single customs territory, the key to regional integration. the case study of eac region

By Beatrice Memo (Ms)Commissioner, Customs Services -Kenya

A Presentation to The WCO Revenue Conference 30th June – 1st July 2014Brussels, Belgium.

2

Defining Single Customs Territory – SCT Challenges Road to achieving SCT in EAC Map of EAC Region Objectives of SCT in EAC SCT as Key to Integration in EAC Conclusion Customs Commissioners of EAC

3

What is SCT ?

This is a stage towards full attainment of the Customs union achievable by the removal of restrictive regulations/or minimization of internal border controls on goods moving between the Partner States with an ultimate realization of free circulation of goods

4

The EAC SCT Model is guided by the fundamental operational Principles of the EAC under Articles 6 and 7 of the Treaty

5

This requires that any Cargo entering the Region must be cleared at the First point of Entry and Taxes paid at Destination before release.

For goods destined to Bonded Warehouses in the importing Country, appropriate Warehousing procedures have to be finalized at destination before release.

6

Cargo destined to outside the Region is cleared under the Transit Regime.

For Local Exports, declaration is made in the importing Country before release by the Exporting Country.

Release of both INTER & INTRA is done by the Revenue Authorities Customs Officers of the Destination Country who are now based at the Ports of Entry and Major Cities e.g. Mombasa, Nairobi, Nakuru & Kisumu.

7

• WHY THE

•SINGLE CUSTOMS

TERRITORY?

8

Due to the challenges impacting on Trade in the EAC Region, it was felt that the SCT would resolve this. The Challenges Noted Were:

9

10

Challenges of Customs Union1 - Application of

Law2 - Duplicated Procedures

3 – Security Bonds 4 - Varying Valuation

5 - Enforcement

Difference in application of Customs Laws & instruments

Multiple Customs declarationsAt internal borders

Application of varying

Valuation approaches

Multiple Security

Bond regimes

Weak

Enforcement Mechanisms

11

Challenges of Customs Union…6 – Non tariff

Barriers7 – Cargo Flow

8 – Congestion 9 – Complex clearance

Multiple road blocks along

Transit corridorRestricted

Flow of cargo

Complex

Clearance proceduresProcedures involving many Government Agencies

At the Ports and Border Stations

12

13

MULTIPLE POLICE ROAD BLOCKS ALONG THE CORRIDOR BEFORE SCT

15

16

17

18

19

2004Signing of

the Customs

Union Protocol

2004Signing of

the Customs

Union Protocol

2005Implementation to Establish the

CU

2010Establishment

of the EAC Common Market

2010Establishment

of the EAC Common Market

2012Summit

Decision to Implement

the SCT

2013Implementation

of the SCT at The Northern

Corridor

2013Implementation

of the SCT at The Northern

Corridor

2014Full

Implementation of EAC SCT

20

21

The EAC Customs Administration are governed by one law namely; The East African Community Customs Management Act and any amendments are discussed and agreed on by all the Partner States.

The various Customs Systems have been interfaced to allow for seamless flow of documents from one Customs administration to the other.

There is mutual recognition of Clearing and forwarding agents i.e. the Agent once licensed in one Partner state is free to operate in any other Partner State without being subjected to any restrictions. They have been trained and given access rights for use of the different Customs Systems in the Region.

22

Only one Single document is used to clear cargo under the SCT, this applies to both Inter and Intra trade cargo.

Trucks carrying cargo cleared under the SCT Regime are also licensed once, and monitored within the region through the use of Electronic Cargo Tracking Devices.

Cargo is weighed only once as it enters a Partner State. The initial inland multiple weigh bridges have been removed.

There are no Police Road blocks stopping trucks on the way.

23

Partner State Customs Officers representing the Partner States share offices at the customs stations and conduct joint cargo verification before release of the cargo for onward movement to the neighboring states.

They too, like the Clearing Agents have been trained and given access rights to process documents on the different Customs Systems in the Region.

At the borders, the cargo is not subjected to further verification, only sighting of seals is done and the truck allowed to continue with the journey.

Data on the cargo is shared real time and any discrepancies addressed on the spot. No loss of revenue has been noted.

24

Technical Working Groups meet regularly in any of the Partner State requiring support.

The five EAC Commissioners of Customs have formed a “Monitoring and Evaluation Committee”. They meet once every month to receive reports from the Technical Working Groups and offer guidance/advise on the spot whenever challenges are noted.

Stakeholder sensitization/engagement is done jointly by the EAC Commissioners of Customs across the Region.

The EAC Heads of State meet every two months to receive reports on the progress being made on the SCT among other projects in the region.

25

An analysis in EAC region has shown that the SCT has reduced the Cost of doing business by about 50% since implementation and the time taken to move cargo across the region from 18 days to 3 days from Mombasa to Kampala, and 21 days to 6 days from Mombasa to Kigali.

It takes political good will to achieve what has been achieved in the EAC Region.

The SCT in EAC was achieved through great sacrifice by the states. No Consultants nor donors were involved in the process. The human and financial resources were met by each Customs Administration.

Customs administrations the world over should embrace SCT as a way of globalization and a step towards removal of non tariff barriers, increase investment and create a conducive business environment.

26

27

Ms Beatrice Memo, Kenya Mr. Richard Kamajugo, Uganda Mr. Richard Tusabe, Rwanda

Now Commissioner General, RRA.

Mr. Domitien Ndihokubwayo, Burundi