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USAID Hub releases study on effects of rules of origin on EAC trade

Published on June 20, 2018

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Rules of Origin (RoO) affect market access opportunities and can act as a Non-Tariff Barrier (NTB) in terms of the rules defining specific processing requirements. They also influence the ability of firms to fully exploit available preferences under the EAC Common Market Protocol and the EAC Customs Union Protocol as they impact on the cost of producing goods and in turn affect firm competitiveness and trade opportunities.

The Hub recently concluded a motor vehicle assembly case study to illustrate the costs to business when Rules of Origin are not properly implemented. You can read here. It shows that despite the revised RoO requiring that locally assembled motor vehicles be given preferential treatment in other Partner States, this has not been a reality.

The study recommends effective implementation and enforcement of RoO to improve the market opportunities through reduction in operational costs and to enable market players to optimize their assembly capacity and create jobs. It also suggests intervention by EAC Organs including sensitization on the crucial role the RoO have in the realization of a common market and the EAC Industrialization Policy. Read more about the study here.

The USAID Hub promotes a more predictable, transparent and enabling business environment in East Africa, conducive to trade competitiveness and accelerated investment.

From June 2016 to May 2017 the USAID Hub partnered with the Federation of East African Freight Forwarders Associations (FEAFFA) to build the capacity of shippers and Customs Clearing and Forwarding Agents (CFAs) on how to effectively use the revised East African Community (EAC) RoO which went into effect in November 2015.  The EAC Partner States revised the RoO to simplify them for the business community, to harmonize them with other preferential trade regimes and to provide clarity on the implementation of criteria such as change in tariff heading. The FEAFFA and USAID Hub partnership helped CFAs and shippers, through greater understanding of the revised RoO, harness the opportunities that a preferential trade regime provides.

The FEAFFA and USAID Hub partnership also updated the East Africa Customs and Freight Forwarding Practicing Certificate (EACFFPC) training module and created a system for training students across the region.  This contributed to an improved policy environment for EAC integration, trade and investment as well as promoted intra-regional trade.

But, for businesses to take advantage of the revised rules, Partner States need to implement and enforce them.

Over the coming weeks, the USAID Hub will publish a series of EAC Common Market Implementation Impact Studies. The first is the above case study on Kenya’s motor vehicle assembly industry.  Stay tuned for more.