Walking in the Dark: informal Cross-border trade ... - International Alert

26 International Alert
5.1 Organisations for regional integration
There are various agreements in place which regulate regional trade and have implications for
small cross-border trade. All of the countries dealt with by this report have signed a whole series
of regional agreements designed to eliminate tariff and non-tariff barriers to trade. Burundi is a
member of the East African Community (EAC), the Economic Community of the Great Lakes
Countries (CEPGL), the Common Market for Eastern and Southern Africa (COMESA), and the
Economic Community of Central African States (ECCAS). DRC is a member of the Southern
African Development Community (SADC), COMESA, ECCAS and CEPGL. Uganda is a member
of EAC, COMESA and the Intergovernmental Authority on Development (IGAD), and Rwanda
is a member of EAC, CEPGL and COMESA. 52
The EAC protocol on a customs union was signed on 2nd March 2004 and implemented in
January 2005. According to this protocol, all tariff and non-tariff barriers to trade should be
eliminated. However, non-tariff barriers continue to be a problem; in 2006 an EAC mechanism
was adopted to identify, monitor and eliminate such barriers by establishing national monitoring
committees in Kenya, Uganda and Tanzania (2007), and in Burundi and Rwanda (2008). 53
Despite this, a range of non-tariff barriers to trade continue to operate in the form of a long
list of customs documents, lengthy formalities at borders and certification requirements which
prevent people getting involved in trade. 54 Tariff barriers persist: EAC’s trade regime includes a
list of 58 “sensitive products” which are subjected to ad valorem customs taxes, including 100
percent for sugar, 75 percent for rice, 60 percent for milk and various dairy products, 50 percent
for kitenge and 45 percent for used clothing. The objective of this measure is to protect local
production, based on the assumption that the region has the capacity to meet demand. 55 What
is more, the protection laws put in place by the different countries vary considerably. 56 Finally,
there are problems with the rules relating to the origin of products. EAC adopted simplified
rules to facilitate the trade of goods with a value of less than USD500 in order to boost business
between small traders. However, this system is not without its problems. First of all, because of
the capacity of the institutions concerned, there are often significant delays in the issuance of
certificates. 57 Secondly, some border authorities do not provide certificates of product origin, as is
the case for example in Cibitoke. All of these factors combine to steer traders towards informal
transactions. One solution to this problem might be the creation of a “one-stop border post” in
Cibitoke to allow for better coordination between the two countries.
The introduction of common tariffs across the EAC customs union has led to a significant increase
in import taxes in Rwanda. These are now at 25 percent for fruit, vegetables, cereals and animal
produce, which has also forced many traders into informal trade. 58
COMESA has established a Simplified Trade Regime (STR) to facilitate cross-border trade.
This regime allows small cross-border traders to import or export without paying any customs
taxes on goods with a value of USD500 or less per batch (and which appear on the joint list
of eligible merchandise), provided they complete a simplified certificate of origin. According to
DRC’s representative at COMESA’s 27th Intergovernmental Committee held in December 2009,
his country was committed to applying the STR and finalising the list of eligible products. The
52 UN Women (2012). Op. Cit.
53 East African Community (EAC) (2011). Status of elimination of non-tariff barriers. EAC secretariat, Arusha, Tanzania..
54 L. Okumu and O. Nyankori (2010). ‘Non-tariff barriers in EAC Customs Union: implications for trade between Uganda and other EAC
countries’, Economic Policy Research. Research Series N° 75.
55 E. Mugisa, C. Onyango and P. Mugoya (2009). An Evaluation of the Implementation of the East African Community Customs Union. Final
report. EAC, pp.16-17.
56 UN Women (2012). Op. Cit.
57 E. Mugisa et al (2009). Op. Cit.
58 International Alert (2010). La Traversée: Le petit commerce et l’amélioration des relations transfrontalières entre Goma (RD Congo) et Gisenyi
(Rwanda) [Crossing: Small business and improving border relations between Goma (DRC) and Gisenyi (Rwanda)]. London.