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USAID Hub analyzes the impact of policy instruments on grain trade in East Africa

Published on June 27, 2018

rice.JPGThe USAID Hub has embarked on publishing a series of East African Community (EAC) Common Market Implementation (CMP) Impact Studies. In our second CMP Impact Study, we showcase how the implementation of EAC trade policy instruments has a significant impact on grain trade in the region. Specifically, how these policies affected Tanzanian rice trade from 2008 to 2016 and leading up to one of the Hub’s trade policy reforms in 2017, where Tanzania’s longstanding dispute with Rwanda – Rwandan authorities assessed a charge of $300 per metric ton on rice originating from Tanzania - was resolved.

The reform was realized through the Hub’s support to Tanzania Private Sector Foundation (TPSF), through a one-year grant in support of accelerating implementation of the EAC Common Market Protocol, which yielded a total of nine trade-facilitating reforms. The grant was a technical and financing partnership designed to build the capacity of the private sector to identify key issues hindering the movement of goods, services and capital into Tanzania and from Tanzania to the rest of the EAC. The grant helped TPSF identify key trade inhibitors, design and implement a mutual framework of accountability between private and public sectors and significantly improve their capacity to author evidence-based advocacy papers to trigger reform dialogue.

This study highlights the impact of EAC trade policy instruments, including Common External Tariffs (CET) on sensitive products, stay of application of the CET, duty remission scheme and application of waivers for food security concerns on Tanzania’s rice trade in the region. It also reveals variance in applicable duty rates on rice as a sensitive product across some of the EAC Partner States. Read the report here.

Although the existing EAC policy framework is intended to benefit trade in sensitive products like rice and further domestic food security objectives, its application and ineffective implementation has undermined trade in the rice market for Tanzanian producers. There is need for joint action at the EAC level in terms of 1) treatment of rice as a sensitive product and the applicable CET rates and 2) review of the inbuilt flexibilities availed through stays of application of the CET and the duty remission schemes.

Watch the video below to learn more about USAID Hub's top nine policy reforms that have made trade and investment easier in East Africa: