(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

scope for both automatic and discretionary exemptions from customs duty” under various legal texts(Milner 2004). Burundi’s 2008 Overall Trade Restrictiveness Index (OTRI) 20 was 12.8 percent based onits MFN tariffs, and 10.1 percent based on the different bilateral tariffs applied to its various partners(OTRI_BE). The wedge between bound and applied tariffs (the overhang), is 54.3 percent (World Bank2010a). As a result of tariff reductions since 2003, the average share of taxes on international trade as aproportion of total tax revenue declined from 23 percent in 2000-2003 to 16 percent in 2007-2010 21 .There remains scope for further tariff reductions. Burundi ranks 102th out of 127 countries on theOTRI_BE variable, where 1 st is the least restrictive. This places Burundi above Uganda (with a rate of7.4 percent), Kenya (8 percent) and Tanzania (9.7 percent), but below Rwanda (11.2 percent). A relatedconcern is the case of “sensitive products” for which tariff peaks persist. For example, Burundi has, likeother member countries, submitted lists of “sensitive products” that should benefit from higher tariffsthan the maximal 25% tariff band of the EAC and COMESA’s CETs, for budgetary or infant industryprotection motives. Products on the EAC’s list include dairy, wheat, maize, sugar, with tariffs rangingbetween 35% and 100% (although a temporary suspension of taxes on basic imported food products wasannounced by the Government in May 2012 to compensate rising food prices, which is intended to lastuntil December). In addition, Burundi has requested that certain products for which there is a domesticproduction be added to the list of sensitive products, such as crown corks (50%), soap (40%), beer(35%), paint (35%) and PVC pipes (35%) (Geourjon and Laporte 2008). This has detrimental impacts onthe level of competition and on prices. The justification for these high tariffs needs to be carefullyreviewed, and alternative ways to enable the Burundian manufacturing sectors to cope with increasedcompetitive pressures need to be explored.Box 1.2: overview of Burundi’s main trade policy developments since 2004Burundi’s multilateral liberalization agendaOne of Burundi’s main objectives in the context of multilateral negotiations remains the improvement ofmarket-access and the reduction of trade-distorting subsidies in agriculture in industrialized countries.However, lack of capacity has continually hampered Burundi’s implementation of its WTOcommitments and limited its participation in negotiations. During the WTO Doha Development Round,Burundi has advocated with the LDC negotiating group for the extension of the Special and DifferentialTreatment regime (SDT) granted to least-developed countries.Burundi’s regional integration agendaBurundi’s integration in the East African Community (EAC) is arguably the country’s mostimportant policy development in the recent period. Burundi joined the EAC’s Customs Union in2009 and subsequently signed with the other members the Common Market protocol, which came intoforce on July 1 st , 2010. Although implementation challenges are vast in all member countries, includingBurundi, this offers Burundi large opportunities for increased trade and investment, improvement of thebusiness environment and structural transformation of the economy. In the coming years, Burundi willtake part in the two final stages of the integration process, first a Monetary Union (expected to beinitiated in 2012) and ultimately a Political Federation. While the EAC is arguably a priority forBurundian authorities, Burundi is nonetheless involved in a number of other regional economic20 The OTRI summarizes the trade policy stance of a country by calculating the uniform tariff that will keep itsoverall imports at the current level when the country in fact has different tariffs for different goods (see Kee, Nicitaand Olarreaga 2010). Dataset accessible at:http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:22951240~pagePK:64214825~piPK:64214943~theSitePK:469382,00.html21 Source : various IMF country reports and statistical appendices, 2000-201127 / 153