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1)
Wheat 1001.90.20
Hard Wheat
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Reduce CET from 35% to 0% proposed by Rwanda
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Hard wheat is not produced in the region though there
is some production of soft wheat.
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The meeting observed that currently each Partner State is implementing a different
regime/tax rates with respect to wheat arising from the consistent requests
for stay of application of the current rate by Partner States. None of the
Partner States has applied the CET rate of 35% on wheat grain. This implies
that current import duty rate is not appropriate and does not reflect the
reality and should be reviewed. In reviewing the CET rate, the difficulty to
differentiate between soft and hard wheat should be taken into
consideration.
The meeting however further observed that wheat is a
sensitive product which is grown in the region and there is need to protect
farmers involved in wheat growing specifically the soft wheat. The meeting
recognised that the production capacity is still insufficient in the region
to meet the demand by the millers.
Tanzania, Uganda,
Rwanda and Burundi
recognised the need to review the CET rate and proposed as follows:
Tanzania proposed to review CET rate from 35% to
10% for HS code 1001.90.20 and HS Code 1001.90.90
taking into account the difficulties in differentiating between soft and hard
wheat.
Burundi, Rwanda
and Uganda
proposed a review of CET from 35% to 0% for HS codes 1001.90.90 and 1001.90.20.
Kenya stated that the duty remission scheme
currently applicable for wheat grain of HS codes 1001.90.20 and 1001.90.90 is
adequate to address any production short falls in the Partner States and
therefore the EAC CET rate should be maintained at the rate of 35%. Kenya
further stated that the current rate of 35% offers flexibility for varying
duty remission levels to match the production and consumption levels in the
Partner States and at the same time protect the wheat farmers in the region
against cheap and subsidised wheat grain imports.
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To take note of the divergent views and provide
guidance accordingly.
q
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2)
Other Wheat and meslin 1001.90.90
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Reduce import duty from 35% to 10% proposed by Tanzania.
Reduce CET from 35% to 0% proposed by Rwanda.
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3)
Heading 10.06
Rice
1006.10.00
1006.20.00
1006.30.00
1006.40.00
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Reduce CET from 75% to 35% proposed by Rwanda
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The region is in the process of increasing
production but the quantity of rice still remains insufficient.
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Uganda submitted that the tariff policy and CET
rate of 75% has contributed to the production of rice in the region and self
sufficiency in food security. Despite the high tariff, importations are still
high and a reduction in the tariff will further impact negatively on rice
growing in the region. Uganda
provided data to show that production of rice has increased significantly in
the region especially in Uganda
and Tanzania.
Uganda submitted that in situations of
scarcity, the CMA provides for Partner States to import rice at lower duty
rates.
Kenya submitted that the demand for rice in
the region far exceeds production and supply and therefore, the current rate needs
to be reviewed to allow for increased imports.
Kenya further submitted that an EAC study on
rice conducted by a team of experts from the Partner States established that
most of the rice consumed in the region is imported from outside the EAC and
recommended that the current rate of 75% or US$200 per ton be reviewed to
35%. A reduced rate of 35% which also applies to wheat grain would still
provide sufficient and adequate protection to rice farmers in the region.
Tanzania submitted that most of the rice consumed
is produced in the country. Furthermore the decrease in the CET rate for rice
from 75% to 35% will jeopardise the efforts taken by the governments in the
region to increase production of rice such as Kilimo Kwanza.
The meeting however observed that Partner States are
faced with trade restrictions on exports of rice from Tanzania to
other Partner States and this constrains availability of the rice. These
trade restrictions need to be addressed because they are contradictory to the
principle of trade promotion in the region.
Taking the above into account, the meeting made the
following proposals:
Uganda, Burundi
and Tanzania
submitted that the CET rate on rice should be maintained at 75%.
Rwanda submitted that the CET rate on rice
should be reviewed from 75% to 35%.
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To take note of the divergent views and provide
guidance accordingly.
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4)
1101.00.00 Wheat flour
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Reduce CET from 60% to 35% proposed by Rwanda.
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Wheat flour produced in the region does
not meet the EAC Rules of Origin. In addition the region does not produce
enough wheat to meet the demand.
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The meeting was informed that wheat flour
produced in the region does not benefit from preferential treatment because
it does not meet the EAC Rules of Origin. For this reason, intra trade for
wheat flour produced in the region is constrained because the CET rate is
prohibitive. The EAC Rules of Origin should be reviewed to allow for free
movement of wheat flour in the region.
Kenya submitted that the reduction would
impact negatively on producers of wheat in the region. In addition, wheat
grain which is an input for wheat flour attracts CET rate of 35% and it would
not be appropriate to attach the same rate for the finished product. Kenya further
submitted that there is sufficient milling capacity in the Partner States and
allowing the importation of wheat flour at a lower rate will erode the protection
given to the milling industry.
Tanzania and Uganda submitted that there is
need to promote local processing in the region and sustain the investment by
the milling industry. For this reason, the EAC CET rate should be maintained
at 60%.
Rwanda submitted that the CET rate of wheat
flour should be reduced to 35% until the EAC Rules of Origin are reviewed.
Burundi proposed that the CET rate for wheat
flour of HS code 1101.00.00 should be reviewed from 60% to 35% until the EAC
Rules of Origin are reviewed.
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i)To take note of the
divergent views and provide guidance accordingly; and
ii) Direct the Secretariat
to coordinate review of the EAC Rules of Origin to allow free movement of
wheat flour in the EAC region.
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5)
1701.99.10
Sugar for
industrial use
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Reduce CET rate from 100% to 10% proposed
by Kenya
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This is an industrial input which is not available
locally.
While the industrial sugar is subject to duty
remission, other customs formalities such as bond requirements still apply at
the rate of 100% and this increases the cost of doing business. The proposed
rate should be applicable only to industrial users. In addition,
manufacturers in the region are subjected to various administrative controls
in utilising the remission.
The current rate of 100% has not been applied since
implementation of the CET because all the industrial sugar is currently
imported at 10%.
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The meeting took note that sugar for industrial use
is remitted to 10% and therefore all industrialists who use sugar in their
manufacturing processes enjoy the 10% duty rate. Section 140 of the EAC CMA is
used in granting the remission. The main challenge is arising from the
administration and procedures of the remission scheme.
The meeting agreed to maintain the duty rate of 100%
and apply the duty remission scheme.
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Sugar for industrial use (HS 1701.99.10) should be
maintained at 100% and duty remission scheme should continue to apply for the
industrial users.
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6)
2402.10.00
Cigars, cheroots
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To increase CET rate from 25% to 35%
proposed by Tanzania
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These are finished products which are
competing with local producers. In addition, these products abundantly
produced in the region and therefore a higher sensitive rate should be
assigned in order to protect local industries.
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The meeting observed that under the Heading 2402, HS
Codes 2402.20.10 and 2402.20.90 attract 35%, and for consistency, equity and
fairness, it would be appropriate to increase the CET rate for HS Codes
2402.10.00 and 2402.90.00 from 25% to 35%.
The meeting recalled that at the adoption of the list of sensitive products of HS Code
2402.10.00 were not produced in the region and did not satisfy the criteria
for sensitive goods. However since production has started in the region, CET
rate should therefore be increased to 35%. It was observed that the tobacco
industry is heavily protected in developed countries and the products are to
an extent subsidised.
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The CET rate for HS Codes 2402.10.00 and 2402.90.00
should be increased from 25% to 35% and elevated to the sensitive category.
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7)
2523.29.00
Other, Portland cement
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Review CET to 35% or USD 50 per ton
proposed by Kenya
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There is sufficient production and a high
potential in the region. The
production capacity in Kenya
is 3.3 million tonnes and capacity utilization is 66%. There are plans to increase the installed
capacity by 3.3 million tonnes per year.
The CET rates should be reviewed taking
into account the current production levels and the capacity under utilisation
in the industry.
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The Secretariat informed the meeting following a
directive of the Ministers of Finance, research to establish production
capacity will be undertaken and a report presented to the pre-budget meeting
of the Ministers of Finance to be held in May 2010.
The meeting took note and urged the Secretariat to
finalise the research and present the report to the pre-budget meeting of the
Ministers of Finance.
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Direct the Secretariat to finalise the study on
production capacity for cement and present a report to the Pre-Budget meeting
of Ministers of Finance to be held in May 2010.
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8)
6309.00.00
Worn clothing and other worn articles
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Reduce CET from 45% or 0.3USD/kg to 35% proposed by Rwanda.
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Worn articles are still needed by the people in the
region.
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The meeting recalled that the duty rate on used clothing
of HS Code 6309.00.00 was reduced from 45% to 35% for a period of one year.
This reduction expires on 30th June 2010 and the import duty rate
will revert to 45%.
Kenya, Uganda,
Burundi and Tanzania
observed that the matter will be discussed by the Ministers of Finance at the
next Pre-Budget meeting of May 2010. It was further agreed that after 30th
June 2010, the duty rate on used clothing of HS Code 6309.00.00 will revert
back to 45% or 0.3USD/kg.
Rwanda submitted that the worn clothing is
critical for the masses and the duty rate should be reviewed from 45% to 35%.
The meeting observed that because of hygienic
considerations, there is need for a regional policy on importation and
prohibition of used undergarments. Tanzania informed the meeting that
she has banned importation of used undergarments and this should be adopted
as a regional policy.
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i) Take note of the divergent positions and
provide guidance accordingly; and
ii) Direct Secretariat to coordinate the
development of a regional policy in importation of under garments
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