The EAC is now among the state parties meeting the minimum requirements for Category A to start trading on a provisional basis under AfCFTA, as the zone is negotiating the AfCFTA rollout as a bloc.
A ministerial council meeting on trade, industry, finance and investment in Arusha on Friday directed the EAC Secretariat to submit the Category A list to the AfCFTA Secretariat as soon as possible, while also asking the EAC Secretariat to convene an experts meeting by 15th April to consider categories B and C of the EAC tariff offer.
The offers will now be subjected to verification by the AfCFTA Secretariat in the Ghanaian capital of Accra, with AfCFTA having so far verified 29 tariff offers to ensure that they meet the protocol framework modalities, with the EAC listing the number to 34 countries once the EAC offers are verified.
Verification of the tariff offers will ensure that AfCFTA member states meeting the minimum requirements start trading under the Continental Free Trade Area Agreement, officials said.
Dr Kevit Desai, Kenya’s permanent secretary for EAC Affairs, said at a media briefing after chairing the ministerial council meeting that consultations will start on the determination of the maximum rate for the Common External Tariff (CET) for various products, in the wake of the EAC offer.
The partner states need to consult stakeholders on the analysis undertaken by the EAC Secretariat on the proposed maximum CET rates and submit comments on the proposed maximum CET rates of 30 per cent, 33 per cent and 35 per cent to the Secretariat by mid next month.
The ministers directed the secretariat to convene another extraordinary meeting of the council on March 18th to deliberate on proposed revisions to the maximum CET rates, with the secretariat saying in its preliminary analysis that measures of benefits for products listed in the maximum tariff band are positive except for welfare loss, which it said would be transitory.
The various maximum CET rates will have diverse macroeconomic impacts, with the average potential short-term impact on EAC Partner States total tax revenues as increasing by 3.9 per cent for the 30o per cent maximum rate, 4.9 per cent increase for 33 per cent and 5.5 per cent increase for 35 per cent maximum external tariff, he elaborated.
Employment generation was likely to increase marginally at 0.02 per cent (implying about 5,055 job openings) under the maximum rate of 30 per cent; 0.03o per cent increase or 6,089 openings with a maximum rate of 33 per cent being applied; and 0.03 per cent or 6,781 employed persons increased in average EAC formal employment under the maximum rate of 35 per cent.
Potential trade diversion into the EAC (intra-EAC trade) increases are pegged at $13.03m under the 30o per cent maximum rate, $16.51m with a maximum rate of 33o per cent and S18.9m with the highest rate of 35 per cent, he stated.
On the other hand, industrial production increases under each of the three proposed maximum CET rates, with the highest rate of 35 per cent conferring the greatest gains in projected regional industrial output. EAC experts affirm that there is a 0.02 percent ($7.7m in value) increase in industrial output with an applied maximum rate of 30 per cent, 0.03 per cent ($10.3m) increase in production with a rate of 33 per cent and 0.04 per cent ($12.1m) increase in output with the highest rate at 35 per cent, he added.
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