New EAC rules of origin ‘will spur regional manufacturing industry’

The revision of rules of origin for products manufactured within the East African Community (EAC) have encouraged investment and boosted manufacturing sector within the region, the business community and officials have said.

In Article 1 of General Agreement on Tariff and Trade, rules of origin are defined as laws, regulations and administrative determinations of general application applied by any member to determine the country of origin of goods leading to the granting of tariff preferences.

Different stakeholders were speaking during the 7th session between the Ministry of East African Community and the Rwandan private sector, last week.

The meeting sought to learn from the private sector’s experience on the implementation of the revised EAC Rules of Origin, and to share updates ahead of another meeting later this month that is envisaged to carry out a comprehensive review of Common External Tariff (CET).

The 25 revised EAC rules of Origin (RoO) came into effect on January 23, 2015.

While expounding on the revised rules, Fred Nuwagaba, a senior customs officer at Rwanda Revenue Authority (RRA), said they are more flexible, clearer and more explanatory.

“They encourage investment in manufacturing, encourage investment in agriculture and aim at boosting processing industry in the region.”

He warned the business community that, recently, there have been problems with people from some EAC member states who export cooking oil to Rwanda after only purifying and packaging crude oil commonly imported from Asia, a practice he said does not qualify for the preferential treatment under the new rules of origin.

“If you want to bring cooking oil that qualifies, import seeds from outside EAC, crush them in EAC, refine them and then ship them into a member state,” he said.

“The new rules of origin seek to encourage people to invest in agriculture to plant these seeds where the cooking oil comes from. Invest in growing sunflower, soya, groundnuts, oil palms, etc and grow them on a large scale. Let’s make our own oil.”

The president of Private Sector Federation (PSF), Benjamin Gasamagera, said; “I think this is an opportunity to think of ways we can work locally so that the new rules benefit us further.

“This subject presents opportunities for local and regional manufacturers. It shows us that we have to change our thinking and operations so as to get prepared because these rules of origin help regional businesses work within the region so as to get the incentives compared to imported products,” he said.

The Minister for EAC Affairs, Valentine Rugwabiza, called for value addition on locally-manufactured products to benefit from the preferential tariffs.

“We should focus on adding value to our products, with a view to increase the exportation of high-end products and increase competitiveness. We want our manufacturing sector to grow, we want to be able to tap into the regional market, to consume more of what we produce,” she said.

According to the rules, the criteria for a product to be offered a certificate of origin include being wholly produced locally, meaning that the product with all its contents are 100 per cent originating from EAC.

The new rules also provides exemption from the certificate of origin to goods of less than $500 in value from any EAC partner state.

RRA commissioner-general Richard Tusabe said EAC is struggling in terms of imports vis-à-vis exports but that the new rules of origin are coming in to address some of the macroeconomic challenges that face the region.

Tusabe said CET guarantees zero per cent tax on raw materials, 10 per cent for intermediate goods and 25 per cent for finished goods.

In 2015, Rwanda’s total trade with EAC decreased by 9.03 per cent from $651.85 million in 2014 to $592.96 million, according to figures from National Institute of Statistics of Rwanda.