KENYA – Tanzania and Rwanda sugar exports to the region will attract full duty after they were allowed to import from outside the bloc at a lower rate to cover for production shortfalls.
East African Community (EAC) council of ministers permitted Tanzania to import 100,000 tonnes of sugar at a duty rate of 50 per cent instead of 100 per cent between April and June 2015 while Rwanda was cleared to import 70,000 tonnes at 25 per cent for a period of one year.
The council also imposed other conditions aimed at protecting the sugar industries of other EAC economies including Kenya, Uganda and Burundi.
“Rwanda and Tanzania should give first priority by sourcing sugar from partner states that have excess production. During the period of stay of application of CET (common external tariff), sugar from Rwanda and Tanzania will attract CET rates when exported to other partner States,” Harrison Mwakyembe, the chairman of the council of ministers said in an EAC gazette notice.
Sugar industry regulators and tax agencies in EAC have been involved in frequent stand-offs over dumping of duty-free sugar within the region.
The feud has mainly drawn Kenya against Rwanda and Uganda with the former accusing the two countries of abetting the malpractice that renders its own millers uncompetitive.
At a meeting in Kampala in last July, Rwanda was reprimanded and urged to step up surveillance on duty-free sugar imported into its market to avoid dumping in other EAC countries.
Like Uganda, Rwanda was in 2011 allowed to make duty-free imports to cover for a massive shortage of the commodity in its domestic market due to drought.
Critics claim part of the imports into Rwanda later found their way into other EAC markets, hurting local millers.
In September last year, Kenya, Uganda and Tanzania agreed to jointly collect custom taxes on sugar in an attempt to beat cartels involved in regional dumping.
The three countries resolved to trade in sugar under the Single Customs Territory (SCT) arrangement — which allows for joint collection of customs taxes by the EAC partners — starting September 15,2014.
Under the SCT deal that began on last April, clearing agents within EAC were granted rights to relocate and carry out their duties in any of the partner States as part of a strategy to improve flow of goods and curb dumping.
Importers covered under the SCT are required to lodge the import declaration forms in their home country and pay relevant taxes first to facilitate the export process.
The tax authorities in the respective countries would then issue a road manifest against the import documents submitted electronically by the revenue authority of the importing country.
In the 2015/16 budget, Treasury secretary Henry Rotich handed a lifeline to sugar factories, on the verge of closing down due to competition from cheap imported sugar.
He raised the specific duty rate on imported sugar from $200 to $460 (Sh19,700 to Sh45,280 per metric tonne.
“The ad valorem rate remains 100 per cent of the customs value. This measure will cushion the sugar sector from unfair competition and enable our local factories to break even and pay the farmers promptly,” the minister said.