Proposed EAC tariff hike to boost regional trade

The proposed maximum East African Community Common External Tariff (CET) rate of 35 per cent will boost intra-EAC trade by $19 million (Sh2 billion) if adopted by EAC Partner States, a report by the EAC Secretariat says.

The proposed CET rates are 30 per cent, 33 per cent and 35 per cent for products classified under the maximum band.

Under the current CET structure, the maximum tariff is 25 per cent while the other bands are 0 per cent and 10 per cent, with a few sensitive products attracting higher tariffs ranging from 30 per cent to 100 per cent.

In 2020, total intra-EAC trade stood at $6 billion (Sh684 billion), 11.8 per cent of the total trade. The proposed 35 per cent tariff is set to boost intra-EAC trade to $6.4 billion (Sh7.1 billion), according to the report. The analysis shows if EAC partner states adopt 30 per cent, 33 per cent or 35 per cent as the maximum CET rate total tax revenues will increase by 3.9 per cent, 4.9 per cent and 5.5 per cent respectively.

The maximum CET rate for products categorised under the fourth Band will divert trade from global trading partners in favour of the EAC, with Uganda accruing $8 million (Sh856 million) followed by Kenya and Rwanda at $5 million (569 million) and $4 million (Sh456 million).