COMESA hopes for customs union by end 2008
Mbogo Steve, Business Daily, 24/01/2008
According to officials from the Common Market for Eastern and Southern Africa (COMESA), the launch of a customs union is top on their agenda for this year. The secretariat from the 19-member trading bloc stated that the union should be in place by the end of 2008, which will open up the market for possible gains for manufacturers and services providers.
Doubts remain, however, as seven of the member states (Angola, Comoros, Congo DR, Eritrea, Seychelles, Swaziland and Uganda) chose to defer joining the bloc’s free trade area (FTA) that is considered a prerequisite to a customs union.
13 members of the FTA have, however, lowered their tariffs by up to 80 percent and have helped to increase the value of intra-COMESA trade by over 200 billion shillings to reach Sh469 billion in 2007.
The FTA was launched at the end of October 2000, and provides for reciprocal arrangements that require participating countries to allow duty free entry into their markets for goods which qualify under the COMESA rules of origin.
A customs union would ease costs and processes of trade by placing member states under a common external tariffs scheme. “It would also create a larger market whose impact is to expose firms in member states to greater competition as manufacturers and service providers seek to meet expanded consumer demand. Manufacturers are also expected to reap the benefits of large scale production in the form of lower unit costs.”
The establishment of a customs union would also eliminate import duties and other restrictive regulations which relate to cross-border trade, although customs duties and other regulations of commerce would apply to any goods from regions that are not included in the union.
It is currently behind schedule, however, as it had been earlier fixed for December, 2004. Charles Chanthunya, COMESA Director for Trade, Customs and Monetary Affairs, said last year that the Secretariat was nonetheless working on the ‘final touches’ of the customs union.
According to the COMESA secretariat, what remains is the harmonisation of other regulations of commerce, creating the schedule of national tariff alignments to the Common External Tariff, reaching a conclusion of sensitive products lists, and implementing modalities for the seven principles of the Customs Union agreed upon by the member states.
“The seven principles relate to Common External Tariff rates and Sensitive Products; Free Circulation of Goods and Elimination of Rules of Origin; Revenue Distribution; Treatment of Goods from Export Processing Zones; Trade Remedy Measures and Competition Policy; Sanitary Phyto Sanitary (SPS) and Technical Standards Programme on how to deal with Bilateral Treaties, Arrangements with Third Parties and Common Negotiating Positions.”
The first meeting of the task force on Regional Trade Policy and Common External Tariff was held on the 14th and 15th of January 2008, where an agreement was reached on their terms of reference and programme of work which is due to be completed by May this year. The other two task forces (Customs Management Regulations and Revenue Sharing) are due to meet in February.
“The special ministerial task force on the Customs Union will meet on February 11, 2008 in Lusaka, Zambia to assess progress and give directions with the view to report to the Summit that will be held in May in Harare, Zimbabwe.”
According to officials from the Common Market for Eastern and Southern Africa (COMESA), the launch of a customs union is top on their agenda for this year. The secretariat from the 19-member trading bloc stated that the union should be in place by the end of 2008, which will open up the market for possible gains for manufacturers and services providers.
Doubts remain, however, as seven of the member states (Angola, Comoros, Congo DR, Eritrea, Seychelles, Swaziland and Uganda) chose to defer joining the bloc’s free trade area (FTA) that is considered a prerequisite to a customs union.
13 members of the FTA have, however, lowered their tariffs by up to 80 percent and have helped to increase the value of intra-COMESA trade by over 200 billion shillings to reach Sh469 billion in 2007.
The FTA was launched at the end of October 2000, and provides for reciprocal arrangements that require participating countries to allow duty free entry into their markets for goods which qualify under the COMESA rules of origin.
A customs union would ease costs and processes of trade by placing member states under a common external tariffs scheme. “It would also create a larger market whose impact is to expose firms in member states to greater competition as manufacturers and service providers seek to meet expanded consumer demand. Manufacturers are also expected to reap the benefits of large scale production in the form of lower unit costs.”
The establishment of a customs union would also eliminate import duties and other restrictive regulations which relate to cross-border trade, although customs duties and other regulations of commerce would apply to any goods from regions that are not included in the union.
It is currently behind schedule, however, as it had been earlier fixed for December, 2004. Charles Chanthunya, COMESA Director for Trade, Customs and Monetary Affairs, said last year that the Secretariat was nonetheless working on the ‘final touches’ of the customs union.
According to the COMESA secretariat, what remains is the harmonisation of other regulations of commerce, creating the schedule of national tariff alignments to the Common External Tariff, reaching a conclusion of sensitive products lists, and implementing modalities for the seven principles of the Customs Union agreed upon by the member states.
“The seven principles relate to Common External Tariff rates and Sensitive Products; Free Circulation of Goods and Elimination of Rules of Origin; Revenue Distribution; Treatment of Goods from Export Processing Zones; Trade Remedy Measures and Competition Policy; Sanitary Phyto Sanitary (SPS) and Technical Standards Programme on how to deal with Bilateral Treaties, Arrangements with Third Parties and Common Negotiating Positions.”
The first meeting of the task force on Regional Trade Policy and Common External Tariff was held on the 14th and 15th of January 2008, where an agreement was reached on their terms of reference and programme of work which is due to be completed by May this year. The other two task forces (Customs Management Regulations and Revenue Sharing) are due to meet in February.
“The special ministerial task force on the Customs Union will meet on February 11, 2008 in Lusaka, Zambia to assess progress and give directions with the view to report to the Summit that will be held in May in Harare, Zimbabwe.”