News

Uganda, Ethiopia to join Comesa free trade area

March 10, 2014

Allan Odhiambo
 
Ethiopia and Uganda have pledged to join the Comesa free trade area (FTA) by December, raising hopes of higher trade volumes for Kenya and the region.

Although the two countries are members of the Common Market for Eastern and Southern Africa (Comesa), they have not ratified a special FTA arrangement.

Under FTA a designated group of countries agree to eliminate tariffs, quotas and preferences on most (if not all) goods among them.

Heads of State of the Comesa said the two countries had pledged to join the bloc’s FTA alongside the Democratic Republic of Congo (DRC), an important destination for Kenyan exports, by the end of the year.

“We commended the Democratic Republic of Congo, the Federal Democratic Republic of Ethiopia and the Republic of Uganda on their commitment to deposit their accession instruments to the Comesa FTA with the secretariat not later than December 2014,” they said in a communiqué at the close of an annual summit in Kinshasa last week.

Analysts said the plans by Uganda, DRC and Ethiopia to join the Comesa FTA would boost commerce in the region.

“Ethiopia has shown a lot of protectionism in its market which makes it unpopular with traders in many neighbouring countries and the wider Comesa. We hope they change this by adopting the FTA status and make it easier for trade,” Joshua Ndegwa, a textile export dealer said.

Ethiopia has of late found itself at loggerheads with other partner countries over trade controls and restrictions to its markets. Only recently it introduced price curbs to tame runaway inflation, triggering protest among Comesa partners such as Kenya who favour free market policy.

Ethiopia imposed price controls on about 20 essential commodities, pushing costs of goods down five to 45 per cent. Those those who violate the rules are liable to up to 15 years in jail.

Two years ago, Kenya also raised the red flag on Ethiopia’s restrictive trade practices and urged the Comesa secretariat to arbitrate in a dispute over a list of products eligible under a special cross-border trading scheme.

Kenya took issue with Ethiopia for failing to honour its pledge to reach a deal with Kenya on a list that would be covered under a newly instituted Comesa Simplified Trade Regime (STR).

Other partners of the 19-member bloc also protested against Ethiopia adamancy to adopting the STR, prompting a special mission from the Comesa to hold talks with Addis Ababa.

Under the new Comesa STR, traders will be granted simplified certificates of origin to enable them enjoy duty and quota free access as long as their goods appear on a list of agreed products.

The certificates would be filled in by traders at designated border posts and stamped by customs officials upon verification.

For purposes of health and safety, those carrying chemicals, foodstuff, plant and animal products would, however, have to report to offices of the ministries of Health, Environment and Agriculture for clearance.

Kenya’s trade with Uganda has however been relatively smooth thanks to their membership of the East African Community.
 
DISCLAIMER: The purpose of the ICF Newsletter is to compile and share relevant information for its users regarding the investment climate in Africa. The focus of this information will predominantly be on the latest reforms in customs, taxations, commercial justice, business registration and licensing, land registration and relevant events relating to the ICF’s mission.
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