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Business wants Comesa members penalised for blocking regional trade

The East African, Kenya

Business wants Comesa members penalised for blocking regional trade

By Francis Ayieko, Special Correspondent

4 June 2007

The Business Forum has recommended the introduction of penalties to deter Comesa member states from blocking regional trade through non-tariff barriers.

The Forum has also called for the development of faster mechanisms to settle disputes on non-tariff barriers and harmonisation of standards in the region.

During its meeting held in Nairobi from May 18-19, the Forum heard that some member countries were inhibiting cross-border trade by unnecessarily denying trucks from other partners access and imposing excise duty on goods like cooking fat, which ordinarily don’t attract such taxes.

However, no specific penalties were recommended.

Organised by the Kenya Association of Manufacturers in partnership with other private sector associations for the Comesa Business Council, the Fourth Comesa Business Forum also recommended the curbing of illegal cross-border trade, promotion of regional value chains in selected key sectors of high potential such as cotton and textiles, horticulture, leather and leather products, organic production and trade in services.

It was attended by about 500 delegates from the region’s business community as well as from Asia, America and Europe.

The business community expressed concern over property rights and recommended that Comesa develops a protocol for dealing with intellectual property rights in the region to be implemented by July 1, 2008.

It was also agreed that public-private partnership should be strengthened to enable Comesa to take full advantage of bilateral and multilateral trade arrangements.

The Forum urged governments to help businesses, especially small and medium enterprises, to access information and technology and long-term loans.

Another sticking issue was that of poor infrastructure in the region. Private sector representatives asked governments to develop good roads and other infrastructure to reduce the cost of doing business in the region.

Currently, most Comesa states have poor road networks, making it expensive to deliver goods and services.

But while officially opening the Forum, Kenya’s President Mwai Kibaki assured the business community that regional governments would nurture the integration process to realise economic growth and development.

President Kibaki noted that the Forum was taking place at a time when competitiveness was a major challenge for the region and challenged the business community to rise to the occasion by producing goods that would give them an edge over their competitors.

“I urge the business community to seriously take the challenge and add value to their products in order to be competitive at both the regional and international levels,” he said.

The Forum also welcomed the decision by the Comesa Council of Ministers to establish Customs Union by December 2008 and urged member states to fast-track its implementation by July 1, 2008.

A main feature of the Comesa Customs Union will be a three-band common external tariff (CET) recommended by the Council of Ministers in consultation with all Comesa countries, and adopted by the 12th Summit of the Comesa Authority of heads of state and government during its meeting in Nairobi on may 22-23.

The three-band CET structure is a plus for the East African countries of Kenya, Uganda and Tanzania, which are already implementing a similar tariff structure under the EAC Customs Union protocol that came into effect in January 2005.

The latter Customs Union allows for zero import duty on raw materials and capital goods, while intermediate and finished goods into the region attract 10 per cent and 25 per cent of duty respectively.

Out of the 19 Comesa member states, 13 have entered into the free-trade area (FTA) while six are expected to conform by December next year.

The Comesa CET structure will come into force when the regional trading bloc enters into a Customs Union on December 8, 2008.

President Kibaki said the heads of state had agreed to set a transitional period by which each country will make annual tariff adjustments towards the common external tariff rates adopted for the Comesa Customs Union.

President Kibaki is the current chairman of Comesa.

The immediate former chairman, President Ismail Omar Guelleh of Djibouti, noted that the three-band CET provided for flexibility on specific limited products for competitiveness and revenue consideration by member states.

This implies that before December 2008, countries shall continue to realign their national tariffs to conform to the three-band CET structure.

The Fourth Comesa Business Forum was one of the Comesa policy organs meeting in Nairobi from May 11-23.