{"id":437992,"date":"2011-06-08T09:38:21","date_gmt":"2011-06-08T09:38:21","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/06\/08\/traders-in-protest-over-ugandas-duty-free-imports\/"},"modified":"2011-06-08T09:38:21","modified_gmt":"2011-06-08T09:38:21","slug":"traders-in-protest-over-ugandas-duty-free-imports","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/06\/08\/traders-in-protest-over-ugandas-duty-free-imports\/","title":{"rendered":"Traders in Protest Over Uganda’s Duty-Free Imports"},"content":{"rendered":"
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Business Daily<\/a> (Nairobi)<\/p>\n

George Omondi<\/p>\n

6 June 2011<\/p>\n

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A fresh dispute is brewing between Kenyan traders and their Ugandan counterparts over preferential treatment of a list of imports by the landlocked country.<\/p>\n

Kenyan traders want Finance minister Uhuru Kenyatta to introduce new custom taxes in the 2011\/12 budget to shield them from unfair competition posed by Uganda products made from inputs imported duty-free.<\/p>\n

“The Uganda list (of goods imported duty free) was allowed by EAC finance ministers only up to June 2011 and must end permanently by July 1,” reads a resolution reached by top government officials and Kenya Private Sector Alliance (Kepsa) at the recent Prime Minister’s Roundtable meeting.<\/p>\n

The resolutions continue: “The Government will introduce tariffs to cushion any industry that is adversely affected by the Uganda list if it is extended again past the June 2011 deadline.”<\/p>\n

If Mr Kenyatta heeds this advice, the contested items from Uganda could attract custom duty of up to 25 per cent to be allowed into the country. Experts say introducing new tariffs almost six years after Kenya scrapped all custom taxes on goods from her EAC member states is likely to attract a similar move from Uganda, which is Kenya’s top trading partner, threatening the region’s integration process.<\/p>\n

The contentious exemption scheme, commonly called The Ugandan List, was initially introduced by President Yoweri Museveni in 1994 to help rebuilt the country’s industrial capacity after decades of civil strife.<\/p>\n

It allows the country’s industrialists to import some 135 types of industrial inputs without paying the 10 per cent common external tariff that other member states apply on such goods.<\/p>\n

The list was meant to lapse as the region began to implement the custom union protocol in 2005, but Uganda successfully lobbied for its extension for five years up to 2010.<\/p>\n

A committee, made up of the five region’s finance ministers, later allowed the country to retain the list in her 2010\/11 budget “for the last time”. “This matter is very sensitive and has been a subject of intensive inter-ministerial discussions, but since we still don’t have a definite answer, the position is that Uganda has to scrap the exemption scheme in her 2011\/12 budget,” said Mr Richard Sindiga, the head of Economic Affairs department at Kenya’s EAC ministry.<\/p>\n

The concern over the Uganda list comes as Mr Kenyatta prepares to read the country’s Budget on Wednesday, the date picked by the region’s finance ministers when they met in Kampala early last month.<\/p>\n

Integration partners<\/p>\n

Under the EAC treaty, Kenya, Tanzania, Uganda, Rwanda and Burundi have to adopt uniform fiscal policies for their countries and read them on the agreed date.<\/p>\n

Last week, the Cabinet cleared Mr Kenyatta to go ahead and present the Budget on the date chosen by integration partners. Parliament speaker Kenneth Marende is set to deliver his ruling tomorrow on whether the minister has broken the law, having failed to submit revenue and expenditure estimates to Parliament two months earlier as demanded by the new constitution. Whichever direction this takes, Kenyan firms have already drawn battle lines after learning that Uganda is likely to retain the list.<\/p>\n

The traders said they would no longer shoulder losses caused by market distortions as a result of products made from duty free inputs.<\/p>\n

“We expect the Uganda list to be scrapped this month as planned, but a lot of trade-offs are still taking place because Tanzania has also her exemption scheme to protect, while Kenya still retains many non tariff barriers to trade,” Kepsa chairman Patrick Obath told the Business Daily on Friday.<\/p>\n

Kenya’s impatience with Uganda’s list burst into the open in March when the Kenya Association of Manufacturers petitioned the government to impose punitive taxes on paper-based items from Uganda, saying they posed a threat to fair competition. Paper is one of the items on the Uganda list. Traders from the landlocked nation import paper from non-EAC countries duty free.<\/p>\n

At the EAC secretariat, the organ that is responsible for overseeing implementation of the regional agreements, officials remained cautious saying they were yet to receive official communication from the council of ministers. “Ideally, these exemption schemes should have lapsed several years ago, but we can’t say whether finance ministers will eliminate them in their 2011\/12 budget because the council of ministers has not communicated their decision to us,” Mr Peter Kiguta, the head of custom and trade directorate said on phone.<\/p>\n

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