Single Customs Territory – The East African Community Model
By Beatrice Memo (Ms)
Commissioner, Customs Services
KENYA
Table of Contents • Introduction
• Challenges
• Objectives
• Benefits
• The EAC SCT Model
• Progress of Achievement of SCT in EAC region
• EAC Success Story
• Implementation Roadmap
• Way Forward
2
Introduction
• 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
3
Challenges of the Customs Union
1 - Application of Law
Difference in application of Custom Laws and
Instruments
2 – Duplicated Procedures;
Multiple Customs declarations at Internal
Borders
3 – Security Bonds
Multiple Security Bond regimes
4 – Varying Valuation
Application of varying Valuation approaches
5 – Enforcement
Weak Enforcement Mechanisms
5
6 – Non Tariff Barriers
Multiple Road Blocks along the Transit Corridor
7 – Cargo Flow
Restricted Flow of Cargo
8 – Congestion
At the Ports and Border Stations
9 – Complex clearance
Complex Clearance Procedures involving many Government
Agencies
Challenges contd…..
6
Objectives of the SCT
Seamless flow of Goods to enhance intra EAC trade
Lowering clearance costs of goods within the EAC region
Shifting of physical controls to electronic clearance processes
7
Objectives contd…..
Coordination between Agencies responsible for clearance of goods
Enhanced compliance through a regional wide mechanism
Building a foundation for EAC Common Market and Internal Single Market
8
Objectives contd…..
Realizing economies of scale and optimal use of resources in clearance of goods
Supportive institutional and legal framework
9
Benefits of SCT
Reduces the Cost of doing business
by eliminating duplication of
processes
Reduces administrative
costs and regulatory
requirements Reduces the risks associated with non compliance on the transit of
goods
11
Benefits Contd
Efficient revenue management
Enhances application of Information
Technology and data collection at
regional level Synergy through shared resources and utilization of
economies of scale
12
More benefits
Enhances trade in
locally produced goods particularly
agricultural goods
Enhances the relationship
between the private and public sectors
Prevents smuggling at regional level
13
Finally
SCT is the springboard for free movement of other
factors of production
SCT attracts foreign, domestic and cross-border investment
14
The EAC SCT Model
• The EAC SCT Model is guided by the fundamental operational Principles of the EAC under Articles 6 and 7 of the Treaty
16
Background of SCT in EAC
2004 Signing of the
Customs Union Protocol
2005 Implementati
on to Establish the
CU
2010 Establishment
of the EAC Common Market
2012 Summit
Decision to Implement
the SCT
2013 Implementation of the SCT
at Trhe Northern Corridor
2014 Full
Implementation of EAC SCT
18
Background contd…..
• In June 2013, the EAC Heads of State held a Summit in Entebbe, Uganda to discuss Infrastructural development in the region.
• The issues of SCT came up and they directed the Revenue Authorities to immediately operationalize this.
• The Commissioners General met in Mombasa and formed technical Working Groups comprising stakeholders for a start.
19
Progress towards the Achievement of the SCT
• The TWGs comprised;
• Business flow and legal
• ICT
• Compliance and Enforcement
• Capacity Buiding and Change Management
• Inter agency
• They had clear Terms of Reference to look at the different laws and procedures and how these could be integrated to work with each other. 20
Progress contd…..
• Piloting and tests started on the Northern Corridor comprising – Kenya, Uganda and Rwanda.
• The tests continued and at a Summit held by Heads of State in Kigali, Rwanda on 28th October, 2013, the Heads of State successfully launched the SCT with the clearance of 15 Petroleum trucks from Mombasa to Uganda and 6 trucks of dry cargo from Mombasa to Kigali
22
Progress contd…..
• With this recorded success, the HoS decided to escalate this to the entire EAC region and at the Summit meeting held in Kampala, Uganda in November 2013, they directed that the SCT should be rollout on 1st January 2014 with full implementation date of 1st July 2014
• Thus the EAC secretariat convened a meeting with the CGs and Customs Commissioners to expand the TWGs and have each country head at least one TWG.
23
Goods imported into the Customs Union are entered only once in the country of destination and released at the first Port of entry to the destination Partner State;
Duty paid goods are not allowed to change destination into another Partner State except where permission is granted by both Partner States
Duty paid goods are released to the destination Partner State for home use and are subjected to Customs controls through the Electronic Cargo Tracking System (ECTS)
25
Success story on the NC • Single weighing for Transit cargo
• Removal of road blocks
• Reduced turn-around time (18 to 4 days for Mombasa/Kampala and 21 to 7 days for Mombasa/Kigali)
• Single Customs declaration for goods destined to Uganda and Rwanda for both International and Intra clearance.
• Reduced Customs documentation, cost of doing business and information exchange.
26
Success contd…..
• Mutual recognition of the Revenue Authorities officials working together in the Partner States
• Mutual recognition of the Clearing Agents in the Region and granting of access rights for use of the Customs systems across the region.
• The initial challenges noted with system integration have been overcome and all the IT systems are talking to each other.
27
Implementation Roadmap
November 2013
SCT Framework approved by the Council and adopted by the Summit
January 2014 SCT commences
Jan – June 2014
Preparations for full implementation
28
• Implementation of the SCT on the Central Corridor is in progress
• Customs Business Systems are being interfaced
• Customs and Stakeholder Business Systems interface is ongoing
• Harmonization of Customs processes is ongoing and near completion.
• Stakeholder training and engagement is ongoing.
• Everyone will be ready by the rollout date. 32