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East African Community Agrees on Common Tariff Rate - 2003-06-20


The presidents of Kenya, Uganda and Tanzania have announced they will create a single tariff level to strengthen and unify the economy of the east African region.

The leaders met Friday in Nairobi at a summit of the East African Community. The EAC was set up two years ago to create a common economic market and trading bloc.

At the meeting, the heads of state of Kenya, Uganda and Tanzania agreed, among other things, that the maximum tariff they would impose on all imports would be 25 percent. They plan to reduce the rate to 20 percent in five years.

The countries believe that having a common tariff rate is one of the first steps toward creating a strong east African economy. Economists say different tariff rates hinder trade among the three countries, and force the countries to compete with each other internationally.

The challenge has been to set the appropriate tariff. If it is set too low, consumers might buy imported goods instead of locally produced products. Too high a rate could restrict imports, which could spell disaster for certain industries that rely heavily on imports.

Uganda President Yoweri Museveni says he is happy with the common tariff.

"We shall be able to speak with one voice. In the world today, what is crucial is trade," he said. "Through trade, we can get much more money than through aid from the donors. But you cannot trade unless you negotiate. You cannot trade unless you attract investments into your country."

Tanzanian President Benjamin Mkapa describes the tariff as a stopgap measure. He warns that unless the private sector in east Africa can provide quality goods and services, and can keep up with the latest technologies, the EAC will be unable to become the global economic force that it aims to be.

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