East African Community countries took a huge step forward on Friday (February 18) by adopting the bloc’s tariff offer for Category A products amounting to 90.2% to be liberalized in 10 years after the start of trade under the African Continental Free Trade Area (ZLEC).
Category A products are those from sectors such as agro-industry, agriculture, transport or automotive industry, pharmaceuticals and textiles.
The new development was announced during an extraordinary meeting of regional ministers of trade, industry, finance and investment at the EAC headquarters in Arusha, Tanzania.
According to the officials, this means that the EAC is now among the States Parties that have met the minimum requirements for Category A to start trading on a provisional basis.
The EAC negotiates the AfCFTA en bloc.
Kenya’s EAC Permanent Secretary Kevit Desai, who chaired the meeting, told The New Times that “this is a very exciting and profound new development on the development agenda of Kenya. ‘EAC’.
He explained that the AfCFTA has so far verified 29 tariff offers to ensure that they meet the terms and that this number will increase to 34 once the offers from the EAC Partner States are verified.
“It also means that together as EAC we have the potential to raise our standards collectively by investing in technology transfer and industrial capacity now that we have the market that drives investment and that has a huge impact in terms of job creation,” he added. .
Growth in the region, he said, will be driven by value addition in sectors such as agribusiness, agriculture, transport or automotive industry, pharmaceuticals and textiles.
Tariff offers from EAC Partner States will now be subject to verification by the AfCFTA Secretariat, which is based in Accra, Ghana. Verification of tariff offers will ensure that AfCFTA member states that meet the minimum requirements begin trading under the Continental Free Trade Area Agreement.
Friday’s meeting also requested the EAC Secretariat to submit the EAC tariff bid for Category A to the AfCFTA “as soon as possible”.
Desai said, “Industrialization is the will of the six partner states. We encourage our business to immediately engage in solidarity as part of this opportunity.
A good precedent
Andrew Mold, head of the regional integration and AfCFTA group at the United Nations Economic Commission for Africa office in Kigali, described the results of the Arusha meeting as important development for the region and the implementation of the AfCFTA.
Mr. Mold said, “This is a very significant development as it means that once this joint offer has been accepted by the AfCFTA Secretariat, the EAC can start negotiating properly under the rules of the AfCFTA”.
“And it’s a good precedent that the EAC negotiated this en bloc. Of course, as a customs union, to do otherwise would have been problematic. So that’s great news, in the sense that it means the EAC countries will benefit from market access to the other 29 member states under the AfCFTA, with 90% of tariffs eliminated over the next five to 10 years, depending on whether the countries involved are LDCs or not.
Mr. Mold explained that five to 10 years might seem slow, but in reality, “the EAC and the AfCFTA Secretariat should be commended for how quickly they got to this point.”
Implementation has been somewhat delayed by the Covid-19 crisis, he noted, but in reality “the pace of progress is impressive by the standards of other international trade agreements”.
Friday’s meeting also requested the EAC Secretariat to convene a meeting of experts by April 15 to review categories B and C of the EAC tariff offer.
The AfCFTA will give the bloc access to an expansive market of over 900 million people.
Desai said the Community will also benefit from increased opportunities for trade, job creation, industrialization and economic prosperity.
“Expanded opportunities include manufacturing, value addition, regional value chains, agribusiness, motor vehicle assembly, pharmaceuticals, automotive aftermarket industries and mineral processing, among others,” Dr. Desai said.
Regarding the determination of the maximum rate of the Common External Tariff (CET), the meeting instructed the Partner States to consult on the analysis undertaken by the Secretariat on the proposed maximum rates of the CET and to submit comments on the analysis and the proposed maximum CET rates of 30%, 33% and 35% to the Secretariat by March 15.
Ministers instructed the Secretariat to convene another extraordinary meeting on March 18 to deliberate on the maximum CET rate.
Desai said it was agreed that Partner States consult with key stakeholders on the proposed CET maximum rates and submit their comments to the Secretariat by March 15.
“As Chairman of the Coordinating Committee, I am confident that at our next meeting, we as Partner States will achieve consensus on the CET by driving value addition through industrialization in the EAC” , he told The New Times.
The EAC Secretariat made a presentation to the Ministers on the analysis it had undertaken on the proposed rates of 30%, 33% and 35% for products classified in the fourth band.
The Secretariat noted that the benefit measurement indicators for products identified as being covered by the maximum tariff band are positive, with the exception of welfare loss, which is transitory.