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Regional agricultural aspects of the East African Community WTO trade policy review

21 January 2013

According to the WTO Secretariat’s East African Community (EAC) trade policy review report of October 2012, prepared as a basis for the second review in November, agriculture remains the leading economic sector in the EAC, with some 80% of the population securing their livelihood from agriculture. EAC economies, however, face serious supply constraints on competitive agricultural production, ranging from poor road infrastructure to high energy costs. In addition, reliance on traditional farming methods means that EAC economies are vulnerable to weather-related developments.

According to the WTO Secretariat, ‘food security remains the main objective of national agriculture policies, although public sector support to the agriculture sector remains low’ (para. 15), and government regulatory intervention is seen as ‘somewhat excessive and distortive’.

It is reported that the EAC has developed an Agriculture and Rural Development Policy and Food Security Action Plan, and that financing is still being sought for their implementation. The WTO Secretariat observes that ‘in practice, formulation of agricultural policies in the EAC remains largely the jurisdiction of domestic authorities’ (para. 142).

While there are no longer any tariffs on intra-EAC trade in originating goods, incomplete implementation of EAC trade policy commitments is seen by the WTO Secretariat as posing ‘a major collective risk for the economies of [the] EAC’ (para. 15), with non-tariff barriers (NTBs) seen as ‘major impediments to trade and business development in the EAC’ (para. 37). The EAC Secretariat has identified some 35 NTBs to trade. While schedules for the elimination of these NTBs have been agreed since December 2008, the WTO Secretariat maintains that ‘there has been very little progress in tackling NTBs’ (para. 40).

This is compounded by ‘non-harmonized technical regulations, sanitary and phytosanitary requirements, customs procedures and documentation, rules of origin, and police road blocks’ (para. 37). Despite EAC treaty commitments on harmonisation, ‘in practice there is no formal structure for the application of SPS measures at the regional level’ (para. 109).

In view of these findings, the WTO Secretariat calls in the report for ‘a shift from identifying and discussing NTBs to implementing regulatory reforms and reducing trade restrictive measures’ (para. 40).

In terms of external trade, while a common external tariff is nominally in force, member states are still allowed to extend preferences bilaterally, and the EAC Council can grant country-specific import duty waivers.

The report notes that while average tariffs have decreased (from 12.9 to 12.7%), tariffs on agricultural goods have increased (from 19.7 to 20.2%) (Table III.1).

Agricultural products are heavily represented in lists of sensitive products to which higher tariffs are applied. These include rice, maize, wheat, sugar, dairy products and cigarettes (para. 75). More specifically, no dairy products, sugar or sugar confectionery, beverage, spirits or tobacco tariff lines enjoy duty-free access to the EAC, with applied duties averaging 45.4% for dairy products, 39.5% for sugars and confectionery, and 25.3% for beverages, spirits and tobacco. Only 10% of cereals and cereals product tariff lines are duty free (average duty is 23.4%, with a range of 0.75%).

Editorial comment

While agricultural policies have been developed at the regional level, the absence of regional financial resources for programme implementation (i.e. a sort of EAC ‘mini CAP budget’) ensures that agricultural policy implementation remains firmly rooted in national agricultural policy-making processes. In this context, the process of harmonisation of policy commitments at the regional level can be seen as a real challenge.

For example, COMESA, with the support of the African Development Bank, has produced regional regulations on harmonisation of SPS measures, which include proposals for a ‘COMESA Green Pass’, a commodity-based certification scheme and setting up of SPS centres of excellence. However, the implementation of these regulatory proposals and their ‘domestication’ in national legislation of member states have not taken place. This has contributed to the continued existence of certain NTBs, which have hindered the development of regional trade in basic foodstuffs and the development of regional food security.

While the need for strong institutional and legal structures to enforce policy commitments on the elimination of NTBs is recognised, the question remains of how to strengthen implementation. In the context of implementing regional CAADP (Comprehensive Africa Agriculture Development Programme) compacts, consideration may need to be given to establishing mechanisms for own-resource generation at the regional level, by, for example, allocating revenues from tariff and levies that deviate from the regionally agreed norm not to the national treasury, but to a regional agricultural trade policy facility.

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