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Trade blocs agree to simple rules of origin

The East African | Monday, August 24 2009

Trade blocs agree to simple rules of origin


East Africa Community leaders Zanzibar President Amani Abedi Karume, President Mwai Kibaki of Kenya, Paul Kagame of Rwanda (EAC chairman) and Pierre Nkurunziza of Burundi after the official opening of 2nd EAC investment Forum in Nairobi in July. The rules of origin belonging to the individual economic blocs will be abolished when the hybrid one comes into force. (Picture: Anthony Kamau)

Three leading regional trading blocs in Africa have simplified the rules of origin to be applied by all member states In a move aimed at boosting intra-continental trade.

Simplifying and merging the criteria used by traders under the East African Community, Common Market for East and Southern Africa, and the Southern Africa Development Community was part of the mandate of a task force set up by the heads of state of the three regional economic blocs during the first Tripartite Summit held in Kampala in October last year.

According to the EAC Director- General in charge of Customs and trade Peter Kiguta, a draft of the hybrid rules of origin is ready.

“It is much simpler; it is expected to facilitate trade once the three regional economic trading blocs establish a Free Trade Area,” Mr Kiguta told The EastAfrican.

Rules of origin refer to the criteria used to distinguish between goods produced within the member states, and, therefore, eligible for the trading bloc’s preferential treatment as opposed to those produced outside the region’s customs territory — that attract duties.

Under the EAC trade regime, for instance, goods qualify for EAC tariff treatment if they originate in the partner states. This means that all goods that meet requirements of the EAC Rules of Origin qualify for EAC tariff treatment when they are traded within the region.

Currently, traders in EAC, Comesa and SADC countries are forced to do business under the three different rules of origin — a cumbersome and expensive affair.
The three sets of rules of origin are also said to be “complicated,” with many business people calling for their simplification.

“The rules of origin belonging to the individual economic blocs will be abolished when the hybrid one comes into force. It is better and simpler,” Mr Kiguta said.

However, he said, the new criteria will not come into force immediately since they have to wait until the three regional organisations become a Free Trade Area.

Among other things, the Tripartite Summit agreed on a programme of harmonisation of trading arrangements among the three regional economic communities, free movement of business persons, joint implementation of inter-regional infrastructure programmes as well as institutional arrangements on the basis of which the three RECs would foster cooperation.

In the area of trade, Customs and economic integration, the Summit approved the “expeditious establishment of a Free Trade Area encompassing the partner states of the three trading blocs, with the ultimate goal of establishing a single Customs Union.

The Summit also directed the Tripartite Task Force to develop a road map for the implementation of this merger.

On measures to facilitate the movement of business persons across the trading blocs, the Summit directed that the study report on the road map and legal framework be presented to a specially convened Tripartite Council of Ministers for consideration within 12 months (by October) to, among other things, determine the timeframe for the establishment of a single FTA encompassing the three regional organisations.

The EAC-SADC-Comesa Summit was historic because for the first time, since the birth of the African Union, key building blocks of the African Economic Community met on how to integrate territories and moving towards deepening and widening integration within the overall Abuja Treaty for the establishment of the African Economic Community.

The EAC, Comesa and SADC currently have a combined population of 527 million people and a combined gross domestic product of $625 billion.

 source: East African