The Citizen (Dar es Salaam)
Orton Kiishweko
8 July 2009
The entry of Rwanda and Burundi into the East African Customs Union should inspire the Tanzanian business community to produce more quality products to compete in the expanded market, a minister said yesterday.
Speaking to The Citizen by telephone from Dodoma, the Deputy Minister for East African Cooperation, Mr Mohammed Aboud Mohammed, said the incorporation of the two countries into the common tariff was a boon to the regional trade bloc.
The business community and development stakeholders, Mr Mohamed added, should play their rightful role as engines of growth between Tanzania and the two neighbouring countries.
"Goods from Rwanda and Burundi will boost intra-EAC trade flows, perhaps to over 40 per cent, through an integrated regional market with production and trade linkages," he said.
Rwandan officials in Kigali said their country was ready to compete effectively with the region's economic giants.
The establishment of the union is bound to result in lower prices, as goods from the member states will be duty free.
This latest move will further enhance economic cooperation between the EAC's newcomers, Rwanda and Burundi and the old partner states Kenya, Tanzania and Uganda.
A ceremony was held last Monday at Kigali's Serena Hotel to celebrate the country's entry into the customs union, which signifies a readiness to implement a three-band common external tariff (CET) structure, where raw materials and capital goods will be rated at zero per cent, intermediate goods at 10 per cent, and finished goods at 25 per cent.
Yesterday, Mr Mohamed challenged Tanzanian business people to exploit the new opportunities by increasing production for local consumption and for the expanded market.
Under the new arrangement, the deputy minister said, it would easier for businesses to export products to Rwanda and Burundi.
"Though there are other products, let's give priority to agricultural goods so we can have enough for domestic use and export the surplus," the deputy minister said.
But he warned: "Every good thing has some challenges. However, we have formed committees to deal with these challenges."
Mr Mohamed added: "We have to strengthen the capacity of the private sector so that it competes with the rest in the region."
The EAC ministry would spearhead the creation of awareness among farmers and business people to enable them to take advantage of the new developments.
EAC secretariat officials said the inclusion of Rwanda and Burundi would boost regional industrialisation by minimising the cost of production and cushioning locally goods manufactured goods against imports.
According to Mr Peter Kiguta, the director- general of Customs and Trade at the EAC, Rwanda has made an additional input to a selected list of sensitive items with import duty rates above 25 per cent in order to protect strategic sectors such as agriculture.
"Rwanda has also implemented the EAC Customs Management Act 2004 that harmonises the legal, administrative and operations of Customs in the partner states.
The uniform law on customs enhances trade facilitation through simplified procedures and documentation," Mr Kiguta said. From 2004 to date, the total growth of intra- EAC trade flows has risen by over 40 per cent.
The entry of Rwanda and Burundi enlarges the market to a population of 120 million people and a combined GDP of $60 billion.
"This large economic region can only be meaningful if it is more than a simple aggregation of neighbouring countries but an integrated market with production, investment and trade linkages," he added.
Rwanda's Prime Minister, Mr Bernard Makuza, said during the launch in Kigali that the expansion of the Customs Union was a milestone for his country.
"Contrary to belief that the Customs Union will negatively affect the economies of the partner states in terms of revenue erosion and competition, major benefits have accrued to the region in increased trade and Customs revenue," he said.
"It is on this strength that Rwanda would like to reiterate support to all the processes that will result in us reaping benefits from the Customs Union.
I would like to assure the EAC that the Rwandan Government will provide you with the necessary support and environment for your business to flourish and the economy to grow," he added.
The protocol establishing the Customs Union came into force in January 2005, in the three founding partner states of Tanzania, Kenya and Uganda.
The implementation of the Customs Union has been steady. It is expected that the region will become a single Customs Union territory by next January.
With the main aim being the uniform application of Customs procedures and trade documentation in the region, the union also ensures the elimination of internal tariffs, enabling partner states to trade freely amongst themselves.
Rwanda's minister for EAC Affairs, Ms Monique Mukaruliza, said that the protocol also recognised the vulnerability of some of the economies and the adverse effects that may arise in the course of implementation of the Customs Union.
There are fears about the future of Rwanda's already manufacturing sector. Manufacturers are urging the Kigali Government to strike a balance between promoting local firms and ensuring that consumer prices come down.
The mechanisms could be applied to cushion industries facing a threat from the Customs Union.
Additional reporting by Kezio-Musoke David, Citizen Correspondent in Kigali
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