Manufacturers cautioned of stiff competition in EA duty free trade

by Simba Nyamaume

Stiff competition awaits industrial manufacturers in Arusha and the rest of Tanzania as East African countries inch to a Custom Union. Heads of state are expected to sign the East African Customs Union Protocol in November this year.

In view of the impending competition, Members of the industrial community in Tanzania have been called upon to prepare themselves as the rest of the East African countries, especially Kenya, are more advanced in industrial production.

The appeal was made during a seminar on the status of East African Community Customs Union Protocol and the 2003/2004 post-budget status organised under the auspices of the Confederation of Tanzania Industries (CTI) Arusha and Moshi outreach last weekend in Arusha.

CTI’s chief economist, Mr. Hussein Kamote told the seminar that Kenya is more advanced in the manufacturing industry compared to both Tanzania and Uganda. Tanzania, he said, should therefore take advantage, between now and the implementation of the customs protocol, to prepare for competition in business and marketing.

Mr. Kamote said trade within East Africa is expected to be duty free in the next seven years and the CTI should use the intervening period to prepare for marketing under free trade when the EAC Customs Union becomes operational later this decade.

A study by the CTI has revealed that old and inefficient technology is expensive to use and that the setting aside of low marketing funds by the manufacturing sector hampers efforts to develop competitiveness in marketing.

Mr. Kamote told some 20 members of the outreach attending the seminar that the ratification of the East African Customs Union Protocol is expected to take two years after its signing this November, probably to July 2005, and that the protocol’s implementation may take another five years making it a total of seven years. This he said is ample time for preparing for competition by businessmen and industrialists in Tanzania.

The seminar participants also learned that achievements which have so far been realized in accommodating CTI’s interests on the envisaged EAC Customs Union Protocol is a result of efforts made by CTI members.

Such efforts included technical inputs and participating in the negotiations for establishing the protocol, in Dar es Salaam, Bagamoyo and Arusha. The efforts, it was explained, are more needed now than before as negotiations are entering the final stages, so members are once again requested to support the secretariat in this process.

Through effective participation in the negotiations process, a number of CTI interests have been accommodated in the draft protocol, including the adoption of the principle of asymmetry in the elimination of internal tariff as provided in the EAC treaty.

Others are the adoption of product specific rules of origin and adoption of the 25 percent maximum tariff band in the Tanzania common external tariff position.

In his remarks, the CTI outreach coordinator, Mr. Daniel Mghwira, said the organization has prepared numerous position papers on various topical issues to the government including those on tax issues, investment promotion, industrial policy, local government finances, regional integration, small and medium enterprises development (SME) and good governance.

On the outcome of the CTI proposals to the 2003/2004 national budget, the government has accommodated most of the cross-cutting issues, but most of the company specific issues were rejected, mostly for reasons of the government revenue implications.

Negotiations for the EAC Customs Union Protocol started in the past three years and included the application of the principle of asymmetry, the elimination of internal tariffs and other charges of equivalent effect, the elimination of non-tariff barriers, establishment of a common external tariff, rules of origin, dumping, subsidies and countervailing measures, security and other restriction to trade, competition, duty drawback, refund and remission of duties and taxes, customs cooperation, re-exportation of goods and simplification and harmonization of trade documentation and procedures.

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Last modified: July 25, 2003.
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