Countries Opt Out of Customs Union

Munyaradzi Mugowo (Financial Gazette)--More than half of the 14 Common Market for Eastern and Southern Africa (COMESA) free trade area (FTA) members opted out of the regional economic bloc’s ceremonial customs union which was launched in Victoria Falls on Sunday, 8 June 2009 by President Robert Mugabe, the new chairperson of the COMESA Authority of Heads of State and Government.

Thus far, around eight countries in the FTA have withheld their signatures, stating that they are either not ready for it, indifferent, or not convinced by the trade creation potential of the new arrangement, which many feel was launched prematurely. During the official launch, the five members of the East African Community (EAC) – Burundi, Kenya, Rwanda, Tanzania, and Uganda – clearly stated that they would not join the COMESA customs union as it is also aiming to establish its customs union next year.

According to World Trade Organisation (WTO) rules, a county cannot belong to more than one customs union as dual memberships distort application and operation of the common external tariff (CET). For this reason, Swaziland, COMESA’s next chair, may also hold back as it is already a member of the Southern African Customs Union (SACU). ‘We need to discuss among ourselves because one of our members, Tanzania, is not here (Tanzania pulled out of COMESA in 2000)’, said Ugandan President Yoweri Museveni on behalf of the EAC. ‘We have also not discussed it among ourselves, but that does not stop others from moving on. The rest can move on while we sort ourselves out.’

Though the EAC stated its position as a collective, Kenya, East Africa’s power house, is likely to sign the COMESA customs union as it traditionally has never taken the EAC seriously. Other COMESA FTA members that have said they will not sign on the grounds of special and differential treatment include the Democratic Republic of Congo (DRC), Malawi, Seychelles and Zambia, which hosts the COMESA secretariat.

There are currently only four countries – Egypt, Kenya, Rwanda and Uganda – implementing COMESA’s four-band CET adopted by the COMESA Authority during its last summit in 2007. It prescribes a tariff rate of ten per cent for intermediate goods and 25 per cent for finished goods. The EAC has agreed to harmonise its CET with COMESA.

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