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

WHY THE

SINGLE CUSTOMS

TERRITORY?

4

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

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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 the

SINGLE CUSTOMS TERRITORY

10

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

Map of EAC Region

15

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

The two EAC corridors

17

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 on the Northern Corridor

21

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.

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Operates EAC SCT Model How

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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

1st July 2014

Full Implementatio

n of the SCT within the EAC Partner States

29

The WAY FORWARD

30

The EAC Central Corridor

31

• 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

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