012, 2013


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6.4 Recommendation on stay of application of the CET rate Based on the findings and analysis of the stay of application of CET rate category of duty remission, it

is proposed as follows: -

1) EAC Duty Remission regulation (2008) be reviewed to include temporary stay of CET rate,

pursuant to the EAC Customs Union Protocol, Articles 12(3) and Articles 39(1) (i) (c).

This revision will be based on the recognition that in EAC certain finished products experience

season shortages, thereby meriting need for the region to import the same products from rest of

the world at a duty rate less than the CET rate.

2) Establish a threshold for screening products that would be considered for temporary stay of

CET rate

Given that regional supply shortage is the basis for the temporary stay of application there is need

to establish the products that the region has genuine capacity to meet the region’s demand

production, safe for specific seasons that the products are in short supply. The following criterion

is proposed:

a) Products where the region’s projected production surpasses consumption

Starting with products that have benefited from stay of application of CET rate over the years,

the EAC Partner States should come up with production and consumption projections to be

used in determining regional supply capacity. Periodic regional monitoring of production and

production estimates will be needed in order to project regional deficit that will be the basis

for advising the Council of the cases deserving duty remission.

b) Where regional production data is not available, apply an average of 30% intra-EAC

exports share in the EAC regional market of the subject product as the criteria for

admission of a product

Trade flow data should be applied where production data is not available, as a proxy for the

region’s supply capacity. In this regard, products whose intra-EAC exports as a share in EAC

total market size of the same product, defined as intra-EAC imports plus extra-EAC imports is

30% will be considered for purposes of application of the EAC CET upon submission of the

request by any of the EAC Partner States.

3) Apply regional deficit as the basis for determining the necessity of the temporary stay of

application of the CET rate

The revision should embrace the following principles to ensure that the regional goal of

production and enhancement of intra-regional trade of the specific products through the CET rate

protection is upheld.

a) The projected regional production, as determined using a regional data base, is less than the

regional demand/requirement, also determined using the same data base.

b) The deficit between the regional supply and demand as determined in (a) above be the quota

for which the Council will allow the region to import at the reduced CET rate over a given

period.

c) The country from which the regional data base is determined to be having the deficit be the

one to be allocated the quota to import the deficit.

4) Apply duty remission are of 0% for all cases of temporary stay of CET rate

For all cases that qualify for temporary stay of application of the CET rate, the reduced duty rate

should be 0%, unless the industry request is otherwise, being the rate at which the product would

have been sourced if EAC supplies were adequate.

5) Proposed duty remission for current cases of the stay of application

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Going by the above principles and based on the analysis in the report on threats posed to other

EAC Partner States with export interest in the subject products, the following is recommended: -

i) Cases of stay of application of the CET rate that are recommended for permanent

reduction in the CET rate

Table 6.13: proposed CET rate for products that the region has limited supply capacity

Product CET rate Proposed CET rate

Wheat 35% 10%

EAC Motor vehicles for

transport of goods (Gross

weight exceeding 5 tons but

less than 20tons and gross

weight exceeding 20 tons

25% 10%

Palm stearin, fractions,

Sodium sulphate and Epoxide

resins

10% 0%

Hand Hoes 10% 0%

Flat-rolled products of iron or

non alloy steel

10% 0%

Stranded wires, cables,

plaited bands and the like, of

cooper, non-electrically

insulated

10% 0%

Tractors 10% 0%

Road guard rails, gabions and

gabion mattresses

10% 0%

Aluminium conductors and

cables

10% 0%

Towers and lattice masts 10% 0%

ii) Case of the stay of application of the CET rate, where continued temporary stay of the

CET rate application is recommended

The following products, based on the principle and criteria discussed in the report

qualify for consideration for the temporary stay of CET rate application: -

Rice

Barley and roasted malt

Sugar

Motor vehicle for transport of more than 25 persons

It is therefore recommended that stay of application CET rate be applied on the basis of

following conditions: -

The producing countries (all EAC countries) to give their projected production in the

next one year.

Each EAC country to provide its total consumption/demand requirement over the same

year

If the regional assessment of supply and demand shows a deficit, then the EAC Council

should grant temporary stay of the CET rate to 0%, because this is the rate at which these

products would have been obtained from within the EAC if regional supply was

adequate.

EAC country that will, from the production/consumption analysis be demonstrated to

have deficit, be allowed to import the product on duty free basis, and the same be

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gazetted for statistics purposes only. There will be no need for returns by those allowed

to import the products because regional sensitivity will have been addressed through the

vetting process.

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7.0 Preferential trade schemes

7.1 Analytical framework for PTA scheme Among the EAC Partner States, Tanzania is implementing SADC FTA, while Burundi, Kenya,

Rwanda and Uganda are implementing the COMESA FTA. This study requires an assessment of the

impact that the multi FTA implementation has on the EAC Partner States.

The conceptual framework that was applied in the determination of the impact is as follows: -

First, for all tariffs where EAC Partner States have liberalized under COMESA and SADC FTA, the

impact is deemed to be zero, as these countries are importing products from these regional blocks on

duty free basis, as they would if they were importing from with the EAC.

If any of the EAC Partner State is importing a product from their respective FTA regional blocks

(COMESA or SADC) at 0% duty rate, which the rest of the EAC Partner States would be importing

the same product as the CET rate, then this is deemed to have negative impact. The negative impact

occurs because by EAC being a SCT, imports from outside the region should come in at the same rate

(CET). Hence, a country that imports goods at a rate lower than the CET rate into the SCT introduces

unfair competition between regionally sourced imports and the imports coming from either COMESA

or SADC. For instance, if CET rate of fruit juices is 25% and Kenya imports fruit juices from

COMESA at 0%, the effect is to create undue disadvantage to Tanzania or Uganda industries that

target Kenyan market of fruit juices at 0%, which now have to COMPETE with fruit juices from

Egypt (a COMESA country). The significance of this impact is assessed through trade flow analysis

to determine cases where either of the EAC countries have opened up under the commitments in

COMESA and SADC and the EAC countries export interest in the specific products that have been

subject of liberalization.

The challenge arising from EAC Partner States commitment in the COMESA and SADC FTA will

need to be addressed through the tariff liberalization under the Tripartite FTA. Ideally, where any of

the EAC countries has liberalized under COMESA or SADC, other EAC Partner States should

liberalize as well on condition that rest of the COMESA and SADC countries reciprocate in order for

the EAC Partner States to access the COMESA and SADC markets on duty free basis.

7.2 COMESA FTA trade regime with EAC Partner States

7.2.1 EAC Partner States relationship with COMESA trade regime

Four of the five EAC Partner States are members of COMESA. These countries are implementing

COMESA FTA on variable geometry basis as demonstrated in the table below. COMESA FTA trade

regime which the four EAC Partner States are implementing fall into four categories as illustrated in

the table below. Tanzania being a non COMESA member applies EAC CET for imports from non

SADC COMESA countries.

Table 7.1: Non Zero EAC CET rates opened up through COMESA FTA

Trade Regime


Trading with COMESA

Trade regime

with COMESA

FTA countries

For imports from COMESA FTA countries

Burundi, Kenya and Rwanda reduces EAC CET of

10%, 25% and SI to 0% for imports from

Applies 4%

and 6% for

goods

Applies 10%,

25% and SI

tariffs on the

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Trade Regime


Trading with COMESA

at 0% duty COMESA FTA countries attracting

CET of 10%

and 25%

respectively

on all

imports from

COMESA

countries.

Applies SI

tariffs on all

items in the

EAC

Sensitive

Items list

following

Non SADC

COMESA

countries -

Djibouti,

Egypt, Libya

and Sudan

Trading regime

with COMESA

Non FTA

Countries 80%

Reciprocity

(Eritrea and

Congo DR)

For imports from Congo DR and Eritrea, Burundi,

Kenya and Rwanda applies 2% and 5% for

products attracting EAC CET of 10% and 25%

respectively. They apply 20% of EAC CET on

sensitive items tariffs

Trading regime

with COMESA

Non FTA

Countries 10%

Reciprocity

(Ethiopia)

For imports from Ethiopia, Burundi, Kenya and

Rwanda applies 9% and 23% for products

attracting EAC CET of 10% and 25% respectively.

They apply 90% of EAC CET on sensitive items

tariffs

Trading regime

with COMESA

Non FTA

Countries 90%

Reciprocity

(Swaziland)

For imports from

Swaziland, Kenya

applies 9% and 23%

for products

attracting EAC CET

of 1% and 2.5%

respectively. They

apply 10% of EAC

CET on sensitive

items tariffs

For imports from

Swaziland, Burundi and

Rwanda maintain EAC

CET.

7.2.2 Trade distorting Effect of COMESA FTA in EAC

COMESA FTA, which Burundi, Kenya and Rwanda are implementing exposes Tanzania and Uganda

to zero rated imports from the COMESA FTA countries. The exposure is phenomenal, as illustrated in

the table below, because, combined, Tanzania and Uganda exports of similar products has since 2010

been less than total imports of Burundi, Kenya and Rwanda imports from the COMESA FTA

countries, accounting for 45% of the combined imports from the COMESA FTA countries and

imports from Uganda and Tanzania..

Table 7.2: Burundi, Kenya and Rwanda imports from COMESA FTA countries on 0% duty

and Uganda and Tanzania exports of similar products that the three countries are

importing from COMESA FTA countries and COMESA FTA Non SADC countries,

2008 – 2012 (figures in US$)

Tariff

Lines

2008 2009 2010 2011 2012

BUR, KE, RWA Imports from

COMESA FTA (0%) countries

5,506 303,127,503 274,810,904 457,477,943 584,670,745 691,547,315

Uganda Exports to BUR, KE &

RWA of similar products that

BUR, KE, RWA are importing

from COMESA FTA at 0% duty

rate

1,619 273,801,788 256,092,551 289,389,325 384,176,618 408,545,989

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Tariff

Lines

2008 2009 2010 2011 2012

Tanzania Exports to BUR, KE &

RWA of similar products that

BUR, KE, RWA are importing

from COMESA Non SADC FTA

countries (Djibouti, Egypt, Libya

and Sudan) at 0% duty rate

895 62,253,363 74,412,002 91,063,999 99,253,487 156,185,711

Total Tanzania and Uganda

Exports to BUR, KE & RWA of

similar products that BUR, KE &

RWA are importing from

COMESA FTA countries and

COMESA Non SADC FTA

countries 336,055,151 330,504,553 380,453,324 483,430,105 564,731,700 Tanzania and Uganda Exports

shared in Bur, Ke and & Rwa 53% 55% 45% 45% 45%

7.3 SADC Trade regime

7.3.1 EAC Partner States relationship with SADC trade regime

Tanzania is the only member of the EAC that belongs to the SADC FTA, where she is implementing

the SADC FTA trade regime that calls for application of 0% duty on imports from all SADC

countries.

Rest of the EAC Partner States apply EAC CET to imports from SADC countries that are non-

COMESA.

Table 7.3: Non Zero EAC CET rates opened up through SADC FTA

Trade Regime Burundi Kenya Rwanda Uganda Tanzania

Trading with SADC

Trade regime with

SADC FTA

countries that are

also members of

COMESA FTA

For COMESA FTA SADC countries – Duty

Applicable 0%

For Non COMESA FTA SADC countries

(Swaziland) – Reciprocal duty applicable – 10%

(only extended by Kenya). Burundi and Rwanda

applied EAC CET on imports from Swaziland

Applies

80%

reduction

on EAC

CET rate

Applies 0%

import duty on

all goods

attracting EAC

CET of 10%,

25% and SI rate

for sensitive

items

Trade regime with

non COMESA-

SADC FTA

countries (Angola,

Botswana,

Lesotho, Namibia

and South Africa)

Applies 10%, 25% and SI tariff rates for items attracting these EAC

CET rate for all imports from Angola, Botswana, Lesotho, Namibia

and South Africa

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7.3.2 Trade distorting Effect of SADC FTA

Tanzania’s imports from non COMESA members of SADC FTA (Angola, Botswana, Lesotho,

Namibia and South Africa) exposes EAC Partner States who have no reciprocal trade arrangement to

zero rated competition from these countries. The number of tariff lines that affected stood 2,584.

Tanzania imports rose from US$308m in 2008 to US$482m in 2012.

Tanzania imports from the Non COMESA SADC countries creates competition for similar imports

from EAC Non SADC Partner States in some 2,261 tariff lines, where these countries recorded

exports of US$347m in 2008, rising to US$442m in 2012. The significance of this competition is seen

in market share of the EAC Non SADC Partner States, which averaged 49%.

Table 7.5: Tanzania imports from SADC Countries – Non COMESA members of

SADC(Angola, Botswana, Lesotho, Namibia and South Africa) for products whose

EAC CET is 10%, 25% or SI and EAC Non SADC countries of exports of similar

products that Tanzania is importing from Non COMESA members of SADC at 0%

import duty, 2008 – 2012 (Figures in US$)

Tariff

Lines

2008 2009 2010 2011 2012 Period

(2008 -

2012)

average

Tanzania Imports

from Non COMESA

SADC members

2,584 308,266,769 334,175,764 348,093,675 449,107,208 483,742,531 384,677,189

EAC Non SADC

Partner States (BUR,

KE, RWA, UG)

export to Tanzania of

similar products that

Tanzania is importing

from Non SADC

Partner States

2261 347,312,273 329,521,873 355,020,672 406,408,339 441,932,716 376,039,175

EAC Non SADC

Partner States (BUR,

KE, RWA, UG) share

in TZ market (%)

53% 50% 50% 48% 48% 49%

7.4 Recommendations on harmonization of the trade regime between EAC and

COMESA and SADC trading blocks

To address the exposure that EAC Partner States are experiencing due to the implementation of

COMESA and SADC FTA, it is proposed that EAC pursues harmonization of tariff liberalization

between COMESA and SADC regional blocs under the Tripartite FTA. The following formula is

proposed: -

EAC Offer to COMESA countries under the Tripartite FTA

a) EAC Partner States to offer all COMESA countries duty free market access building on Burundi,

Kenya and Rwanda COMESA FTA commitments where duty under COMESA FTA these

countries apply 0% duty on imports from COMESA FTA countries

b) For COMESA countries not willing to offer EAC duty free market access, EAC to offer

reciprocal rate to such countries

EAC Offer to SADC countries under the Tripartite FTA

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a) EAC Partner States to offer all SADC countries duty free market access building on Tanzania

SADC FTA commitments where duty under SADC FTA, where Tanzania applies 0% duty on

imports from SADC FTA countries

b) For SADC countries not willing to offer EAC duty free market access, EAC to offer reciprocal

rate to such countries

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ANNEXES Annex 1

List of Respondents Public Sector Respondents Name of respondent/coordinator Title/Institution/contacts

Burundi

Léonce NIYONZIMA, Director of Monitoring and Programmes ,

Excises and Customs Commission. Office

Burundis des Recettes (OBR)

Tel: +257 22 21 5915, [email protected]

Jean Harahagazwe Fiscal Policy Director and President of the Duty

Remission Committee, Ministry of Finance

+257 79 921 182; [email protected]

Kenya

Kenneth Ochola Deputy Commissioner, Kenya Revenue

Authority, Tel: +254-0722831974 OR +254-

2817129; [email protected] or

[email protected]

K. J. Ngugi Economist, Ministry of Finance,

Tel+254723362733; Email:

[email protected],ke

Rwanda

Flavia Busingye Head of Trade Management Division, Customs,

Tel: +250 788560331; Email:

[email protected]

Jackson RUGAMBWA Tax policy Expert, Ministry of Finance; Tel:

+250788745237; Email:

[email protected]

Tanzania

Edwin Changwe Senior Customs Officer; Tanzania Revenue

Authority; Tel:+255754 275636; Email:

[email protected]

William Mhoja Principal Economist; Ministry of Finance; Tel:

+255 784235229

Email: [email protected]

Uganda

Magera Stephen Assistant Commissioner, Trade; Uganda Revenue

Authority; +256717440254

Moses Ogwapus Assistant Commissioner, Tax Policy; Ministry of

Finance; Tel: +256-414-717309; Email:

[email protected]

mailto:[email protected],ke

of 122

Annex 1 (a)

Private Sector Respondent Firms/Institutions

Name of company Contact person email Tel

Burundi

1. Brarudi NIYONKURU

Stanislas

relationspubliques@braru

di.net

+25722215360

2. Burundi Tobacco

Company

Ningaza Isidore [email protected];

[email protected]

(25722226694

3. Farusana SA BIGRINDAVY

Edouard

+257219942

4. Liquids Heimo Vicens Heimo.vicens@liquids-

bi.com

+25722225641

5. Savonor Jimmy

MANIRAKIZA

Jimmy.manirakiza@savon

or.com

+25722223860

6. Imparudi Madame Christine [email protected] +25722227381,

+25722223125

Kenya

1. Kenya Association

of Manufacturers

Wambui Ndungu Wambui/[email protected]

.ke

+254722993809

2. Chrysal Africa Ltd [email protected]

3. Bidco Oil

Refinaries Ltd Mr. Vimal Kumar [email protected] 254-67-2821000

4. Alpha knits Ltd Directors [email protected] 254-203594711

5. Njoro Canning

Facrory (K)

Limited T. K. Patel [email protected]

e

254 51 2217751/2/3,

+254 724 253050

6. Broadway Bakery

Ltd BIMAL SHAH [email protected]

0734252525,

0203596210/11

7. Mabati Rolling

Mills Limited Stephen Ndege [email protected] 6427200 Ext 222

8. Kenafric Industries

Limited George Onsongo [email protected] (254) 20 21 30 73

9. Trufoods RAJAN MALDE [email protected] 020 2385880

10. Coast Bottlers Ltd Virendra Nagori Virendra.nagori@coasta

lbottlers.co.ke

+254412000197/8

11. Diamond Industries

Ltd

Paresh Patel [email protected] +254725242000

12. Mini Bakeries

(Nairobi) Ltd

Jayanti D. Patel [email protected] +254-0202034123

13. Mzuri Sweets Ltd Jinal Shah [email protected] +254-412224630

14. Ubbink East Africa

Ltd

Martin Kingori [email protected] +254(020)2167757

15. Car & General Dr. Isaac P. Kalua isaac.kalua@honda-

eu.com

+254724 264 444

16. Auto industries Ltd Salman Basharat [email protected] +254020 2322380

17. Pentagon Agencies

Limited STEPHEN

WAIGWA

MURAGE

[email protected]

m +254722514182/0722

561110

18. Soroya Motor Mr.Yasif Soroya [email protected] +254729145786/0734

mailto:[email protected]






of 122


Spares Ltd .uk 347336

Rwanda

1. SULFO RWANDA

Industries

[email protected] (250) 252 57 64 72

2. PTC Anne RWIGARA [email protected] (+250) 788301331

3. Papyrus Co. Ltd Esmaeil

Khanabadi

papyrusrwanda@yahoo.

com

(+250) 570500,

788308722,

788617177

4. AFRIFOAM KALISA Jeremy [email protected] (250) 252 50 35 13 &

788 75 55 78

5. Ameki Color KAYITARE Jaun

Paul

[email protected] 250 252 500 257,

512173, 0788413172

6. UTEXRWA Ritesh Patel [email protected] (+250) 0788303031

7. KABUYE

SUGAR WORKS

Thiru [email protected] (250) 252 57 44 68,

0788305225

8. BEMS GATERA Elise [email protected] (250) 252 51 48 07 &

0788 52 29 69

9. SAFARI

CENTER Ltd

MAKANDA

PASCAL

[email protected] (+250) 783055350

10. INYANGE [email protected] (250) 252 57 19 41 &

252 51 74 22

11. TOMINI [email protected] (250) 252 57 11 15

12. Rwanda Foam Makuza Bertin [email protected]

m

+250252511549 and

+250252511550

Uganda

1. Britania Products

Uganda Ltd [email protected] (256) 50 58 60

2. Graphic Systems

(U) Ltd James Kayizzi

james@graphicsystems-

ea.com 0414 504502/3/4

3. Hwan Sun

Industries Ltd

[email protected]

om

0414-285684, 25641-

286019

4. Kampala

Pharmaceutical

Industries

Nazeem Mohamed,

CEO

[email protected] 256-414285645,

414287287

5. Leader (U) Ltd ORUKA HERBERT [email protected]

m

0414 231 686

6. MAKSS Industries

Ltd

Somesh Kuriseti somesh@maksspackaging

.com

0712 343610

7. Movit Products Ltd Musasirane Emmy [email protected] 0392 736801/0772-

670789

8. Nile Agro

Industries Ltd

Mr. Baganzi Francis [email protected] 0772858788 /

0716858788

9. Nile Breweries Ltd [email protected]

ller.com

+256 31 2210 008

10. Picfare Industries

Ltd

[email protected] +256-414-230416,

+256-414-343619

11. Prime Concepts Ltd Buyungo David K

12. Riley Packaging

Uganda Limited

Mr.Vipul.Desai,

Michael.Matanda

[email protected] 0752

333170/0752333152


















of 122


13. Sadolins Paints (U)

Ltd

[email protected]

om

+256 (0414)

342070/342071

14. Shumuk

Aluminium Ltd

Dan Muhumuza [email protected] 0752747471/04145059

74

15. Tororo Cement Ltd Gagrani B.M. [email protected]

m

256 756732583

16. Uganda Baati Ltd Okoth Patrick (+256) 312-260962/3

17. Nice House of

plastics

Tanzania

1. Confederation of

Tanzania Industries

Hussein S.Kamote [email protected] +2552114954

2. Confederation of

Tanzania Industries

Akida M.

Mnyenyelwa

[email protected] +2552114954

3. Colour Print

(Tanzania) Ltd

Mr Safder Khimji [email protected] +2552450331/213369

4

4. Tanzania Breweries Fabian Mwakatuma [email protected]

abmiller.com

+255767 266852

5. Chemi & Cotex

Industries Limited,

A.V. Parmar [email protected] +255 22 2628014/5/6

6. Jamana Printers Mr.Kazim F

Kermali

Kazim@Jamana

printers.com

+2552861400




of 122

Annex 2

Paper and paper products that should have their CET rate reduced permanently to 0% on

account of the region’s lack of supply capacity to meeting regional demand for use in

production of approved finished products for home use


Rate

Proposed New

CET rate

Trade Flow 2008-2012

Period Total in

US$

% share

48010090 News Print 10% 0% Intra-Exports 6,416,680 2%


48025400 M.G Cover Boards 10% 0% Intra-Exports 5,446 0%


48025500 Wood free paper 25% 0% Intra-Exports 2,250,282 1%


48025600 Wood free paper 25% 0% Intra-Exports 8,070 0%


48025700 Bond Paper 25% 0% Intra-Exports 603,478 1%


48025800 Cover paper 25% 0% Intra-Exports 743,594 5%


48026100 Bond Paper 25% 0% Intra-Exports 61,554 5%


48026200 Bank Paper 25% 0% Intra-Exports 56,929 3%


48026900 Paper 25% 0% Intra-Exports 488,489 8%


48041100 Kraft paoer 25% 0% Intra-Exports 59,116,925 38%


48041900 Cover paper 0%-25% 0% Intra-Exports 12,505 6%










48059100 Bond Paper 25% 0% Intra-Exports - 0%


48070000 White Lined Chipboard 25% 0% Intra-Exports 55,943 2%


48092000 NRC Paper 10% 0% Intra-Exports 626,430 2%


48101300 Cover board 25% 0% Intra-Exports 956,670 2%


48101400 Coated Paper and Paper board 25% 0% Intra-Exports 109,570 2%




48102200 Cover Paper 10% 0% Intra-Exports 14,320 0%


of 122

Annex 2

Paper and paper products that should have their CET rate reduced permanently to 0% on

account of the region’s lack of supply capacity to meeting regional demand for use in

production of approved finished products for home use


Rate

Proposed New

CET rate


Period Total in US$

% share

48102900 Cover Board 10% 0% Intra-Exports 520,320 1%


48103100 Art Paper 10% 0% Intra-Exports 35,301 1%


48103900 Manila Paper 25% 0% Intra-Exports 313,751 19%








48115900 Cover paper 0%-10% 0% Intra-Exports 24,822 2%


48115990 other paper 10% 0% Intra-Exports 224,881 3%


48116090 Wood free paper 10% 0% Intra-Exports 434,117 16%


48119000 Cover paper Board 10% 0% Intra-Exports 2,235,117 15%


of 122

Annex 3

Raw material/industrial inputs in the Uganda List of 2007 and 30 June 2013 which should have

their CET rate reduced permanently to 0% on account of the region’s lack of supply capacity to

meeting regional demand for use in production of approved finished products

HS Code Description CET

Rate

Proposed

New

CET

rate


11071000 Malt not roasted 10% 0% Intra-Exports 22,078,646 6%


15119010 Palm Oleins, fractions 10% 0% Intra-Exports 32,528,916 3%

Extra Imports 1,049,264,469 97%

15119040 Palm Stearin RBD 10% 0% Intra-Exports 1,866,442 7%


17021900 Lactose and lactose syrup Plates..., of

polymers of 10% 0%



17023000 Glucose and glucose syrup,

containing <20% fructose 10% 0%



20091900 Other orange juice, frozen or not

frozen 25% 0%



20097900 Other 25% 0% Intra-Exports 1,834,170 15%


21021000 Active yeasts 25% 0% Intra-Exports 461,767 1%


21069090 Bread improver 25% 0% Intra-Exports 3,487,752 4%


25231000 Cement clinKenyars 10% 0% Intra-Exports 33,599,553 4%


27101959 Base Oil 10% 0% Intra-Exports 1,935,867 1%


32110000 Prepared driers 10% 0% Intra-Exports 374,499 4%


32129010 Pigments in non-aqueous media, nes,

for retail sale 10% 0%



32151100 Black printing ink, whether or not

concentrated or solid 10% 0%



32151900 Printing ink other than black. 10% 0% Intra-Exports 6,125,009 9%


38159000 Reaction accelerators 10% 0% Intra-Exports 270,522 6%


39052100 Vinly acetate copolymers in aquaeous

dispersion 10% 0%



39053000

Polyvinyl alcohol, whether or not

containing unhydrolysed acetates

groups, or not containing

unhydrolysed ac

10% 0%



39059900 Other copolymers 10% 0% Intra-Exports 190,482 3%


39075000 Alkydresins, in primary forms 10% 0% Intra-Exports 8,217,414 18%


39095000 Polyurethanes, in primary forms 10% 0% Intra-Exports 185,168 1%


of 122

Annex 3





Rate

Proposed

New

CET

rate


39201000 Plate and sheets of polymers of

ethylene, (unprinted) 10%-25% 0%



39202010 propylene, not reinforced, etc

(unprinted) 10% 0%



39202090 other 25% 0% Intra-Exports - 0%


39205910 Plates..., of other acrylic polymers,

not reinforced, etc, (unprinted) 10% 0%



39205990 Other plates….unprinted 25% 0% Intra-Exports 4,974 0%


39211910 Cellular plates, strips... Of other

plastics, nes 10% 0%



40081900 Other plates 10% 0% Intra-Exports 30,085 2%


40082900 Other road and profile of non cellular

rubber 10% 0%



44101200 Oriented strand board (OSB) 25% 0% Intra-Exports 8,117 0%


44111400 Of a thickness exceeding 9mm 25% 0% Intra-Exports 3,170,449 10%


44119100 Fibreboard of density =<0.35/cm3 not

worKenyad or surface 25% 0%

Intra-Exports 448 0%


44119200 Of a density exceeding 0.8g/cm^3 25% 0% Intra-Exports 22,083 1%


44119400 Of a density not exceeding 0.5g/cm^3 25% 0% Intra-Exports 32,150 1%


44130000 Densified wood in blocks, plates,

strips or profile shape. 25% 0%



48010000 Newsprint, in rolls or sheets 10% 0% Intra-Exports 43,430 13%


48010090 Newsprint in rolls or sheets weighing

more than42gsm 10% 0%



48025700 Other weighing > 40g/m2 but

<=150g/m3 25% 0%



48025800 Other paper and paperboard weighing

more than 150g/m3 25% 0%



48030000 Toilet... similar paper, in rolls or

sheets 10% 0%



48041990 Other uncoated craft paper and

paperboard 25% 0%



48042900 Bleached sack Kraftliner 25% 0% Intra-Exports 925,135 22%


48043100 Other unbleached kraft paper and 25% 0% Intra-Exports 503,618 2%

of 122

Annex 3





Rate

Proposed

New

CET

rate


paperboard Extra Imports 30,233,721 98%

48043900 Kraft paper... (excl. unbleached),

weighing =<1 50g/m2 25% 0%



48044900

Bleached kraft pape and paperboard

weighing more than 150g/m2 but

<225g/m2, nes

25% 0% Intra-Exports 25,170 0%


48070000 Composite paper and paperboard 25% 0% Intra-Exports 55,943 2%


48083000 Kraft paper, creped or crinkled, (excl.

sack), in rolls or 25% 0%



48089000 Other paper and paperboard,

corrUgandaated, 25% 0%



48092000 Self-copy paper, in rolls or sheets 10% 0% Intra-Exports 4,228,417 10%


48101300 Paper and paperboard…. In rolls 25% 0% Intra-Exports 956,670 2%


48101900 Other paper and paperboard of kind

used used for writing 25% 0%



48109200 Multi-ply paper and paperboard 25% 0% Intra-Exports 110,341 0%


48114900 Other gummed and adhesive paper

and paperboard 25% 0%



48192010 Skillets, free hinge lid pacKenyats 10% 0% Intra-Exports 668,230 2%


48192090 Other folding cartons, boxes and

cases, of 25% 0%



48239010 Straw wrappers 10% 0% Intra-Exports 88,194 6%


52041100 Cotton sewing thread containing 85%

or more 25% 0%



52081200 Plain weave, weighing more than 1

00g/m2 25% 0%



54021000 High tenacity yarn of nylon or other

polyamides, nprs 10% 0%



54023300 Textured yarn of polyesters 10% 0% Intra-Exports 5,068 0%


54026900 Multiple or cabled yarn 10% 0% Intra-Exports 117,170 1%


54041000 Synthetic monofilament 10% 0% Intra-Exports 8,471 8%


54041900 Other 10% 0% Intra-Exports 9,151 1%


55082000 Sewing thread of artificial staple

fibres 25% 0%



of 122

Annex 3





Rate

Proposed

New

CET

rate


55091100 Single yarn, with >=85% staple fibres

of nylon or other po 10% 0%



55093200 Multiple or cabled yarn, >=85%

acrylic or modacrylic staple fibres 10% 0%



55131100 Of polyesters staple fibres, plain

weave Textile fabrics 25% 0%



56031200 Non woven fabrics weighing

>25g/m2 but< 70g/m2 10% 0%



56075000 Twine, cordage, rope and cables, of

synthetic fibres, nes 10% 0%



59031000 Textile fabrics impregnated…. 10% 0% Intra-Exports 743,041 4%


59039000 impregnated…..with plastics nes 10% 0% Intra-Exports 114,292 2%


59119000 Counter Materials 10% 0% Intra-Exports 83,780 2%


60012200 Looped pile fabrics of man- made

fibres, knitted or crochet 25% 0%



64061000 Uppers and parts thereof (excl.

stiffeners) 10% 0%



64069900 Non-wood parts of footwear (excl.

uppers, outer soles 10% 0%



72092500 Flat rolled products of thickness of

3mm or more 10% 0%



72104900 Non corrUgandaated flat rolled

products of iron or non alloyed steel 25% 0%



72107000 Rolled iron/steel, >=600mm wide,

painted, varnished or pla 25% 0%



73129000 Bale straping metal and stitching wire 10% 0% Intra-Exports 316,047 2%


74081900 Copper wire and plates of refined

copper(other) 10% 0%



74082900 Galvanised steel wire of copper

alloys (other) 10% 0%



76042900 Rod of aluminium alloys 25% 0% Intra-Exports 5,725,185 10%


83082000

Tubular or Burundifurcated rivets of

base metal, but <=1 50g/m10, Flat

rolled products exceedings 1mm but

less than 3mm

10% 0%



of 122

Annex 4

Raw material/industrial inputs in the Rwanda List which should have their CET rate reduced

permanently to 0% on account of the region’s lack of supply capacity to meeting regional

demand for use in production of approved finished products Tariff Nos Descriptions CET Rate Duty

Remission

Rate


11010000 Wheat or meslin flour. 60% 0% Intra-Exports 23,665,778 9%


11031300 Of maize (corn) 25% 0% Intra-Exports 13,251,760 24%


11071000 Not roasted 10% 0% Intra-Exports 22,078,646 7%


11072000 Roasted 10% 0% Intra-Exports - 0%


12010000 soyabean 10% 0% Intra-Exports 2,748,561 2%


15099000 Other (Olive oil and its fractions, whether or

not refined, but not chemically modified.) 25% 0%



15119010 Palm olein, fractions 10% 0% Intra-Exports 32,528,916 4%


15119040 Palm stearin, RBD 10% 0% Intra-Exports 1,866,442 11%


15132900 Other (Palm Kernel or babassu oil and fractions thereof: Other



17019910 Other sugar, for industrial use

100% or $

200/MT whichever

is higher

0%



17029000 Colorent Caramel 10% 0% Intra-Exports 234,209 4%


21021000 Active Yeast 25% 0% Intra-Exports 461,767 1%


22072000 Denatured Ethyl Alcahol 25% 0% Intra-Exports 1,384,765 6%


23031000 Residues of starch manufacture and similar residues

10% 0% Intra-Exports 14,935 14%


24011000 Tobacco, not stemmed/stripped 25% 0% Intra-Exports 5,635,335 14%


24039900 Other 25% 0% Intra-Exports 308 0%


25199000 Magnesia and other magnesium oxide 10% 0% Intra-Exports 39,696 5%


25232100 White cement, whether or not artificially

coloured 25% 0%



25309000 Other Mineral Substances 10% 0% Intra-Exports 63,516 1%


27071000 Benzol (benzene) 10% 0% Intra-Exports - 0%


27072000 Toluol ( toluene) 10% 0% Intra-Exports 2,892 2%


of 122

Annex 4




Remission

Rate


27101959 Other (Petroleum Oils) 10% 0% Intra-Exports 1,935,867 1%


28111900 Other (Other inorganic acids) 10% 0% Intra-Exports 243,085 20%


28112100 Carbon dioxide 25% 0% Intra-Exports - 0%


32110000 Prepared driers. 10% 0% Intra-Exports 374,499 4%


32129010

Pigments (including metallic powders and

flakes) dispersed in non-aqueous media, in

liquid or paste form, of a kind used in the manufacture of paints (including enamels)

10% 0% Intra-Exports 917,033 6%


32151100 Black (- Printing ink) 10% 0% Intra-Exports - 0%


32151900 Other (- Printing ink) 10% 0% Intra-Exports 6,125,009 10%


33021000 Extracts, essences and concentrates 10% 0% Intra-Exports 545,065 0%


34021100 Anionic 10% 0% Intra-Exports 9,640,853 17%


35069100 Glues based on starches or on dextrin or other

modified starches… 25% 0%



36020000 Prepared explosives other than propellant ….. 10% 0% Intra-Exports 5,789,742 11%


37012000 Instant print film 10% 0% Intra-Exports 3,679 0%


37013000 Other plates and film, with any side

exceeding 255mm 10% 0%



37019900

Other (- Other ) (Photographic plates and film

in the flat, sensitised, unexposed, of any

material other than paper, paperboard or textiles; instant print film in the flat,

sensitised, unexposed, whether or not in

packs. )



37071000 Chemical preparations for photographic uses . Sensitising Emusions

10% 0% Intra-Exports 112,998 5%


37079000

Other (Chemical preparations for

photographic uses (other than varnishes,

glues, adhesives and similar preparations); unmixed products for photographic uses, put

up in measured portions or put up for retail

sale in a form ready for use. )

10% 0% Intra-Exports - 0%


38109000

!- Other (Pickling preparations for metal

surfaces; fluxes and other auxiliary

preparations for soldering, brazing or welding; soldering, brazing or welding

powders and pastes consisting of metal and

other materials; preparations of a kind used as cores or coatings for welding electrodes or

10% 0%



of 122

Annex 4




Remission

Rate


rods)

38159000

!- Other (Reaction initiators, reaction

accelerators and catalytic preparations, not

elsewhere specified or included.)

10% 0% Intra-Exports 270,522 8%


39051200 In aqueous dispersion 10% 0% Intra-Exports 146,666 2%


39051900 Other (- Poly(vinyl acetate)) 10% 0% Intra-Exports 1,386,604 27%


39052100 In aqueous dispersion 10% 0% Intra-Exports 346,394 3%


39052900 Other (- Vinyl acetate copolymers) 10% 0% Intra-Exports 81,621 6%


39053000 Poly(vinyl alcohol), whether or not

containing unhydrolysed acetate groups 10% 0%



39059100 Copolymers 10% 0% Intra-Exports 1,478,487 25%


39059900 — Other (- Other )( Polymers of vinyl acetate or of other vinyl esters, in primary forms;

other vinyl polymers in primary forms)

10% 0% Intra-Exports - 0%


39061000 Poly(methyl methacrylate) 10% 0% Intra-Exports 283,547 11%


39069000 Other (Acrylic polymers in primary forms.) 10% 0% Intra-Exports 1,871,593 3%


39075000 Alkyd resins 10% 0% Intra-Exports 8,217,414 19%


39079100 Unsaturated 10% 0% Intra-Exports 958,236 7%


39091000 Urea resins; thiourea resins 10% 0% Intra-Exports 138,885 6%


39092000 Melamine resins 10% 0% Intra-Exports 48,022 2%


39095000 Polyurethanes 10% 0% Intra-Exports 185,168 2%


39199010 In rolls of a width exceeding 100 cm,

unprinted 10% 0%



39204310 Unprinted (— Containing by weight not less than 6% of plasticisers )

10% 0% Intra-Exports 567,059 2%


39206110 Unprinted plates, sheets,….in polycarbonates 10% 0% Intra-Exports 457,772 10%


39207110 Unprinted (Of regenerated cellulose: ) (Of cellulose or its chemical derivatives: )



of 122

Annex 4




Remission

Rate


39211110 Other unprinted plates,sheets, of polymers of

styrene 25% 0%



39219000 Other plates , sheets, films, foil etc 10% 0% Intra-Exports 2,374,766 4%


40081100 Plates, sheets and strip 10% 0% Intra-Exports 521,588 18%


40082900 Rods profile shapesof vulcanised rubber (Excl. hard)

10% 0% Intra-Exports 350,824 7%


40169300 Gaskets, washers and other seals 25% 0% Intra-Exports 258,505 1%


40169900 Other (- Other )( Other articles of vulcanised

rubber other than hard rubber ) 25% 0%



44092100 Wood of non coniferous of bamboo 25% 0% Intra-Exports - 0%


44092900 Other wood of non coniferous 25% 0% Intra-Exports 158,548 8%


44111300 Of a thickness exceeding 5 mm but not

exceeding 9 mm. 25% 0%



44111400 Of a thickness exceeding 9 mm. 25% 0% Intra-Exports 3,170,449 12%


44119200 Of a density exceeding 0.8 g/cm3 25% 0% Intra-Exports 22,083 1%


44119300 Of a density exceeding 0.5 g/cm3 but not

exceeding 0.8 g/cm3 10% 0%



44119400 Of a density exceeding 0.5 g/cm3 10% 0% Intra-Exports 32,150 2%


48022000 Paper and paper board of a kind used as a

base for photosenstive , heat senstive… 10% 0%



48025400 Printing, writing or drawing paper 25% 0% Intra-Exports 5,446 0%


48030000

Toilet or facial tissue stock, towel or napkin

stock and similar paper of a kind used for household or sanitary purposes, cellulose

wadding and webs of cellulose fibres,

whether or not creped, crinkled, embossed, perforated, surface-coloured, surface-

decorated or printed, in rolls or sheets.

25% 0% Intra-Exports 5,836,706 9%


48042900 Other (- Sack kraft paper) 25% 0% Intra-Exports 925,135 22%


48044900 Other (- Other kraft paper and paperboard weighing more than 150 g/m? but less than

225 g/m? )



of 122

Annex 4




Remission

Rate


48089000

Other (Paper and paperboard, corrugated (with or without glued flat surfacesheets),

creped, crinkled, embossed or perforated,in

rolls or sheets,other than paper of the kind described in heading 48.03 )

25% 0% Intra-Exports 316,184 15%


48099000

Other (Carbon paper, self-copy paper and

other copying or transfer papers (including

coated or impregnated paper for duplicator stencils or offset plates), whether or not

printed, in rolls or sheets).

10% 0% Intra-Exports 328,231 5%


48114900 Other (- Gummed or adhesive paper and

paperboard ) 10% 0%

Intra-Exports - 0%


48119000 Other paper, paperboard, cellulose wadding and webs of cellulose fibres

25% 0% Intra-Exports 2,235,117 15%


48192010 Skillets, free hinge lid packets 25% 0% Intra-Exports 668,230 2%


48195000

Master case Carton boxes (Soft cap) Other

packaging containers, including record

sleeves

25% 0% Intra-Exports 45,913,738 75%


48232000 Filter paper and paperboard 25% 0% Intra-Exports 49,593 1%


48239090

Other(other paper, paperboard, cellulose

wadding and webs of cellulose fibres, cut to

size or shape; other articles of pulp, paper, paperboard, cellulose wadding or webs of

cellulose fibres)

25% 0% Intra-Exports 1,333,467 14%


56012100 Of cotton 25% 0% Intra-Exports 94,239 5%


56012200 Of man-made fibres 10% 0% Intra-Exports 5,904 1%


56029000 Other (Felt, whether or not impregnated,

coated, covered or laminated.) 10% 0%



56031100 weighing not more than 25 g/m? (Of man-

made filaments: ) 10% 0%



56039400 Non Wovens weighing more than 1 50gm2 10% 0% Intra-Exports 45,493 1%


59080000

Textile wicks, woven, plaited or knitted, for lamps, stoves, lighters, candles or the like;

incandescent gas mantles and tubular knitted

gas mantle fabric therefor, whether or not impregnated.

25% 0% Intra-Exports 100,145 4%


62179000

Parts (Other made up clothing accessories;

parts of garments or of clothing accessories, other than those of heading 62.12.)



of 122

Annex 4




Remission

Rate


68052000

On a base of paper or paperboard only

(Natural or artificial abrasive powder or

grain, on a base of textile material, of paper, of paperboard or of other materials, whether

or not cut to shape or sewn or otherwise made

up)



70101090 Other (- Ampoules) 25% 0% Intra-Exports 977,012 5%


70102000 Stoppers, lids and other closures 25%* 0% Intra-Exports 41,991 16%


72091500 Of a thickness of 3 mm or more 10% 0% Intra-Exports 66,477 4%


72091600 Of a thickness exceeding 1 mm but less than

3 mm 10% 0%



72092500 Of a thickness of 3 mm or more 10% 0% Intra-Exports 65,198 4%


72092600 Of a thickness exceeding 1 mm but less than

3 mm 10% 0%



72092700 Of a thickness of 0.5 mm or more but not exceeding 1 mm



72103000

flat rolled products of iron or non alloy,

electolyically plated or coated with zinc,winded

25% 0% Intra-Exports 138,408 2%


72104900 flat rolled products of iron ………..coated

with zinc,winded 10% 0%



72179000 Other (Wire of iron or non-alloy steel.) 25% 0% Intra-Exports 829,034 7%


72210000 Bars and rods, hot rolled, in irregulary wound

coils of stainless steel 25% 0%



73030000 Tubes, pipes and hollow profiles, of cast iron 10% 0% Intra-Exports 890,420 3%


74082900 Other (Of copper alloys) 25% 0% Intra-Exports 424,487 20%


76042100 Hallow profiles (of aluminium alloys) 10% 0% Intra-Exports 698,973 14%


76042900 Other (of aluminium alloys) 25% 0% Intra-Exports 5,725,185 15%


76071100

Aluminium foil of a thickness (excl. any

backing) not exceeding 0.2 mm , not backed, rolled but not further worked)

10% 0% Intra-Exports 306,245 2%


76071990 Other of Aluminium Foil 10% 0% Intra-Exports 87,474 1%


76121000 Collapsible tubular containers 10% 0% Intra-Exports 283,833 4%


79070000 Other articles of zinc 10% 0% Intra-Exports 309,660 13%

of 122

Annex 4




Remission

Rate



83089000 Other, including parts 10% 0% Intra-Exports 189,390 4%


96061000 Press-fasteners, snap-fasteners and press-

studs and parts thereof 10% 0%



96062100 Of plastics, not covered with textile material 10% 0% Intra-Exports 73,290 3%


96062200 Of base metal, not covered with textile

material 10% 0%



96062900 Other (-Buttons ) 10% 0% Intra-Exports 37,564 1%


96063000 Button moulds and other parts of buttons;

button blanks 10% 0%



96071100 Fitted with chain scoops of base metal 10% 0% Intra-Exports 21,431 0%


96071900 Other (- Slide fasteners) 10% 0% Intra-Exports 17,242 0%


96072000 Parts (Slide fasteners and parts thereof) 10% 0% Intra-Exports 1,118 0%


of 122

Annex 5

Raw material/industrial inputs in the Burundi List which should have their CET rate reduced


demand for use in production of approved finished products


Rate Proposed

New

CET

rate


Period Total

(Figures in US$)

% share

11031100 Groats and meal of Wheat. 25% 0% Intra-Exports 332,581 10.4%


11072000 Roasted malt. 10% 0% Intra-Exports 83,888 0.1%


12010000 Soya beans, whether or not broken. 10% 0% Intra-Exports 2,748,561 2.1%

Extra Imports 127,855,112 97.9%

17021900 Other lactose and lactose syrup. 10% 0% Intra-Exports 52,899 3.9%


17029000

Other including invert sugar and other

sugar and sugar syrup blends containing in the dry state 50% by weight of fructose.


4.4%


21021000 Active yeasts. 25% 0% Intra-Exports 461,767 1.5%


21069020 Preparations of a kind used in manufacturing of beverages.

10% 0% Intra-Exports 1,953,101 1.7%

Extra Imports 114,836,116 98.3%

22072000 Ethyl alcohol and other spirits, denatured,

of any strength. 25% 0%



25191000 Natural magnesium carbonate (magnesite). 10% 0% Intra-Exports 16,436 6.2%


25221000 Quick lime. 10% 0% Intra-Exports 739,733 13.0%


25222000 Slaked lime. 10% 0% Intra-Exports 37,674 13.3%


25281000 Natural sodium borates and concentrates (whether or not calcined).

10% 0% Intra-Exports 12,897 20.4%


32151100 Black printing ink, writing or drawing ink and other inks, whether or not concentrated

or solid.


3.4%


32151900

Other printing ink, writing or drawing ink

and other inks, whether or not concentrated or solid.


5.2%

Extra Imports 110,757,369 94.8%

33021000 Of a kind used in the food or drink industries

10% 0% Intra-Exports 545,065 0.1%

Extra Imports 568,522,135 99.9%

33029000 Other mixtures of odorifeous substances and mixtures

0% 0% Intra-Exports 159,406 0.2%


33072000 Personal deodorants and antiperspirants. 25% 0% Intra-Exports 510,885 2.8%


34021100 Anionic organic surface-active agents. 10% 0% Intra-Exports 9,640,853 17.4%


34021200 Cationic organic surface-active agents. 10% 0% Intra-Exports 706,223 14.9%


34021300 Non-ionic organic surface-active agents. 25% 0% Intra-Exports 1,371,064 6.3%


of 122

Annex 5





Rate Proposed

New

CET

rate


Period Total

(Figures in US$)

% share

35011000 Casein. 10% 0% Intra-Exports 24,580 0.7%


35019000 Other casein, caseinates and other casein derivatives; casein glues.

10% 0% Intra-Exports 261,012 24.1%


35021900

Other albumins (including concentrates of

two or more whey proteins, containing by weight more than 80% whey proteins,

calculated on the dry matter) , albuminates

and other albumin derivates

10% 0% Intra-Exports -

0.0%


35040000

Peptones and their derivatives; other

protein substances and their derivatives,

not elsewhere specified or included; hide powder, whether or not chromed.


1.1%


35051000 Dextrins and other modified starches 10% 0% Intra-Exports 838,399 14.3%


37050000

Photographic plates and film, exposed and

developed, other than cinematographic film.

10% 0%

Intra-Exports - 0.0%

Extra Imports - 0.0%

37071000 Sensitising emulsions. 10% 0% Intra-Exports 112,998 100.0%

Extra Imports - 0.0%

37079000 Other chemical preparations for

photographic uses. 10% 0%



38151900 Other (supported catalysts) 10% 0% Intra-Exports 72,394 10.8%


38159000

Other reaction initiators, reaction

accelerators and catalytic preparations, not elsewhere specified or included.


7.8%


39051200

Polymers of vinyl acetate or other vinyl

esters, in primary forms; other polymers in

primary forms, in aqueous dispersion.


2.2%


39051900 Other Poly (vinyl acetate) 10% 0% Intra-Exports 1,386,604 27.4%


39052100 Vinyl acetate copolymers in aqueous

dispersion 10% 0%



39052900 Other vinyl acetate copolymers . 10% 0% Intra-Exports 81,621 5.9%


39053000 Poly(vinyl alcohol), whether or not

containing unhydrolysed acetate groups. 10% 0%



39059100 Copolymers 10% 0% Intra-Exports 1,478,487 25.1%


39059900 Other Polymers of vinyl acetate or of other vinyl esters, in primary forms; other vinyl

polymers in primary forms.


3.5%


39061000 Poly (methyl methacrylate). 10% 0% Intra-Exports 283,547 10.5%


of 122

Annex 5





Rate Proposed

New

CET

rate


Period Total

(Figures in US$)

% share

39069000 Other acrylic polymers in primary forms. 10% 0% Intra-Exports 1,871,593 3.2%


39075000 Alkyd resins. 10% 0% Intra-Exports 8,217,414 19.0%


39095000 Polyurethanes. 10% 0% Intra-Exports 185,168 1.7%


39235010 Spools, cops, bobbins and similar supports,

Stoppers, lids, caps and other closures 10% 0%



48010090 Other newsprint in rolls or sheets. 10% 0% Intra-Exports 6,416,680 2.1%

Extra Imports 293,154,483 97.9%

48022000 Paper and paperboard of a kind used as a base for photo-sensitive, heat-sensitive or

electro-sensitive paper or paperboard.


4.0%


48025700 Other, weighing 40 g/m? or more but not

more than 150 g/m? 25% 0%


Extra Imports 106,140,493 99.4%

48025800 Weighing more than 150 g/m? 25% 0% Intra-Exports 743,594 4.8%


48041910 Kraftliner uncoated in rolls or sheets, dry

battery craft liner. 0% 0%



48042900 Other sack kraft paper. 25% 0% Intra-Exports 925,135 22.4%


48043900 Other of other kraft paper and paperboard weighing 1 50g/m2 or less.

25% 0% Intra-Exports 49,386 0.1%


48044900 Other of other kraft paper and paperboard weighing more than 1 50g/m2 but less than

225g/m2.


0.4%


48051900

Other uncoated paper and paperboard, in

rolls or sheets, not further worked or processed than as specified in Note 3 to

this Chapter


27.2%


48083000 Kraft paper, cerped or crinkled, in the rolls

or sheets 25% 0%



48092000 Self-copy paper 10% 0% Intra-Exports 626,430 2.1%


48101900 Other paper and paperboard of a kind used for writing, printing and graphic purposes.


0.8%


48111000 Tarred, bituminised or asphalted paper and

paperboard. 10% 0%



48114110 Unprinted self-adhesive gummed or

adhesive paper and paperboard. 0% 0%



48114190 Other self-adhesive gummed or adhesive paper and paperboard.

10% 0% Intra-Exports 743,422 18.1%


48114900 Other gummed or adhesive paper and

paperboard. 25% 0%



of 122

Annex 5





Rate Proposed

New

CET

rate


Period Total

(Figures in US$)

% share

48119000 Other paper, paperboard, cellulose

wadding and webs of cellulose fibres. 10% 0%



48192010 Cartons, Boxes, Cases skillets, free hinge lid packets

10% 0% Intra-Exports 668,230 1.7%


56031100 Non woven, whether or not impregnated, coated, covered or laminated, weighing not

more than 25g/m2.

10% 0% Intra-Exports 665

0.1%


72112300

Flat-rolled products of iron or non-alloy steel, of a width of less than 600 mm, not

clad, plated or coated; Not further worked

than cold-rolled (cold-reduced) Containing by weight less than 0.25% of carbon.

10% 0%



72122000 Electrolytically plated or coated with Zinc 10% 0% Intra-Exports 3,965 0.6%


72166900

Other, angles, shapes and sections, not

further worked than cold-formed or cold-finished


2.0%


73102920 Aerosol cans. 0% 0% Intra-Exports 295,906 0.8%


74081900 Other refined copper wire. 10% 0% Intra-Exports 4,919,822 29.3%


76042100 Hollow profiles of aluminium alloy 25% 0% Intra-Exports 698,973 13.5%


76042900 Others of aluminium alloys 25% 0% Intra-Exports 5,725,185 15.1%


76061100

Plates, sheets and strip, of a thickness

exceeding 0.2 mm, rectangular (including

square) of aluminium, not alloyed

10% 0% Intra-Exports 5,281,684 26.6%


76071910 Unprinted aluminium foil. 10% 0% Intra-Exports 152,065 0.7%


of 122

Annex 6

Kenya: Raw material and industrial input which meet the threshold for inclusion in the duty

remission on imported goods for manufacture of goods for exports, where 0% duty should apply

for a period of 3 years, subject to review of the region’s supply capacity

HS Code Description-raw material Trade Flow Period Total % share

02032900 Pork Bellies, Loins & Bone In Intra-Exports 6,900,439 55%


11081200 Starch Intra-Exports 17,242,940 47%


11081400 Starch Intra-Exports 4,549,707 85%


15119030 RBD Palm Olein Intra-Exports 226,737,659 69%


17019100 Caram Sugar Intra-Exports 18,363,484 75%


20094900 Fruit Concentrates Intra-Exports 1,021,617 56%


20099000 Fruit Concentrates Intra-Exports 31,663,640 66%


21039000 Sausage Flavours & Concentrates Intra-Exports 15,651,431 49%


28070000 Sulphuric Acid Intra-Exports 6,227,805 49%


32089000 Internal Adhesive Lacquer Intra-Exports 21,175,295 42%


32091000 Vanishes / Viinyl Polymers Intra-Exports 3,890,271 35%






34021900 Assorted Chemicals Intra-Exports 5,745,675 43%


35052000 Industrial glue Intra-Exports 9,186,201 63%


39191000 Tear Tape Intra-Exports 5,599,778 31%


39231000 Punnets Intra-Exports 29,642,171 54%


39232100 Barrier Bags Intra-Exports 51,780,199 87%




39233000 COEX Bottles Intra-Exports 35,548,597 51%


39234000 Aluminum ROPP Caps Intra-Exports 11,637,687 78%


39235090 Tear Droppers Intra-Exports 25,585,702 52%


39239020 Collapsible Tubes Intra-Exports 4,617,931 45%




of 122

Annex 6

Kenya: Raw material and industrial input which meet the threshold for inclusion in the duty

remission on imported goods for manufacture of goods for exports, where 0% duty should apply

for a period of 3 years, subject to review of the region’s supply capacity

HS Code Description-raw material Trade Flow Period Total % share

41022900 Raw Sheep Skins Intra-Exports 1,079,868 99%


41039000 Raw Goat hides Intra-Exports 4,670,222 95%


43021900 Whole Skins Intra-Exports 24,562 81%


48041100 Kraft Liner Intra-Exports 59,116,925 38%


48081000 Single Facer Kraft Rolls Intra-Exports 912,718 44%


48191000 Cartons Intra-Exports 40,761,787 41%


48194000 Tea Paper Sacks Intra-Exports 45,684,707 54%


48195000 Cluster Sleeves Intra-Exports 45,913,738 75%


48211090 Labels,Barcodes, Stickers and seals Intra-Exports 23,360,429 41%


48219000 Literature Inserts Intra-Exports 9,743,678 37%


49111000 Catalogues Intra-Exports 18,921,249 49%


52079000 Cotton Yarn dyed Intra-Exports 1,475,776 43%


54060000 Holofusion & Estaz Intra-Exports 44,423 52%


63053300 WPP Bags Intra-Exports 59,756,290 68%


70109000 Glass Jars Intra-Exports 158,794,962 62%


72091800 Cold Rolled Steel Coils Intra-Exports 79,753,527 38%


72162200 T-Bars Intra-Exports 6,212,117 66%


76069100 Aluminium Circles Intra-Exports 14,112,479 60%


85366900 Electricals Intra-Exports 1,065,712 100%

Extra Imports - 0%

85369000 Solar Junction Box Intra-Exports 627,352 100%

Extra Imports - 0%

95079000 Feathers/Fishing Line, Beads, Fur Intra-Exports 3,730,671 71%


96082000 Markers Intra-Exports 42,177 100%

Extra Imports - 0%

of 122

Annex 7

Kenya – Duty Remission for Exports

Products which should have their CET rate reduced permanently to 0% on account of the region’s lack of supply capacity to meeting regional

demand for use in production of approved finished products for exports

HS Code Description-raw material CET Rate Proposed New CET

Rate

Trade Flow 2008 2009 2010 2011 2012 Period Total %

share

04021000 Full Cream Milk Powder

60%

0%

Intra-Exports 5,612,860 2,013,189 530,022 436,620 217,103 8,809,795 23%

Extra Imports 4,354,659 6,276,505 5,305,880 8,436,337 5,955,476 30,328,857 77%

07119000 Garnishing Onions

25% 0% Intra-Exports 27,952 59 - 125 473 28,609 5%

Extra Imports 70,067 69,395 40,827 332,663 45,120 558,072 95%

08021200 Almonds shelled

25% 0% Intra-Exports - - - 65 32 96 0%

Extra Imports 246,715 65,033 258,051 619,458 857,280 2,046,538 100%

11061000 Peatex-Pea Flour

25% 0% Intra-Exports 26,353 4,222 8,857 2,087 976 42,495 2%

Extra Imports 156,497 1,109,831 279,539 276,294 296,485 2,118,646 98%

15111000 Crude Palm Oil

0% 0% Intra-Exports 3,062,543 649,349 3,220 117,146 1,336,505 5,168,764 0%

Extra Imports 497,468,696 457,237,484 605,563,991 777,784,981 703,238,033

3,041,293,18

6 100%

15119020 Palm Stearin

0% 0% Intra-Exports - 340 499,662 197,128 24,227 721,357 1%

Extra Imports 43,152,542 8,842,960 12,556,904 13,135,059 3,201,897 80,889,363 99%

15119040 RBD Palm Stearin

10% 0% Intra-Exports 1,468,949 - 194,178 203,315 - 1,866,442 11%

Extra Imports 1,051,780 3,392,470 4,322,252 3,972,973 2,953,499 15,692,973 89%

15152100 Crude Corn Oil

10% 0% Intra-Exports - - 42,493 13,242 1,315 57,051 0%

Extra Imports 2,973,300 1,574,538 5,480,274 23,128 4,235,697 14,286,938 100%

15211000 Carnauba Wax

10% 0% Intra-Exports 43,655 72,975 - 486 - 117,116 5%

Extra Imports 283,104 466,719 466,056 515,382 380,441 2,111,701 95%

17019910 Sugar for Industrial Use

100 % or $ 200/MT whichever is higher

0% Intra-Exports 975,046 818,450 1,132,674 139,695 165,249 3,231,113 0%

Extra Imports 103,974,996 113,934,336 166,265,283 173,769,285 211,890,960 769,834,859 100%

17023000 Dextrose

10% 0% Intra-Exports 2,541,459 2,823,427 2,192,348 2,687,367 1,132,871 11,377,473 20%

Extra Imports 6,151,107 5,768,654 8,904,120 11,247,283 14,495,013 46,566,176 80%

17024000 Dextrose Monohydrate

10% 0% Intra-Exports 198,386 161,646 391,620 420,673 106,984 1,279,310 20%

Extra Imports 1,334,864 1,037,772 889,658 1,080,231 809,751 5,152,275 80%

17029000 Dextrose monohydrate

10% 0% Intra-Exports 84,404 33,927 48,366 44,301 23,210 234,209 4%

Extra Imports 695,071 778,883 782,404 1,795,310 1,035,481 5,087,148 96%

19019090 Fat Filled Cream Milk 25% 0% Intra-Exports 1,630,983 1,585,006 2,608,743 1,477,883 3,807,177 11,109,793 8%

of 122

Annex 7





Rate


share

Powder Extra Imports 18,867,188 14,645,941 34,953,683 11,788,372 39,771,807 120,026,991 92%

20091900 Fruit Concentrates

25% 0% Intra-Exports 204,475 252,539 213,948 514,227 210,314 1,395,503 9%

Extra Imports 3,325,724 3,377,177 3,935,069 3,630,481 675,351 14,943,803 91%

20097900 Assorted Concentrates

25% 0% Intra-Exports 214,570 415,447 511,882 466,376 225,894 1,834,170 20%

Extra Imports 1,488,945 1,542,044 1,671,837 1,325,268 1,368,453 7,396,547 80%

21012000 Aroma for Reprocessing

25% 0% Intra-Exports 39,462 656 8,568 100,062 60,199 208,947 6%

Extra Imports 804,273 188,360 636,526 901,560 1,010,104 3,540,823 94%

21069020 Fruit Concentrates

10% 0% Intra-Exports 423,412 146,002 148,736 83,970 1,150,982 1,953,101 2%

Extra Imports 26,887,552 23,427,933 22,506,854 23,657,271 18,356,506 114,836,116 98%

21069090 Regal Ham Flavour

25% 0% Intra-Exports 909,256 840,497 538,266 642,193 557,541 3,487,752 5%

Extra Imports 13,930,028 13,031,049 21,039,227 15,583,238 4,098,563 67,682,105 95%

24012000 Semi Processed Tobacco

25% 0% Intra-Exports 48,386,870 25,396,455 16,591,759 14,722,076 23,522,675 128,619,835 43%

Extra Imports 20,595,942 22,358,773 35,670,149 61,024,314 34,208,686 173,857,864 57%

24039100 Reconstituted Tobacco

25% 0% Intra-Exports - - - - - - 0%

Extra Imports 4,069 - 782,084 1,992,183 1,854,685 4,633,021 100%

25231000 Clinker

10% 0% Intra-Exports 9,576,391 4,209,054 461,831 15,421,106 3,931,171 33,599,553 5%

Extra Imports 127,530,469 95,275,212 123,104,799 152,807,539 130,377,230 629,095,248 95%

25383900 Phosphate Mix

0% Intra-Exports - - - - - - 0%

Extra Imports

- 0%

29101000 Protine Drum

0% 0% Intra-Exports - 194 - - - 194 0%

Extra Imports 15,778 42,380 16,271 55,818 61,201 191,448 100%

29181400 Citric Acid Anhydrous

0% 0% Intra-Exports 78,127 65,940 15,176 73,118 81,541 313,902 2%

Extra Imports 1,432,013 2,244,729 2,337,166 3,643,823 2,875,568 12,533,300 98%

29181500 Sodium Citrate

0% 0% Intra-Exports 21,924 16,613 19,718 30,076 51,983 140,314 10%

Extra Imports 258,617 139,404 302,275 172,289 389,324 1,261,910 90%

32072000 Glaze

0% 0% Intra-Exports 24 - 2,900 5,286 - 8,210 0%

Extra Imports 321,932 311,017 697,738 288,853 357,495 1,977,034 100%

32081000 Polyester print Varnish 25% 0% Intra-Exports 52,397 56,950 30,033 89,738 267,570 496,689 4%

of 122

Annex 7





Rate


share

Extra Imports 1,896,954 1,916,163 2,329,389 2,620,625 3,827,219 12,590,350 96%

32151900 Inks

10% 0% Intra-Exports 689,977 899,531 1,434,782 1,410,418 1,690,302 6,125,009 10%

Extra Imports 12,028,405 7,629,134 11,195,548 11,841,105 12,684,493 55,378,685 90%

33021000 Assorted Flavours

10% 0% Intra-Exports 61,426 80,530 209,532 97,143 96,434 545,065 0%

Extra Imports 98,278,778 101,060,797 113,413,033 143,444,865 112,324,662 568,522,135 100%

33049100 Talc Powder

25% 0% Intra-Exports 465,187 609,079 503,627 365,802 436,013 2,379,708 28%

Extra Imports 1,447,316 1,324,255 1,224,522 1,348,137 917,502 6,261,731 72%

34021300 Fatty Acid

10% 0% Intra-Exports 113,889 191,895 300,494 337,295 427,491 1,371,064 6%

Extra Imports 1,913,406 1,934,516 3,665,443 5,384,923 7,380,485 20,278,772 94%

35040000 Soya Protein Isolate

10% 0% Intra-Exports - 5,989 6,674 4,571 6,876 24,110 1%

Extra Imports 211,404 177,707 260,815 844,230 614,593 2,108,749 99%

35051000 Glassigel (Starch)

10% 0% Intra-Exports 203,616 163,858 129,536 47,369 294,018 838,399 14%

Extra Imports 812,074 712,461 912,739 1,245,597 1,351,720 5,034,592 86%

35069100 Glue

25% 0% Intra-Exports 58,348 173,555 75,548 282,743 265,342 855,535 6%

Extra Imports 1,768,233 2,536,837 3,612,148 2,938,305 3,714,103 14,569,626 94%

35069900 Adhesive

25% 0% Intra-Exports 363,022 448,078 506,553 599,518 705,605 2,622,777 15%

Extra Imports 2,502,731 1,958,687 3,058,305 3,323,031 3,932,479 14,775,232 85%

38101000 Flux for submerged arc welding

10% 0% Intra-Exports 6,150 1,054 1,794 2,319 1,780 13,097 1%

Extra Imports 395,952 234,625 311,521 407,282 343,454 1,692,834 99%

38249090 Gum base

0% 0% Intra-Exports 173,891 174,607 135,205 176,240 588,738 1,248,681 1%

Extra Imports 15,853,718 15,020,523 28,409,878 24,476,280 31,104,762 114,865,161 99%

39042200 PVC/PE

0% 0% Intra-Exports 1,245,391 1,294,204 1,474,256 2,037,114 1,332,507 7,383,472 13%

Extra Imports 10,639,591 7,053,803 8,563,930 14,380,723 9,445,037 50,083,085 87%

39051900 Ethylene-Vinyl Acetate

10% 0% Intra-Exports 387,738 238,319 250,583 232,965 276,999 1,386,604 27%

Extra Imports 927,209 659,502 746,013 868,575 468,871 3,670,170 73%

39052100 Vinyl Acetate Polymer

10% 0% Intra-Exports 39,935 37,922 41,057 48,205 179,276 346,394 3%

Extra Imports 459,704 1,325,356 2,008,284 3,731,465 3,498,765 11,023,575 97%

39073000 Epoxy in powder form 0% 0% Intra-Exports 63,802 14,255 47,667 33,503 20,107 179,334 1%

of 122

Annex 7





Rate


share

Extra Imports 2,650,206 1,620,531 3,702,727 4,426,180 4,230,367 16,630,012 99%

39095000 Polyurethane Resin

10% 0% Intra-Exports 27,013 13,141 25,402 56,597 63,016 185,168 2%

Extra Imports 2,028,440 1,772,002 1,784,614 2,425,260 2,404,451 10,414,768 98%

39199010 Self Adhesive Tapes

10% 0% Intra-Exports 129,356 122,496 120,504 46,052 70,823 489,230 1%

Extra Imports 6,202,358 5,983,277 7,395,697 8,942,127 10,053,764 38,577,223 99%

39199090 Unprinted adhesive film

25% 0% Intra-Exports 154,458 73,286 302,517 350,856 305,714 1,186,831 7%

Extra Imports 2,552,802 3,454,242 3,679,355 3,069,409 4,273,519 17,029,328 93%

39201000 Polypropylene film

10% 0% Intra-Exports - - 3,145 - - 3,145 0%

Extra Imports 1,086,481 22,035 - 543 - 1,109,059 100%

39201010

Solar Isolation Underlayer

EPE

10% 0% Intra-Exports 1,298,749 1,259,403 2,571,243 1,354,803 2,081,372 8,565,568 19%

Extra Imports 5,230,315 4,696,636 9,223,671 7,826,968 8,390,140 35,367,729 81%

39202010 BOPP Film

10% 0% Intra-Exports 675,656 870,061 1,092,717 875,658 993,415 4,507,508 6%

Extra Imports 13,289,301 7,266,680 13,074,909 20,438,634 22,542,921 76,612,444 94%

39202090 Printed BOPP Film

25% 0% Intra-Exports 588,855 554,243 512,425 2,098,477 986,542 4,740,542 15%

Extra Imports 6,322,716 4,251,082 4,521,846 9,294,428 2,295,547 26,685,618 85%

39203010 BOPP Film

10% 0% Intra-Exports 141,134 39,291 112,276 84,800 23,419 400,920 9%

Extra Imports 775,876 327,687 872,329 1,039,158 828,693 3,843,745 91%

39204310 PVC Film

10% 0% Intra-Exports 103,201 45,189 233,832 138,975 45,861 567,059 2%

Extra Imports 3,611,062 2,781,137 5,545,671 7,261,255 6,768,530 25,967,654 98%

39204390 Wrappers

25% 0% Intra-Exports 103,169 71,857 133,601 21,375 16,729 346,731 10%

Extra Imports 325,000 477,283 697,942 688,164 820,447 3,008,837 90%

39204900 Polythene Films

25% 0% Intra-Exports 6,634 20,294 63,423 14,136 472,761 577,248 6%

Extra Imports 1,338,641 1,504,357 2,518,127 1,438,868 2,392,876 9,192,870 94%

39206210 Polyester Film

10% 0% Intra-Exports 109,441 126,730 81,066 75,463 98,534 491,234 2%

Extra Imports 3,672,569 2,999,795 6,679,190 7,469,817 6,731,346 27,552,718 98%

39206910 Polyester Film

10% 0% Intra-Exports 752 5,818 - 275,611 - 282,181 7%

Extra Imports 1,029,576 210,041 714,582 1,419,843 627,246 4,001,288 93%

39207100 Film 10%-25% 0% Intra-Exports - - - - - - 0%

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Extra Imports 236,556 95,963 186,203 130,933 144,875 794,530 100%

39211110 Clear Film

10% 0% Intra-Exports 6,039 50,599 288,267 3,688 34,283 382,877 5%

Extra Imports 1,668,336 823,008 1,991,187 963,466 1,333,459 6,779,457 95%

39211390 Plastic Jugs

25% 0% Intra-Exports - 26,604 - 49,032 104 75,741 1%

Extra Imports 1,106,744 2,494,644 1,634,382 1,838,360 739,293 7,813,423 99%

39211910 Cling Film

10% 0% Intra-Exports 154,202 291,232 437,390 499,101 765,416 2,147,340 6%

Extra Imports 6,619,183 3,843,648 5,107,651 6,987,714 9,202,321 31,760,517 94%

39219000 PVC Film

25% 0% Intra-Exports 385,117 694,091 564,873 377,642 353,043 2,374,766 4%

Extra Imports 7,562,045 6,116,565 10,944,945 15,008,204 11,271,442 50,903,201 96%

39235000

Aerosol Valves and Plastic

Caps

10%-25% 0% Intra-Exports 27,739 7,563 - - - 35,303 7%

Extra Imports 271,713 218,795 - - - 490,508 93%

39239010 Empty Gellatine Capsules

0% 0% Intra-Exports 4,070 5,243 12,129 486 182 22,111 0%

Extra Imports 1,095,893 1,125,582 1,453,895 1,334,405 1,397,427 6,407,201 100%

40159000 Foam

10% 0% Intra-Exports 11,025 51,079 19,488 193,296 231,809 506,698 8%

Extra Imports 422,016 497,619 568,935 2,464,457 2,074,846 6,027,873 92%

40169300 Rubber gaskets

10% 0% Intra-Exports 30,707 91,479 45,993 35,083 55,244 258,505 1%

Extra Imports 6,078,393 5,591,795 8,752,191 13,210,994 14,724,346 48,357,719 99%

41019000 Raw Cow hides

10% 0% Intra-Exports 23,982 116 139,636 7,505 265,112 436,351 14%

Extra Imports 517,734 219 1,835,448 339,863 1,861 2,695,126 86%

43023000 Fur

10% 0% Intra-Exports - - - - - - 0%

Extra Imports 732 - 24,032 2,606 4,196 31,565 100%

48010090 Newsprint paper

10% 0% Intra-Exports 4,151,055 1,105,137 600,109 198,127 362,252 6,416,680 2%

Extra Imports 57,857,144 55,939,493 60,329,765 65,653,314 53,374,767 293,154,483 98%

48025400 Bleached paper

10% 0% Intra-Exports - 465 4,981 - - 5,446 0%

Extra Imports 2,515,913 2,470,564 3,195,772 3,774,966 2,021,915 13,979,130 100%

48025500 Bond Paper

25% 0% Intra-Exports 1,278,353 306,737 257,408 352,790 54,994 2,250,282 1%

Extra Imports 34,511,310 31,598,013 41,986,431 39,850,568 33,326,382 181,272,704 99%

48025600 Woodfree Paper 25% 0% Intra-Exports 920 - 2,283 4,820 47 8,070 0%

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Extra Imports 23,623,031 13,353,628 11,257,350 10,129,375 13,096,866 71,460,250 100%

48025700 Woodfree Paper

25% 0% Intra-Exports 53,179 86,040 52,568 144,982 266,709 603,478 1%

Extra Imports 13,452,034 17,901,594 24,241,910 25,492,183 25,052,773 106,140,493 99%

48025800 Bond paper

25% 0% Intra-Exports 483,856 156,091 70,501 20,354 12,791 743,594 5%

Extra Imports 2,471,675 2,823,270 2,174,048 2,926,908 4,351,347 14,747,249 95%

48026100 Woodfree Paper

25% 0% Intra-Exports 46,613 4,128 3,683 6,812 318 61,554 5%

Extra Imports 256,909 269,305 295,755 297,560 143,343 1,262,873 95%

48041990 Bleached Kraft

25% 0% Intra-Exports - - - - - - 0%

Extra Imports 3,215,842 3,197,531 4,181,486 5,452,411 5,547,521 21,594,791 100%

48042100 Sack Kraft Paper

25% 0% Intra-Exports - - - - - - 0%

Extra Imports 2,523,855 6,256,380 10,430,530 10,488,083 6,537,396 36,236,244 100%

48042900 Krafliner

25% 0% Intra-Exports 492,814 224,083 69,076 70,996 68,166 925,135 22%

Extra Imports 21,188 495,697 789,856 1,158,233 742,959 3,207,933 78%

48043900 Kraftliner paperboard

25% 0% Intra-Exports

- 0%

Extra Imports 4,853,045 3,659,678 7,227,122 9,125,719 10,697,721 35,563,285 100%

48044900 Bleached Paperboard

25% 0% Intra-Exports 14,056 - - 6,416 4,699 25,170 0%

Extra Imports 318,159 265,113 1,177,331 2,027,036 2,757,378 6,545,018 100%

48045100 Kraft Paper & Paperboard

25% 0% Intra-Exports

- 0%

Extra Imports 153,573 327,847 581,245 3,170,669 1,762,301 5,995,634 100%

48051100 Fluting Medium

25% 0% Intra-Exports 2,953,956 265,641 579,655 724,597 230,674 4,754,522 8%

Extra Imports 4,214,665 7,333,822 11,006,530 16,267,610 13,638,733 52,461,361 92%

48051200 Fluting

25% 0% Intra-Exports - - - 1,653 65 1,718 0%

Extra Imports 156,856 236,458 169,591 262,335 75,073 900,313 100%

48052400 Testliner

25% 0% Intra-Exports - - 244,372 581,586 17,080 843,039 3%

Extra Imports 2,659,123 3,450,930 6,237,228 11,634,358 8,132,640 32,114,280 97%

48052500 Fluting Paper

25% 0% Intra-Exports 548,015 241,012 38,910 - - 827,937 16%

Extra Imports 329,254 14,942 1,363,123 1,667,624 884,808 4,259,751 84%

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48070010 Straw Boards

10% 0% Intra-Exports - - - - - - 0%

Extra Imports - - - - - - 0%

48092000 NCR Paper

10% 0% Intra-Exports 84,710 71,016 129,237 125,424 216,043 626,430 2%

Extra Imports 6,115,675 4,226,598 6,497,402 6,477,375 6,388,786 29,705,837 98%

48101300 Label paper

25% 0% Intra-Exports 227,892 166,573 152,433 343,656 66,115 956,670 2%

Extra Imports 10,345,292 6,589,797 13,431,918 12,773,250 6,914,316 50,054,572 98%

48101900 White Duplex Board

25% 0% Intra-Exports 284,900 85,215 89,930 54,355 77,036 591,437 1%

Extra Imports 15,046,189 13,569,176 17,389,578 16,937,822 6,874,640 69,817,405 99%

48102900 Labels

10% 0% Intra-Exports 375,569 93,586 2,707 9,320 39,138 520,320 1%

Extra Imports 8,275,083 5,904,809 11,528,660 12,335,668 16,003,562 54,047,782 99%

48103100 Kraft paper

10% 0% Intra-Exports - - - - 35,301 35,301 1%

Extra Imports 413,349 1,366,498 466,214 403,113 1,990,577 4,639,751 99%

48109200 Duplex Boards

25% 0% Intra-Exports 1,403 3,583 2,512 70,595 32,248 110,341 0%

Extra Imports 6,421,207 4,800,935 8,746,737 9,499,366 11,197,609 40,665,854 100%

48109900 Folding Box Board

25% 0% Intra-Exports 35,418 57,012 50,437 90,452 60,046 293,365 4%

Extra Imports 973,428 862,178 783,270 1,719,595 2,285,322 6,623,792 96%

48114110 Unprinted self Adhesive Paper

0% 0% Intra-Exports 36,300 30,706 16,238 66,825 146,199 296,268 1%

Extra Imports 6,808,685 4,170,849 11,888,190 12,306,649 11,484,289 46,658,662 99%

48114190 PVC White self adhesive

10% 0% Intra-Exports 8,281 46,584 272,293 325,231 91,034 743,422 18%

Extra Imports 751,102 720,214 665,754 688,560 539,287 3,364,917 82%

48114900 Folding Box Board

25% 0% Intra-Exports 26,096 19,001 797,425 531,222 273,810 1,647,555 15%

Extra Imports 526,689 1,570,120 2,947,555 1,825,486 2,694,412 9,564,262 85%

48115990 MG Paper

25% 0% Intra-Exports 6,445 1,683 214,375 - 2,378 224,881 3%

Extra Imports 1,544,409 1,187,371 1,429,617 1,183,278 2,048,492 7,393,167 97%

48116090 Waxed Wrappers

10% 0% Intra-Exports 114,215 117,411 111,229 54,539 36,723 434,117 16%

Extra Imports 393,115 425,116 721,482 429,212 244,221 2,213,147 84%

48132000 Plug Wrap Paper

0% 0% Intra-Exports - - 379 38 - 417 0%

Extra Imports 4,844,222 4,742,936 5,523,795 5,610,371 7,448,960 28,170,285 100%

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48192010 Hinge Lid Packets

10% 0% Intra-Exports 57,747 6,797 136,520 111,407 416,620 729,091 2%

Extra Imports 7,806,728 4,042,365 7,938,778 8,807,504 9,939,928 38,535,303 98%

48192090 Wrappers

25% 0% Intra-Exports 752,365 1,124,586 291,284 539,875 138,731 2,846,841 9%

Extra Imports 3,916,312 4,063,132 5,511,107 6,947,419 8,924,553 29,362,523 91%

48193000 Paper Sacks

25% 0% Intra-Exports 501,799 317,544 1,092,625 1,911,375 2,626,054 6,449,397 20%

Extra Imports 5,304,497 5,382,077 6,911,339 6,386,055 1,433,627 25,417,594 80%

48211010 Labels

10% 0% Intra-Exports 3,151 22,523 5,004 - 1,609 32,286 3%

Extra Imports 362,502 221,705 361,517 112,611 112,055 1,170,390 97%

48229000 Paper Cores

10% 0% Intra-Exports 53 1,677 133 1,109 - 2,973 0%

Extra Imports 174,085 79,091 95,873 253,208 186,763 789,020 100%

48232000 Adhesive paper (Tape)

25% 0% Intra-Exports 59 15,946 328 4,731 28,529 49,593 1%

Extra Imports 843,654 814,997 612,285 1,323,682 1,210,195 4,804,812 99%

49011000 Leaflets

0% 0% Intra-Exports 708,204 1,082,997 3,080,791 1,184,470 312,149 6,368,611 22%

Extra Imports 4,028,925 4,172,851 6,612,421 4,324,180 3,432,359 22,570,737 78%

49090000 Printed Cards

25% 0% Intra-Exports 4,261,184 5,510,696 3,954,890 3,752,181 2,672,095 20,151,046 75%

Extra Imports 2,045,828 1,118,769 1,360,644 1,407,533 936,210 6,868,985 25%

52093100 Cotton

25% 0% Intra-Exports - - - 220 - 220 0%

Extra Imports 8,839 2,123,866 1,096,804 1,366,774 678,416 5,274,700 100%

52121100 Fabric- Unbleached

25% 0% Intra-Exports - 4,654 1,609 - 163 6,426 0%

Extra Imports 4,811,418 421,545 500,510 228,879 249,903 6,212,255 100%

52121300 Fabric Dyed

25% 0% Intra-Exports - 5,128 - - 4,588 9,716 1%

Extra Imports 1,215,300 200,948 178,760 95,874 53,510 1,744,391 99%

54011000 Thread

25% 0% Intra-Exports 11,901 8,242 621 15,234 6,829 42,827 0%

Extra Imports 2,666,977 1,092,546 2,578,271 4,084,183 5,261,715 15,683,693 100%

54012000 Yarn Sewing

25% 0% Intra-Exports 1,350 - 140 479 2,549 4,519 0%

Extra Imports 786,324 379,264 497,767 591,836 322,454 2,577,645 100%

54022000 Textured Yarn

10% 0% Intra-Exports - - - - - - 0%

Extra Imports 60,797 73,053 1,422,516 2,090,115 2,144,612 5,791,094 100%

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54023300 Polyester yarns

10% 0% Intra-Exports 2,627 1,294 - 625 522 5,068 0%

Extra Imports 15,798,129 9,222,966 17,014,727 18,008,028 15,341,693 75,385,544 100%

54026900 Polyester Yarn

10% 0% Intra-Exports 11,780 2,927 31,142 38 71,282 117,170 1%

Extra Imports 2,472,456 2,797,538 4,224,972 3,109,512 632,337 13,236,814 99%

55093200 Acrylic high bulk yarn

10% 0% Intra-Exports 4,101 19,153 64,583 62,432 123,938 274,207 1%

Extra Imports 7,481,889 5,519,008 9,264,699 10,778,948 10,192,938 43,237,482 99%

55094100 Shoddy Synthetic Yarn

10% 0% Intra-Exports - - - - - - 0%

Extra Imports 5,708,468 5,316,670 7,809,609 8,918,802 9,854,973 37,608,523 100%

55096900 Acrylic yarn

10% 0% Intra-Exports 39,977 44,431 - - - 84,408 1%

Extra Imports 1,364,478 705,569 1,002,411 1,247,565 1,560,771 5,880,793 99%

55121100 Printed Viscose

25% 0% Intra-Exports 21,744 182,686 226,634 2,990 1,033 435,089 2%

Extra Imports 3,312,562 2,938,533 4,233,517 5,745,188 1,831,077 18,060,877 98%

56031200 Non-Woven

10% 0% Intra-Exports - - - 8,792 2,460 11,252 0%

Extra Imports 337,307 446,082 866,731 1,001,534 722,274 3,373,929 100%

58071000 Woven Labels

25% 0% Intra-Exports 1,311 2,198 2,461 6,592 1,430 13,991 0%

Extra Imports 2,632,830 1,187,345 3,036,589 5,960,245 3,189,411 16,006,419 100%

62171000 Zips

25% 0% Intra-Exports 30,347 27,829 27,760 10,894 9,085 105,915 1%

Extra Imports 1,286,008 819,537 1,261,332 3,311,793 2,493,878 9,172,547 99%

62179000 Clothing Parts

25% 0% Intra-Exports 8,343 13,430 27,958 23,331 2,771 75,833 3%

Extra Imports 446,901 465,894 558,321 674,477 707,302 2,852,895 97%

63053900 Pouches

25% 0% Intra-Exports 304,862 76,304 15,127 424,310 468,716 1,289,318 18%

Extra Imports 575,449 729,286 903,631 790,825 2,717,617 5,716,809 82%

63079000 Frantic Tail

25% 0% Intra-Exports 36,346 296,589 183,929 103,674 66,795 687,333 6%

Extra Imports 1,987,229 1,581,895 2,459,122 2,137,638 3,386,749 11,552,633 94%

68029900 Stone Granules

25% 0% Intra-Exports 5,205 3,983 6,397 6 5,658 21,248 1%

Extra Imports 140,745 137,766 372,266 741,972 439,856 1,832,605 99%

70071900

Solar Structured Tempered

Glass

10% 0% Intra-Exports 282,138 353,712 294,966 451,949 236,103 1,618,868 20%

Extra Imports 1,066,477 652,359 629,063 2,840,600 1,315,618 6,504,117 80%

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70200090 Glass Refills

25% 0% Intra-Exports 110,558 87,215 41,710 14,414 2,930 256,827 2%

Extra Imports 1,743,416 2,486,508 5,725,678 2,678,362 1,519,053 14,153,018 98%

72082700 Hot Rolled SteelCoils

0% 0% Intra-Exports 106,928 - 203,621 88,426 10,571 409,545 0%

Extra Imports 184,741,896 144,502,180 158,724,866 145,165,025 127,115,152 760,249,119 100%

72105000 Tin Free Steel

0% 0% Intra-Exports - - 263,825 - 27,344 291,169 0%

Extra Imports 13,907,945 11,558,558 17,258,321 7,615,562 13,364,056 63,704,442 100%

72163200 HR Beams & Columns

10% 0% Intra-Exports 312,286 320,213 272,869 646,723 328,332 1,880,423 3%

Extra Imports 10,535,375 9,295,249 10,174,952 11,463,092 13,467,692 54,936,360 97%

73071100

Pipe fittings of non-

mellable cast iron

25% 0% Intra-Exports 509 - 5,431 - 29,774 35,714 1%

Extra Imports 2,456,501 394,767 378,594 701,696 863,076 4,794,634 99%

73071900 Pipe fittings

25% 0% Intra-Exports 942,701 209,939 271,952 160,517 399,377 1,984,486 8%

Extra Imports 1,630,122 4,267,356 3,779,750 7,480,061 5,792,924 22,950,213 92%

73073300 Butt welded fittings

- 0% Intra-Exports - - - - - - 0%

Extra Imports

- 0%

73079100 Flanges

25% 0% Intra-Exports 22,343 26,616 27,629 162,759 35,174 274,521 3%

Extra Imports 1,578,725 878,713 1,189,919 1,993,885 2,873,223 8,514,464 97%

73079200 Threaded elbows, bends & sleeves

25% 0% Intra-Exports 13,232 25,073 65,852 41,198 14,218 159,573 2%

Extra Imports 1,111,161 988,566 1,434,855 1,668,615 1,946,932 7,150,129 98%

73079900 Other, tube or pipe fittings

25% 0% Intra-Exports 93,256 181,535 1,079,035 1,068,883 527,711 2,950,421 5%

Extra Imports 8,935,284 7,011,824 8,985,774 11,674,041 20,021,100 56,628,024 95%

73101000 Steel Drums

25% 0% Intra-Exports 1,133,488 756,927 838,225 1,116,335 1,118,289 4,963,263 12%

Extra Imports 9,544,889 4,524,114 2,537,229 8,689,168 9,850,979 35,146,379 88%

73102100 Can Cylinders

25% 0% Intra-Exports 5,638 14,861 90,385 131,044 31,801 273,728 14%

Extra Imports 113,607 453,827 72,683 404,138 673,913 1,718,168 86%

73102900 Aerosol Cans

10% 0% Intra-Exports 134,842 155,481 212,061 279,019 206,037 987,439 3%

Extra Imports 5,608,836 5,055,159 9,351,061 9,899,720 7,959,186 37,873,962 97%

73102990 Rectangle Cans & Lids

25% 0% Intra-Exports 607,384 255,600 1,132,147 297,250 940,455 3,232,835 9%

Extra Imports 9,105,273 3,183,350 6,995,560 8,866,339 6,050,940 34,201,462 91%

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73121000 Stranded Wire

10% 0% Intra-Exports 140,622 319,579 271,938 247,890 89,285 1,069,315 4%

Extra Imports 3,862,239 4,819,962 3,971,020 6,549,389 6,815,980 26,018,590 96%

73181500 Bolts/Nuts and washers

10% 0% Intra-Exports 527,336 358,395 464,769 729,618 387,627 2,467,745 3%

Extra Imports 16,200,127 16,939,258 16,995,514 19,343,101 24,538,764 94,016,763 97%

73181600 Hot rolled steel plates

10% 0% Intra-Exports 13,243 6,980 13,427 21,823 9,282 64,756 0%

Extra Imports 1,593,799 1,914,965 2,098,484 2,763,837 4,689,164 13,060,249 100%

73261900 Solar Frame Corner Insert

10% 0% Intra-Exports 37,776 109,742 4,332 32,586 30,700 215,136 3%

Extra Imports 415,609 664,519 2,076,918 2,665,114 876,451 6,698,611 97%

74099000 Solar Tabbing

10% 0% Intra-Exports - 4,602 865 13,807 - 19,274 7%

Extra Imports 43,879 38,442 97,331 10,913 67,040 257,604 93%

76012000 Aluminium Silicon Alloy, Billets

0% 0% Intra-Exports 158,752 28 10,624 180 - 169,584 0%

Extra Imports 12,952,568 11,849,776 13,473,709 20,285,819 18,332,490 76,894,362 100%

76061100 Aluminum Coils

10% 0% Intra-Exports 2,332,850 662,371 1,070,205 560,728 655,530 5,281,684 27%

Extra Imports 1,974,099 4,198,861 3,141,422 4,147,428 1,136,649 14,598,460 73%

76071100 Aluminium Rolled Coils

10% 0% Intra-Exports 80,463 40,069 64,455 55,968 65,290 306,245 2%

Extra Imports 4,567,435 2,094,619 2,066,057 2,138,473 1,657,713 12,524,298 98%

76071910 Aluminium Foil

10% 0% Intra-Exports 188 - 1,601 14,763 135,512 152,065 1%

Extra Imports 3,437,615 2,150,803 4,683,742 7,091,144 5,207,557 22,570,860 99%

76072010 Laminate Sack Kraft Paper

10% 0% Intra-Exports 447,181 656,199 904,931 681,336 803,389 3,493,036 7%

Extra Imports 9,678,996 10,320,406 8,935,017 8,550,069 10,874,408 48,358,895 93%

76082000 Solar Aluminium Frame

25% 0% Intra-Exports 24,088 620 4,555 6,072 11,952 47,287 1%

Extra Imports 1,339,428 289,834 608,924 582,635 657,587 3,478,408 99%

76129090 Rectangle Cans & Lids

10% 0% Intra-Exports 6,177 10,748 40,475 54,518 42,972 154,889 1%

Extra Imports 3,151,656 2,112,254 1,930,548 3,961,237 3,008,883 14,164,578 99%

76130000 Aluminum Cans

10% 0% Intra-Exports 2,845 4,487 10,788 12,282 5,847 36,249 1%

Extra Imports 1,128,412 184,149 252,304 663,446 342,503 2,570,815 99%

76161000 Aluminium Poly Clips

25% 0% Intra-Exports 31,905 53,561 100,761 44,723 47,729 278,679 5%

Extra Imports 487,175 446,755 786,830 1,275,745 1,863,440 4,859,945 95%

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79011200 Zinc Metal Ingots

0% 0% Intra-Exports - - - - - - 0%

Extra Imports 19,285,141 10,767,640 9,223,694 7,713,535 5,357,707 52,347,717 100%

83030000 Buckles,Clips & Rivets

25% 0% Intra-Exports 130,382 341,017 263,020 224,021 169,279 1,127,719 5%

Extra Imports 4,897,203 4,332,158 4,589,439 4,658,723 4,978,481 23,456,005 95%

83089000 Beads-brass

10% 0% Intra-Exports 1,158 131,777 12,152 18,114 26,189 189,390 4%

Extra Imports 909,320 495,785 947,947 1,003,069 840,186 4,196,306 96%

83099000 Can Ends

10% 0% Intra-Exports 293,677 63,607 400,730 166,137 267,830 1,191,981 4%

Extra Imports 8,246,263 5,059,278 4,334,727 4,936,024 5,060,477 27,636,769 96%

83099090 Kiwi Shoe Polish Tins

25% 0% Intra-Exports 191,232 551,912 376,410 625,818 512,674 2,258,047 6%

Extra Imports 2,830,130 6,404,228 8,351,189 8,636,510 8,946,329 35,168,387 94%

83111000 Electrodes for arc welding

10% 0% Intra-Exports 324,033 244,435 361,616 480,591 363,940 1,774,615 5%

Extra Imports 4,525,433 6,579,630 5,953,680 8,106,556 7,621,811 32,787,110 95%

83112000

Wire for submerge arc

welding

10% 0% Intra-Exports 10,630 4,141 26,267 - 26,359 67,397 1%

Extra Imports 403,611 820,434 599,815 1,046,676 1,641,051 4,511,587 99%

83113000 Welding Wire

10% 0% Intra-Exports 51,037 45,479 10,258 28,298 78,021 213,094 2%

Extra Imports 2,112,830 1,858,369 2,068,449 1,868,569 1,919,491 9,827,708 98%

87087000 Wheel Rims

10% 0% Intra-Exports 31,752 34,062 29,586 102,050 19,716 217,166 1%

Extra Imports 6,960,417 5,961,706 7,690,988 7,075,500 9,126,103 36,814,714 99%

87169000 Manhole Assembly

10% 0% Intra-Exports 178,993 216,204 250,381 1,284,725 3,422,809 5,353,113 10%

Extra Imports 7,385,405 8,364,427 10,418,208 10,569,615 13,384,596 50,122,251 90%

95072000 Hooks

25% 0% Intra-Exports 2,030 363 216 2,455 10,726 15,790 1%

Extra Imports 773,456 388,726 721,045 579,125 458,263 2,920,615 99%

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eac drs study draft final 112013

Documents

duty remission schemes

national consultant

manufacture of goods

imported goods

economic rationale

customs controls

customs management practices

customs management practises