The EAC Customs Union, launched in 2005, aimed at forming a free trade area where partner states reduce or eliminate taxes on goods originating from within the bloc and impose common tariffs on goods imported from other countries. However, trade disputes between the East African Community (EAC) member countries over rules of origin, safety and quality of products traded in the region have hindered the smooth and free movements of goods and services in the region. The tiffs between Uganda, Kenya, and Tanzania have been particularly threatening, the on-going regional integration.
The deal reached between Uganda and Kenya last week is expected to resolve the trade disputes between the two countries. The deal was closed during a meeting in Kampala between officials from the two countries led by Kenya’s Principal Secretary in the Ministry of Trade Chris Kiptoo and his Ugandan counterpart Grace Choda and covers taxation of pharmaceuticals, juices, and milk products, which had created severe disputes.
According to sources, Uganda has agreed to abolish the 13 percent excise duty charged on Kenyan juice and removed 12 percent verification fees payable on Kenyan pharmaceuticals by June 30, 2020. Uganda had introduced the Excise Duty Amendment Act in 2017, which charged a discriminative excise duty on Kenyan juice and verification fees on pharmaceuticals. Kenya, on its part, has removed the ban on exports of poultry products to Uganda that was imposed on February 14 this year and also committed to increase imports of Ugandan sugar to 90,000 metric tonnes from 30,000 metric tonnes, subject to a verification mission by Kenya in February next year. Kenya’s ban on export of beef and beef products to Uganda also stands removed. Both the countries also agreed that Kenya imposes 16 per cent value-added tax (VAT) to control the excessive influx of Ugandan milk into the Kenyan market and protect local dairy farmers.
Trade relations between Kenya and Tanzania hit a road block when both countries started quality verification on each other’s products going against the mutual agreement on the standards of goods traded within the region. However, the tension was diffused in May 2019, when Kenya and Tanzania announced that they have resolved 75 percent of the non-tariff barriers (NTBs) that had affected trade between them.
