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East African Presidents Meet on Customs Union - 2004-08-27

The presidents of Kenya, Uganda and Tanzania are meeting in Kenya Friday for an East African Community summit, focusing on establishing a customs union the three countries agreed to earlier this year.

High on the agenda of the East African Community summit is a discussion about how to put into place a common external tariff, and reduce trade barriers among the three countries.

Kenyan presidential spokesman Isaiah Kabira says the presidents would likely use the meeting to express their concerns about the customs union they agreed to set up in March this year.

He says these concerns include losses of particular tax revenues.

"Now, it's just a question of each country presenting its case about its gains and losses, and deciding how each of the countries can help one another to overcome some of the gains and loses that they are going to make," he added.

Mr. Kabira says there are also worries that the East African Community, because of the common tariff structure, could become what he calls a "dumping ground" for cheap imports from other countries, which would decrease demand for goods produced locally.

"There's some industries that are to be found in Kenya, or found in Tanzania, but not in the other countries,? Mr. Kabira said. ?Some of those industries could be producing a good that the other countries feel that could be accessed more cheaply from abroad, and yet, we all agree that there is need to grow an industrial infrastructure within the region."

Mr. Kabira says officials are looking at ways to make local industries more competitive.

As of January 1, Kenya, Uganda and Tanzania will impose tariffs of zero percent on raw materials, such as cotton, 10 percent on semi-processed goods, such as yarn, and 25 percent on finished products, like cloth.

These tariff rates would apply to goods coming from outside the East African Community.

Within the community, the three countries are dismantling trade barriers, although, for the next five years, Uganda and Tanzania will be allowed to charge a tariff on certain goods coming from Kenya. This is because Kenya's manufacturing sector is more developed than theirs.

Some analysts have lauded the customs union. In an earlier interview, a program officer at the Nairobi-based Institute of Economic Affairs, John Ochola, said the agreement would make trade within the East African Community, "much easier, much faster, much more efficient."

The East African Community has a market of an estimated 90 million people.