Distr.
Limited
ECA/I~OC/Lusaka/V/3/(iii)
February 1982 Original: ENnLISH
UNITED NI\TIONS ECCNOIHC COMMISSION FOR AFRICA
Multinational Programming and Operational Centre (MULPOC) for Eastern and Southern African States
Fifth Meeting of the Lusaka-based MULPOC committee of Officials March 17-22 and Fifth Meeting of Council of Ministers
March 23-25 1982
Lusaka, Republic of Zambia 17 - 25 March 1982
re,ALYSIS OF EXISTING AFRI('~1 TRADE LEGISLATIONS, RULES, REGULATIONS AND PRACTICES INCLUDING
T1RIFF AND NON-TARIFF BARRIERS FOR EASTE.RN AND SOr~RN AFRICAN STATES
ECA/IRnPOC/Lusaka/V/3/(iii)
I. l'~RODUCTION
1. Broadlyconce:j.ved, international econOO'lic policv embracell ail the varied econol'lic"measures and,activities of governments th1..tbear, directly o~indirectly, upon the cOMPosition, magnitude and directionol international tr~de. This
conception of international econOMic policy covers not only such obvious examples as tariff and non-tariff policy measures, but at.so a vat;ietY"of governmental ~easures. Trade, ~netary and financial policies as' cohcretized by eh~licit tariff and non-tariff barriers are ?y no means, the only devices used by nations to requlate, restrict or promote or other-lise interfere,with trade flows. Included in the panoply of barriers founuin vario.l.s"couritries are soecial regulations, rules and practices largely intended to supplement trade and ~netary policies in regulating trade fl~,iSamongcountries, ' 2. Trade and monetary policies of each country usually ai~ at, and are directed towards,' the, achievement of specific goals identified ?y the' ' government, or they maY he intended to provide solutions to certain problemI'.
However, the many ends of internlltional economic pOlicy arecliverSe on two
counts, (a) each nation usually nursues simultaneously a nUMber of ends.j.n its O\1Dforeiqn economic policy, and (b) the' constellation Of ends pursued by one nation does' not necessarily correspond to the constellatiort,of ends, pursued by other nations.. l'otwithstanding the diversity of enos pursued.
the fact is that international economic policy and domestic economic policy have a close relationship >lith each ot.hez,: lienee, no nation
can
fully achieve the many objectives of its international economic policy because of'SQinadequacy of means, an internal conflict between its ovrn interna.tional and national economic policies, and an external conflict of ends: betWe,en it"
policY and the policies of other nations. ., '
3. In sOllie cases, a country's international economic oo11cies ",ffecr not only its process of economic development but also the developrnentpro~ess
of other neighbouring countries while. in other cases, the effects of:sucn policies on subregional integration, and development spillover to the' world community as a whole. A number of questions "rise frortconfliets' of' trade and monetary ~olicies: in what ways do the diverse international econo",ic policies affect the process of economic and social development of individual national econOMies, what are the implications of such policies on subregional or regional economic integration schemes being pursued by African countries; how,10' these policies affect the efforts directed ,at the attainment of subregional collective self-reliance?
ECA!MULPOC!Lusaka!V!3!(iii) Page 2
~. Accordingly, this study aims at identifyin~the nature of trade arid
~onetary policy instruments and analysing the existing trade and monetary/
financial legislations, rules, regulations and practices with a view to determining whether or not they retart': the development and expansion'of :.tptra.,l>UbregtoQaltrade and the process of economic. inteqration amonq the
countries of the Rastern'and Southern African subregion;y
I I . '. TRADE AND HONET1IRY POLICIES
II.l· Trade and llonetary policy Objectives
5. Virtually all governments of the oountries of Eastern and South~rrt Africa closely control imports and exports as a general policy. However within ·the subregion there is a mixture of relatively liberalized and unliberalized trade policies depending upon the state of the economy.' In
ti~es of.severehardships, national trade and exchange control policies usually tend to be more restrictive and inward looking. In some cases trade policies and exchange.' control· measures are a reflection of histOrical and present ties as in the'commonwealth countries' relations with Britain or the past relationship between the former Portuquese territories and Portugal or. the present franc zone countries' relationship with France.
6.. Trade and. monetary policies of any governnent are inextricably intertwined with a variety of sectoral policies. For example, trade and monetary policies of most governments are used as' instruments for the
attainment, of sectoral objectives: 1lIOst governments use foreign trade and exchange control policies to broaden national industrial bases, to diversify domestic production of certain goods and to ensure adequate supply of foreign exchanqe. to fiJ;lance essential imports of goOdS and services. ForeigJ;l exchange pOlicies lead,to the introduction of exchange control regulations, rules and practic'i's that mainly take the form of boosting and consolidating. a country's foreign exchange supplies as well as rationing the available fOreign exchange among competin~ demands.
1/ The 18 countries of the su.hregion are" Angola, Botswanli, the'ColOOros, Pjibouti., Ethiopia, Ke'lyo., Lesotho, 14adagascar" lIalawi, !"auritius, 'Aozambia:ue,
Seychelles, Somalia, SWaziland, Tanzania, Uganda. Zambia and Zimbabwe.
ECA/I~POC/Lusska/V/3/(iii)
page 3
7. In the field of merchandise trade, some policies give rise to regulations and rules designed mainly to provide incentives for exports and to consolidate export proceeds while other policies aim at rationing iMoorts through licences, monopolization of imports by state trading organizations and through the
imposition of import duties and a. variety of taxes. In the case of invisiDle, transactions and capital, polici;'s are intended to limit the amount of
foreiqn exchange q,ranted and also to prevent capital outflO\'s.,
8. Reasons for controlling trade or for the existence of such inter- national economic policies, while differing the l"\inor respects from one country to another, generally cluster around some or all of the fOllowing:
promotion of self-reliance through diversification and industrialization,
protection of infant and strategic industries;
protection of consumers,
national security and creation of employment;
encouragement of capital'formation by restricting the composition of imports in favour of capital equipment at the expense of
inessential cons~~er goods;
control of domestic liquidity by schemes of advances on imports, encouragement of certain types of industries by means of policies regarding imports (i.e. relaxing regulations on their raw materials and capital imports While' restrictions are tightened on competing products) and exports,
promotion of transfer of foreign exchange from the private to the public sector to match the increased participation of the latter.
9. Pursuit of these objectives by each country has a direct effect on the development and expansion of intra-subregionaI'trade. The legiSlations, rules, regulations and practices that are dire¢ten at contrOlling trade within the subregion, tend to affect trade r~lationshipsamong the countries of the subregion mo~e than they affect the relationships between each country of the subregion and the developed countries_
" ,
•.
ECA/MULPOC/Lusaka/V/3/(iii) Page
4
!I.2 Special Trade and lIonetary Relationships
10. As of hpril 1979, seven of the 18 countries of F.astern and Southern.
Africa were contnacting parties to the General Agreement on ~ariffs and Trade (GATT): these were Kenya, l'ladagescar, Hal_i, 11auritius, Tanzania, Uganda and Zimbabwe. Another seven member States of the proposed
Preferential Trade ~xeafor Eastern and Southern Africa belonged to as ..
'countries to whose territories the GATT has been applied and which now, as independent-States maintain ade facto application of the GATT pending final decisions as to their future commercial policy, -. and these >lere . Angola, Botswana, Lesotho, f'o",ambique, Seychelles, ,SWazilanq and 7011l!lbia. 1/
Although Ethiopia and Somalia were not contracting parties to the General- Agreement on Tariffs and Trade not associated through other countries, they, however, participated in the "Tokyo Round" trade neqotiations "nd ,·rere·
regarded as forming the mefubership of Trade Negotiations COMmittee, in April 1979. Only the Comoros and Djibouti seem not to have been associated with the GATT in 1979.
11. Ilemhership in or association ~,ith, the General l,qreel'lent on Tariffs and Trade entails observance of the principles of the GATT by tailoring trade policies to the requirements of the rules and regulations of
the
GA~.To the extent-'that every contracting party to. the GATT agrees to .adhere to, and uphold the principles of the Gl'.TT.··trade policies of the governMents of. the countries of Eastern and Southern Africa are influenced·in one way or another by the relationships they have ~ith ~~is international institution.;
17. The majority of the countries in Eastern and SOuthern Africa are signatories to the Lome COnvention of 1975 concluded between the Buropean Economic 'Cormnunity (8EC) and developing countries of 1\:l:rica,. the r:aribbean and the Pacific (ACP). Angola and Nozambique were not signatories to the Agreement in 1979. Under the te=s of that agreement, the ACP countries are not obliqed to give reverse preferences to EEC goods, hut undertake to grant EEC members equal most~favoured-nationtreatment. All the countries of Bastern and Southern Afrioa, with the exception of Angola and I".ozartbique, are members of the
I:,te~ational"onetary Pund Membership in the International l'onetary Funds or participa- t10n 1n the Lome Convention has a bearing on each country's commercial and moneta
po11c1es. ry
II.3 The Role of Trade andllonetary Legislations
13. Although trade practices may differ in form and degree from one country to another, they are som~.hat similar in·Eastern and southern African States.
Trade regulations and rules of each country derive their authority from . legislative laws such as customs and excise laws, while rules and reculations
1/ See GATT Activities in 1979 and Conclusions of the Tokyo ~ound
Multilateral Trade ~egotiations (1973-1979), Geneva, 1980.
ECA!MULPOC!Lusaka!V!3!(iii) Page 5
governing foreign exchange derive their authority from foreign exchange control laws. These laws are, in turri, basically Acts of Parli~ent or
Decrees of Heads of State. Thus, the fundamental basis of trade and exchange control rules, regulations and practices is legislative action by the governments.
In, a number' of countries in the subzeqfon , customs and excise laws and exchanee control laws are normally sup?lementedby ,legal notices, rules and regulations.
14. Because legislations or Acts of Parliament or Decrees of Heads of State map out trade and monetary regulations, rules and practices, including the adm~nistrationof iMport and export procedures, schedules of irnpOr~and export duties or taKes, exemptions from certain duties and taxes and prohibitions, t-l1e composition, maqnitude and direction of trade are" to a very large extent, deterMined by trade and reonetary legislation~,' , Prohibitions of certain imports (Le. narcotic, obscene literature.~ etc,.) on
~, ':" ' ,
grounds of health, security or moral reasons or on pureIv econom~cgrounds are based on legislation. Exportation of certain goods is restricted or prohibited by legislation.
15. The direction of trade is, therefore, basically determined by legislation.
Rules and regulations affect the composition and magnitude. The acts ~9metimes
stipulate what goods may be imported into a country and the conditionsun~er
which they may be imported. For exa"lple, under the Botswana Customs, Excise and Sales Duty act of 1970, the Import Control Notice of 1972 contains the EKportation and Importation Restriction Procl~ationshowing in Chapter 162 of that Act a list of countries from which i~ports do not require permits
(i.e. Lesotho, M~la~i, South Africa, Swazilan~ and ZiMbabwe).l!
16. The basis of trade regulations and rules for Kenya, Tanzania and Uganda is found in the East African Customs and ~xcise Act and the East African Excise rlanage~entAct as revised in 1970.2/ The cast African Excise
!!ana<;lttnt Act lays down the rules and regulations-for:
(i) the administration and enforcement of eKcise laws;
(ii) the manufacture of excisable goods;
(iii) the denaturing of spirits;
(iv) the control of manufacture;and
(v) assessment of ex,:ise duties and legal procee"inqs.
17. The East African Customs and Excise Tariffs Act, on the other hand, stipulates the rules, regulations and procedures for the determination of duty rates and exemptions fro~ import duties includins drawin~ up of
tariff schedules for im!?Oi.:t clu,tles, sales tax" special t?:~es and countries of origin. For example, the First Schedule is a list of dutiable imports, while the Second Schenule shows suspended duties and the Third Schedule contains exemptions from duty.
ECA!MULPOC!Lusaka!V!3/(iii) Page 6
18. In Valawi, the Control of Goods Act of 1967 is the statutory basis for principal import controls. Thr'ough that r.ct, the .·'inistry 0:': Trade, Industry and Tourism is authorized to regulate iMports and exports as well as supervise the distribution and purchasing of roods. 11 (;eneral Notice .'10.164 of 1967 •..
announcing the Control of l!oods (imports ane: exports) and the Commerce Order of 1967 indicate" which imvorts wouId te subject to open reneral Li.cences, while General :'otice '10. 757 stipulated regulations on the i!l'Dortation andexl'ortation of agricultural pro~~cts.~
l~. In Ethiopia, t.he "inistry of Porelvn Tracie, in collaboration with the .'lational ~ankof" Ethiopia; controls trade onthe basis of a numher of Decrees or Declarations such as the Declaration of Fconomic Policy of Socialist Ethiopia of Pebruary 1975, the Foreign Exchange Regulations Notice ;'0.1 of19n, the Charter of the National Bank of Fthiopia and the Classification of Goods in Custo!'s Tariff I'roclal"ationNo.5 of Serte",her1976.3/ .
20. The extent to which the legislations are !,ut into force varies from country tR,country and accord in/? to the state of each country's economy. It.shQuld be noted once again that vhiIe these trade and monetary legislations are i-Enlnt to.
affect a country's economic relationship witlt the rest of the world, the effects are more often than not I:lore seVE>"e on the relationships among developing
countries or countries of the sut'~"~ion at the salte level of economic development.
To the extent that such legislati~:~s retard the' deve l ooment of inter-country trade within the Eastern and Southern African subre<;ion, they militate arainst the
spirit and letter of the Pre~erentialTrade Area.
III. D,IILES ANn "EGl'LATrrmS ')"1 P''!'')''.T AWl ['{PORT TAP-IFF SYSTP1S
IlLI Classification Systems.
21. T)Je majority of the countries of Dastern and Southern Africa apply, as a rule, the Custons Co-oneration Council Homenc La'ttrre (CCo.!) for the classi"ication of ~oods in customs tariffs. The indiviJual country tariff systems differ in many ~inor resoects in terms of the number of columns, the number of tariff lines or tariff headings and sub-head mss and -the number of tariff lines ·subject to
specific duty rates and those that are assessed on an ad valorem basis. Basincally, all imnorts and the tariffs annlicable thereto are shown· in the tariff scheuules of each country. Asample of four countries will illustrate the similarities and differences.
Y
f'ints to P.usinessmen: Falawi, nritis~ !'verseas Trade Board, 1976.Y
Ihid.Y
See Custons and Excise A.!ministration, "inistry of Finance, Provisional '·'ilitary r.overnment of Socialist I'thiol'ia, Customs Tariffs, 1976.ECA/~~OC/Lusaka/V/3/(iii)
Page 7
22. In Et!'iopia, the tariff system is based OP
eee:,!
and has three schedules.The First Schedule contains titles of sections, rates of customs duties, exemptions
ap~licahle to goods importes into.Ethiopia as well as other taxes such as excise taxes, transactions taxes, t~xes levied by different 80aras, surtaxes and
municipality tax.s, The Second Schedule vives a list of general exemptions for Importat.ion by or or, beha l f of pr IviIeged or pani zati ons , privileged persons , public bodies and institutions. The Third Schedule contains rates of duties and other taxes levied on poods exported I'rom Ethiopia.
23. "'alawi's tariff systen >chich is based on tre Customs Co-operation Council
tl~cnclature has a two-column tariff sc~edule. ~ne colwnn of the schedUle lists the 'lost Favoured-Nation rates which apply to mports 0" member countries of the European Economic ComJ"unity(EEC) and all African, Caribbean and Pacdf'i c CACr) , Commonwealth countries, and other contractinp- p~rties to the General Agreement on Tariffs and Trade (9TT), while the other co lur-n cont a i.ns reneral tariffs
applicable to imnorts fro!" countries other than the ~bove.
24.. In '''alawi, as in many other countries in this sut-rcgton , import .lut Les are either ad valore~ or specific or Mixed and are p-enerally levied on a cost, insurance and freight basis. ~ll in all, the tariff schedule consists of some 1551 tariff hEtu'linpsand sub- headings with an unweichted aver-ace of ad valorem duty rates
·of 12.l)pe~ cent fot: ap-ricultural products covered by chapters 1-24 of the CCeN and 11.2 per cent for industrial products cha~ters 25-S o of CCeN. SOMe 66 positions are subject to specific duties assesserl on i~~orts of certain agriCUltural items such as tobacco an( tolacco products, alcoholic ~everaves and petroleum products.
~"ixed duties on sor-e 26 positions are applicatle to certain textile products, framophones, eye les, arms and anurri.tIon , "ot', sneci"ic anJ mixed import dut ies are calculated on net weir-ht or quantity. ~s of ;·loveml·er 1977 the main categories and sub-caterrories of products were arranged accordin~ to stares of processin"
and the ranr.es 0': import duties anplicable to them.
25. T'Je tari:'f schedute of "auritius is based on the Customs Co-operation Council
NoraencIa'tu're and consists o'~ three co lunns : a co Iunn for fiscal duties leVied on all importetl foods irrespective of their country 0'" oridn, a column for general duty rates wIde!) are levied on all !,ooels ot',er than those ~rom the United States, the EEC member-s and the 13ritish Coromonwea Lt.h countries ~!hich enjoy preferental Juties presented in the third column of the tarFf schedule.
26. In all, there are about 2,426 tarif': lines,S ner cent (or 125) of which are subject to specific "uty rates. The remainder is assessed on ad valorem basis and the rates ranoed from zero to 90 per cent in January 1979. Three tariff lines had nixed, ad valorer and specific duty rates, ~lile 65 lines had alternative ad valorem or specific rates, the higher rates ~eiriz ap~licable. A distinctive feature of the ~;auritian tariff is that a large number of tariff lines have suspended additional iuties. For customs valuation nurposes, clutiable value is de filled as t.he nrice that the goods would fetcll in an open market in r"auritius at the time of their removal out of customs control.
ECA/MULPOC/Lusaks/V/3/(iii) Page 8
27.. The CCCN chnptens 1-24 consist of product s generally produced by the agrfcultura.L'sector- and, in ,'auritius, this sector is assigned 395 tariff lines of which 64 are subject to specific duties and the renainder being dutiable at ad valorem rates; which in 1979, ranged from zero to 5S per cent with an
unweighted duty average of 10,1 per cent. In general, the lowest duties were applied to primary food products, agricultural inputs and raw materials, with intermediate rates being levied on processed food products. while alcoholic beverages and ethyl alcohol attracted the highest rates of between 50 and 55 per cent ,
2~..
the
tariff schedule of Uganda is based on the Customs Co-operation Council Nomenclature and. as of April 1977, the schedule consisted of 1,861 tariffheadings and sub-headinrs. '~st duties were ad valorem and were levied on the cost, insurance and freight value of gOOQS imported. Dganda's tariff 5chedule :in
IP77 was hasically th~t of the defunct East African Comml1nity. with mir.or changes to suit the local conditions here and there. The tariff schedules of [iganda and those of Kenya and Tanzania indicated that the categories and sub-catepories'of
p~6ducts were arranped generally according to stages of processing and the ranges
of~mport dutiesa~plicableto them.
29. Import duty rates varied frow zero to l5n per cent with 169 positions of duty free, 513 tariff lines dutiable at 1 to 10 per cent, above 10 to 20 per cent applicable to 68 tariff positions and 656 positions being subject to duty rates above 20 to 30 per cent. Some 402 tariff lines were subject to duty at rates above 5~ per cent. The overall unweighted average of a~-valorem rate was 30.9 per cent for agriCUltural products (CCCN chapters 1-24) while in~ustrial products (CCCN chapters 25 to 99) had an unweir,hted ave rage dut.y rate of 23.•5 per cent.
Specific duties were applied to 34 positions covering items such as sugar, tea, tobacco, beverages, cement,petroleum prDducts. bicycles, flles, playing cards. etc.
30. The abDve four country examples - and these are by no means the only ones that cou~d have been given - indicate that some countrIes in tile subregion use their classification systems as an instrument fer solidifying trade relations with countries belonging to some groupinrs, which discriminates against imports originating in countries of the subregion that do not belong to these economic group mgs ,
31. It is also clear froll' the examples given ,,;"ovc that. on the cve:::age, agricultural products ccny" higher duty r~t~
::.c.•.
i~•.:Iustrial products. While this may somewhat be a reflection of pyesent supply conditions at count~y levels.it should be noted that some countries of the subregion concentrate on the production and exportation of agriCUltural products so that those countries with exportable surpluses fail to export to the net importers because. inter alia, of high duty rates. The wain suppliers of industrial products are the develbped countries and their products carry lower duty rates.
32. Thus. the system of tariff classification by itself has some ele~ents
that may militate a~ain5t subregional interration and trade-to some extent, particularly in the presence of a numher of bilateral and multilateral trade
-,
EC4MJLPOC!Lus8-ka!V!3! (iii)
Po.ee 9
agreements between individual or a group of countries of the subregion and
developed countries. This situation can he offset by similar or better subregional co-operation scheme~ with specific provisions designed to give subregional products a cl~ar comparative advanta~e over extra-subrefional nroducts.
111.2 Tariff Rates
33. One of the main purposes of tariff Classification systems describe~,~nd analysed above is to facilitate the determination of the types and levels of tariff rates to be applied to individual Or groups of products. It is, usually, on the basis of tariff h6adings and sub-headings thit import duties and taxes applicable to products are determined. "
34. ~ost tariff schedules indicate the n~~uer of tariff lines subject to
specific duty rates and those lines assessed on an ad valorem basis. A very hir,h proportion of duties and t~-xes (i;e. over 90 per cent) is on ad valorem basis and is also levied On c.i.f. values. Another'important feature of duty rates consists in that for industrial products in sOme countries tariff headings and sub-headings are usually arranged on the basis of stages of processing.
35. Normally, the mode of application of i~rort and export duties varies according to products and also frOM country t£' country and this variation has significant iwplications on the development and expansion of intra-subreeional trade. Whether the ad valorem basis or the specific duty rate basis is applied, each one is ilJ'portant "or discouraging trade in certain,products.
36. The actual duty levied on cheaper qualities o~ commodities on the basis of au valorem will be lower than the actual ~uty levied on higher and more expensive quality commodities. In the case of specific duty , the levies will be the s ame on both qualities. Since more than 90 ner cent of the levies are assessed on an ad valorem basi s , better quality products are subjected' to a hi.gher ad valorem incidence than p00r quality products. Iris means that duty rates imposed on an ad valorem basis retard intra-subregional trrrde in higher quality and expensive products more than it retards trade in poor quality products.
~)' Export Duties and Taxes
37. Almost all count ries 0" the subt-eoi on have a list of nroducts that can be imported and exnorted duty free. Takinp exports first, the'nu"lber of products subject to export duties and taxes is very SMall and, In any case, less than 5 per cent of the total number of products. however, in terms of value, the percent apes may be very high in some countries. f'ost of the major exports of the subregion are subject to export duties and a variety of snecific taxes. For example, Ethiopia imnoses export Juties on selected commodities i.e. bovin cattle
ECA/MULPOC/Lusaka/V/3/(iii) Page 10
and calves of bovine cattle carry an export duty of E. ~irr5.00 per head, ghee E. 3irr 3.00 per 100 kr., ivory of elephant and others E. Birr 20.00 per 100 kg., coffee (arabica and robusta) beans E. Birr 15.00 per 100 kg., undresseJ furskins, particularly leopard skins, E. Birr 50.00 per piece or 20 per cent of the value.
38. In addition to export duties, special taxes are levied on some exports such as a Livestock and '"eat Board tax ranging from 2'1 cents to one Ethiopian Birr with an unweighted average of 29 cents rer head. This applies to exports of live animals, pOUltry, some dairy products, most undressen and untanned hides and skins and is imposed by the r,eat Board of Ethiopia. The Coffee Board imposes a coffee Board tax of E. Birr 3.00 per Ion kg.; the Grain Board imposes a Grain Board tax of 20 to 40 cents per 100 ky. on such export items as lentils whole, skinned, split or broken; and dried and unmixed peas; oil seeds etc.
39. In ~1auritius, a graduated tax ran!'in!' from zero to 13.5 per cent is levied on the f.o.b. value of sugar exports,S per cent ad valorem tax on exports of
molasses, and at varying rates on a number of other exports. Many other countries of the subregion sUbject their exports to export duties and other taxes.
40,.. Export duties and taxes are usually imposed either to raise revenue for
government and promote economic development, to prevent the exportation of products in short supply in a country, or in cases where prices are high enough in the
international market to bear the additional costs of the relevant products.
The imposition of high export tariff rates tends to discourage the production and exportation of goods, particularly where a hf.gh proportion of production is
exported. In the Eastern and Southern African subre~ion there is evidence to the
ef~ect that products such as copper, coffee, diamonds, meat and.meat products, livestock, tea, etc. are subject LO a variety of taxes. Some of. these products constitute major foreipn exchange earners of individual countries. Although they are presently exported ~ainly to developed countries, the high export taxes also make these products uncompetitive pricewise in the subrepion and therefore tend to
stand in the way of intra-subregional trade develop~ent.
(~ Import Duties an:! Taxes
41. In Botswana, Lesotho and Swaziland, i~port duties are levied on either
f.o.c. cost of goods to the importer including any agents or the buying co~~ission
or the current domestic value (where "domestic" refers to the SouLhern African Customs Union market) whichever yields the greater Juty. 1/ Goods imported into Madagascar are, in general, sllbject to both customs duty and an import tax assessed
11
Hints to Busincssme~; Southern Africa, British Overseas Trade Board, 1976ECA/~rrrLPOC/Lusaka/V/3/(iii) Pag" 11
on an ad valorem basis on c.i.f. values. Customs duties range between 5 and 10 per cent, while import taxes, which vary widely, but ,generally fall between 23 and 100 per cent, are levied on almost all products irrespective of origin.!!
42. As already pointed out, in some countries, the main categories and sub- catep;ories 'of products are arranged according to stages of processmg and
the ranges of import duties applicable to them. In Nalawi,fQr example, in 1978, duty rates varied from zero to 45 per cent for almost all goods with the exception of one position (Le.97 .04.01 - pin-tables and other coin or disc operated
machines for games of skill or chance) which bore a duty oflDO per cent. Some 330 tariff lines or 54 per cent of all positions were duty-free, 104 positions bore ad valorem duty rates in 1978 which ranged fro~ 1 to 10 per cent while 72 positions were subject to duty rates of above 10 to 20 per cent. Duties above 20 to 30 per cent were applicable to 369 positions, and some 84 tariff lines were dutiable
a~ove 30 per cent (see Table 1). In Mauritius, ac valorem rates ranged from zero to 90 per cent in January 1979"whereas in Uganda, import duty rates varied from zero to 150 per cent with anover~all unweighted average of ad valorem rate 30.9 per cent for agriculturalproclucts (CCCN chapter 1-24) and 23.5 per cent for industrial products (eCCN chapters 25-99).
43. An analysis of the contents of Table 1 shows that the types and number of product s (generally of an agricultural and raw material nature) that can be imported duty-free into some countries vary significantly, partiCUlarly from
country to country. Within the subregion, the number of products, in this respect, not subject to import duty may be faiilylarge, but intra-subregional trade in
these products seems to be,retarded by sUpply constraints despite some similarity in the relevant products .', For example, aU the four countries shown in Table 1 do not impose import duty' on live animals, some fertilizers, some chemical products, etc. Free market acce's s , according to TabIe I', does not appear to depend on processine. It seems that domestic supply conditions are the main determininR
factor.
];.1 Ibid: I,'adagascar, 1974
Table . I
Import Duty Rates for Selected Countries and Products ECA/MULPOC/Lusaka/V/3/(iii)
Page 12
Duty Rates
I - - I I
: Ethiopia
I
llalt.wi : t4auritiusI I I
I • I
Uganda
Duty Free
I - --. - - - I - - - - t
: Live animals of bovine I Live an~F";al~; meat; milk;
r
Live r'tnim31s; frech, chilled : species;live horses'; nulos , fre,s~_arid:- frozen vegetables:: or fr¢>zen t':'tec::t; dried, saltedI
sheep; goa_ts; live poultry; fresh fruit; coffee; tea,lor
fresh fish, ddry products;: frozen, chilled or fresh· cereals; ra,:, vegetable [..fl'e$h fruits and vegetables'"
: fish; preparations of phar- !n?terials; i"':1in3.1 and ccooa,' beanot b'..1tter and paste;
rnaceuticals: fertilizers; 'vegetable oils; raw coeoa; oil~ceds; mi~ce~laneousaqri- insulin in buck for use in minerals; metallic ores, c~ltural mat(ri~ls;hidesand the production of textiles I ino'~ganic and orgJ.nic skins; natur(ll .rubber latex;
of fabrics, raw vegetable.
I
chemicals; fertilizers; raw cork and seni-manufactures materials used priMaIilyfoi, pharmaceuticals; tanning of cofk;cotton and synthetic dyeinq or tanning-; coconutI
and dyeing extractsira,." yarns; fertili~ers; crudeI oil; some metallic salts an~ rubber; hides and skins: 'rrinerals and products;unworked peroxy salts of inorganic
I
raw furskins; textiles iron and steel ferro-alloys,salts, etc. : fibres:"'wood;' cement; unwrouqht, copper, aluminium,
I
: artilces of metals and lead, zinc and tin; agricultural:
I
metals; etc. machd.nezvr metallic tools and :I • " I
I coneamersi etc. I
I I
: ! I
Live animals:wheatl maize; certain phal maceuticals; ferti power generating machinery; agricul machinery; certain electrical eguipme railway vehicl:s;w transport equi?men medical and scient equipment; etc.
1-20 per cent
Rice, raw coffee, crurje minerals;
coal and coal products; plastic materialS; raw
rubber and semi- l1'anufactures; hide!
and skins; cork an, cork products;
Table 1 (contd •• ) ECA/MULPOC/Luseke/V/3/(iii}
Page 13
Duty
I - , - - 1 - - - - - - ,
Rates: Ethiopia : Malawi : Mauritius
I , _ _ _ I ---.l Uganda
I ! :
1-20 per cent
varnishes and lacquers; : true hemp, raw or processedil jute and vegetable textiles;\I
unwrought copper; etc.
I , , ,
II
,,
I I
,,
II
,,
II I
Semi-manufactured and manu- factured products of cork, rubber and wood; cotton fibres and'wool, products of coal and petroleum,chemical elements and compound8;dyeing~
tanning and colouring matters>
most pharmaceuticals, plasticl materials and articles of I plastic materials;semi- : manufactured products of oresl and metals; veqetable oils; : cigarettes and tobacco :
iproducts; etc. r
, ,
I ,
raw cotton, precio\
metals;lorries and transport equipmen1 ores and metals;
etc.
I I !
21-40 per cent
Onions; leeks; shallots;
frozen vegetables; fresh and dried fruits; cocoa powdez , paste and butter;
prepared or frozen fruits;
malt txtracts; aerated watersispa waters;
polishes and cream for footwear; alUl'lini urn and metal glass; etc.
Cheese, cereal flours;
meat products;suqar;
chocolate;colouring matter;
cosmetics; domestic articles of plastic rubber and leather;
house-hold utensils of wood and cork; carpets; knitted and crocheted goods;
headgear; pottery;
glassware; metal articles;
tools; domestic appliances, furniture and toys, etc.
I
I
IPrepared or preserved fish;lnatural honey; preserved lfruits and vecetable ore- lparations; sugar conf~c
Itionery not containing
I
cocoa , cocoa powder and Ichocolate; roasted coffee, Icoffee substitutes and feoffee extracts; food Ipreparations; manufacturedI .
,skin and leather products;
lsilk fibres and fabrics;
\jute fabrics; certain
, ' 1 ' 1
:made-up text1 e art1c es land clothing, glassware
I
meat,dairy product eggs; fish and fis preparations; coco salt; most chemica elements and compo wood; silk fibres yarns; synthetic and other fibres glass and glasswar tools;" cutlery; of machines; cycles;
: furniture; vegetab
\ and fruits; flour, : spices miscellaneo
I
food preparations;: certain cosmetics;
: soap; paints;
:A/MULPOC/Lusaka/V/3/(iii) ige 14
Table 1 (contd •• )
I I - - - . - ,
luty Rate~ Fthiopia
I
I!alawiI
'~uritius :, _ _ --' _ ~_______ 1 Uganda
I I I
I I
II I
II
,
I II II I:
II :
I•
II I
!l-I!O
ler cent
11-60 ler cent
I - - I - , ----.
I !
I
Soap and clearing prepara- I footwear;carpets;1 ' I
I tions; non-electrical I textile fabrics;
I
office machines, certainI
clothino; >latches;: telecommunication apparatus : musical- instruments
I and domestic electric
I
and sound recorders;eCluipment; motor vehicles
, I
etc.and parts; recorders and qramoohone records; articles of jewellery and precious stones.
I - - - f
r
- - I, I I I
I
Fish, salted, dried or in I I Alcoholic beverages, 'Chocolate; wines;I
brine; sl'\Oked crustaceansI :
foot'~ear '1i th outer soles : certain cosmetics;• • I I I
I and molluscs; fresh m1lk I , and upoers of rubber or I_tches; eazsrecc,
: and cream not concentrated
I I
artificial plastic: or sweetened; clarifiedI
I
II
I material f~twearwithI butter; ghee, cheese; curd, I I outer soles of leather or
!
ivory unworked, powder andI !
leather composition.I waste of: potatoes; wl;ieat : and meslin (mixed \1heat and : rye); barley oats; maize,
I
I rice; buck wheat; millet;
: fats of bovines of cattle;
I
I sheep or goats; vegetable : oils, Uuid or solid, : spaghetti: macoroni and
I similar products, asparagas, prepared mustard: soups and i
broths; perfumery, cosmetics;
articles furskins, wood,
Table 1 (contd •• )
ECA/MULPOC/Lusaka/V/3/(ii:
Page 15
I I I i
Duty Rates: Ethiopia : Malawi
I
Mauritius : UgandaJ I I I
i i . ~ i
lGO : Coffee; tomatoes and tomato 'P1n-tables and other coin I I
: • • I I
per cent ~ extracts such as JU1ce, lor disc operated machines ~
concentrates, puree, catch-
I
for games of skill orI
up and sauce; beer made froml chance;
I
malt; ,qoven fabrics of
I
flax; watches decorated with :
jewels, pearls or brooches; I
I
etc. I 1
, I
, ,
I I I
I
I
I1 I
41-60 per cent
61-90 per cent
I I I i
I
charcoal and fuel wood;I I :
: some paper products;
I I I
I
textile fabrics; footwear; : : :, I I •
I etc. t I I
I I , I
,----
,-- .
'leat and meat products; : Saloon cars, hackney
poultry, fresh, chilled
I
carriages, sports andor frozen; cereal flours; : racing cars, estate cars;
sausages an" the like
I
station waqons; ..ini-products of Meat; chocolate
I
buses; motor caravansand other preparations
I
(engine capacity ofI containing cocoa; ja..s and
I
1,300 cc and above).fruit jellies; marmalades;
fruit puree and ~astes;
artificial fur and articles thereof; carpets, rugs and tapestries; undergarments;
..en's women's and children'sl outer garments, natural II
honey; some sugar; sugar II
syrups; molasses; sugar II
confectionery; sweets; etc.
! .
. L - - • t
Source: Countrv Customs Schedules
ECA/MULP6C/Lusakai~/3/(iii)
Pagel6 ' . . .
44, . .
On the basie of the above analysis and witll regard to products subJect ,to' impor~ .duties, it ,would appear that these duties and taxeshave t~d':b.asic f'unc'ti.ons as policy Lns'trumerrt a , FirstlY, they are
" " , , . r . : ." 1
protective devices, designed to reduce demaridfor certain imports in order
, ,'; J . ' . ' ._, _ ,,' _ • ,', -';"", " :1'
to' encQur~e domestic produc:\;ionas ,,,e1.1: as &a.ve:to;reign exchange,.S,econ~ly,
import,d1;l,ties and 1a-x.es ;j:r~' designed
'to',_ Qjil·;a
-'source of government.rll:v~nue.Th~ importance of. eacbef" these two funct'i~ns varies from country,to couniiry acqor-d.ing to 'the level 'of econorm.c deve'l.opmerrt, In some oountrie~, the
:t..lo
funotions carry equal, ,might, 'Ihile, in others, ··one.function may be more importanttlmn the oth~r,
46" 'The level of tariff rates is dependent upon the domestic supply
con4i~ions and th~ demand conditions. On the basis of these, countries , can 'raise or lower, tariff rates with a view to promotin domestic productiod and increasing government revenue from import duties and taxes. The extent·
to which these two' objectives can be achiGved at the same:\iJile will ,depend ; . upon the responsiveness of domestic producers to the higher,prices and the
enlarged market and the short-term effective demand for imp~rts. That this:
is one of the main ~eterminants of tariff rates is sho~ by the fact that ! most of tl:J.e country', schedules have a number of duties,Qr.tariff lines whose dutie:, ma~ be ,suspended, if and when suppiy';md'demand conditions so ' dictate. 'Furthermore, the level of tariff rates, is, in some cases, intended to discourage imports of luxury goods as a means of imprpving the balance of paymel'lts position, This GituatiQn is exemplified by the high tariff rates applicable. to privat~ly ~ owned cars in Mauritius, Ethiopia; Uganda, Kenya, Tanzani~, ~ambia, Borswana, Lesothp, Swaziland, Zimbabwe;etc.
! ' . '.
46. High tariff Ji'ate?,whether~usedas a protective devi ce or revenue generating means or both;' havesom~ serious implications on the development
and expansion of intra~s~pregionaltrade as well as on subregional economic
and social integration. Notwithstanding the revenue and domestic production
•. •,. ,., -1
benefits of: these rat,"s, in the shor-t-o-un , it is only .the· developed countries that c~ eqectively~enetrate-thesemarkets; while countries of the
subregion find it extremely difficult to export to each other. In the long- run, high tariff rates, prevent the integration of the economi ee of the
countries as well as the development of individual economies because of the absence or .i~dequacy of complementarities in their economies. The smallness of nationa~ ~arkets and inadGquacy of national resources i~ the presence of high tariff rates have direct and unfavourable effects on the development of individ~al national Gconomies and the subregion as a wh~le.
III. 3
ECA!MULPOC!Lusaka!V!3!(iii) Page 17
Other Charges of Equivalent Effect
47. In addition to customs duties analysed above, almost all countries, as a general policy" subject a large number of imported products to a
variety of charges such as customs surcharges, surtaxes, excise taxes, fiscal taxes, sales taxes, transactions taxes, consumption taxa" etc. The nomenclature used in respect of taxes vary from one country to another and the purpoees for their imposition also vary, but the effects on intra- subregional trade and economic integration are almost the same. A majority of the countries use, on the average, only four out of the.man;y forms of other charges.
48.
In Mauritius, certain imports are subject to customs aurchargosof 15 to 30 per cent of the applicable ,duty, in addition to fiscal duties rangiJ:lg from 10 to 40 per cent that are applied to most imports. On the abolition of the import deposit scheme in June 1978, an additional fiscal duty of5
per cent was imposed on a selected list of items covered by the scheme. An excise duty of 10 per cent is levied on cigarettes, with an equivalent duty on imported cigarettes.49. In Uganda, a sales tax is applied to certain imported anddomestically- produced ,goods wi t-h rates that vary from 5 to 25 per cent. Lower rates cf 5 to 10 per cent are applicable to essential requirements, 15 per cent to semi-luxury goods, and 20 to 25 per cent to luxury items. This sales tax is not levied on raw materials for specified industries, ie. plastic
footwear, basic foodstuffs and other non-processed food product
°,
re-exports, plant fertilizers and insecticides, agricultural machinery, animalfoodstuffs, packing materials, heavy diesel oil for use in industry and' some building materials. Uganda also imposes excise taxes with varying rates on imports of beer, sugar, tobacco products, matches, alcoholic beverages, soap and soap products, woven fabrics, paints, varnishes, lacquers and enamels and distempers.
50. In Malawi, imports, mainly of consumer goods, as well as domestic manufactures, are subject to a surtax. The basic rate of the tax, effective J';'ly 1976, is 15 per cent. In the case of imports, the valuation basis is the value for customs duty purposes plus any duty payable, increased by 20 per oent. However, the tax is not applicable to goods which are free of import duty, or imports of capital equipment, goods produced for export, or to certain basic foodstuffs for domestic consumption (e.g. fish, rice and maize).
ECA/MULPOC/Lusaka/V/3/(i-i) Page 18
51.
Kenya and Tanzania, just like Uganda, impose excise duties which vary according to products on imports -of beer (342 shillings per 36 standard gallons of worts), sugar (22 shillings 40 oent s per hundredweight), cigars, cheroots and cigarillos (19 shillings 20 cents per pound), cigarettes, manufactured tobacco, matches, spirits (153 shillings per
proof gallon) wine, mineral waters and similar beverages, biscuits, soap, soap powders, woven fabrics, varnishes, lacquers, cosmetic preparations and enamel paint. Tanzania has an aditional beer consumption tax
introduced by Act. No. 35 of 1964. The three countries (Kenya, Tanzania and Uganda) impose additional duties (Le. dumping and subsidies) under the East African Community Customs Tariff on minerals dyed khaki drill
from Pakistan, aluminium hollow-ware from India and steel karais from India.
52. In Botswana, Lesotho and Swaziland, excise t~es are levied on a few items such as spirits, beer, tobacco, oil and motor vehicles. Sales taxes at rates ranging between 5 and 20 per cent on a variety of manufactured consumer goods ( excluding most foodstuffs and slothing) are imposed in
addition to all other taxes and import duties.lI Furthermore, these
countries, in compliance with the provisions of the Southern African Customs Union Agreement, have stringent anti-dumping provisions.
53. Madagascar, in addition to custcms duty and import tax, imposes a consumption tax on goods such as alcoholic beverages, cigarettes and tobacco.
A transactions tax ( Taxe Unique sur les Transactions) is levied at a standardized rate of 10 per cent of the duty-paid value inclusive of all other t~es; this tax affects most commodities, except basic fOOdgitUffs, tobacco, petroleum and sbelloils, fertilizers ?fid disinfectants.2
54. In 1975, Zembia imposed an excise tax on the imports of the following items: (~) cigarettes at K 10.00 per thousand
(B)
potable spirits at K 6.25 per litre(£) ethyl alcohol or neutral spirits undenatured at K 0.12 per dekalitre A surtax of K 0.43 per dekalitre was also levied on opaque beer, while imports
of clothes, fencing wire, footwear, furniture, motor batteries, paints,
varnishes, lacquers, perfumery, cosmetics, toilet preparations, radios, soaps, detergents, sugar, tyres and tubes carried a 10 per cent sales tax.
55.
In Ethiopia, a number of imported commodities is subject to excise taxes and these include:beet and cane sugar; fruit juices and squashes; lemonade, wine beer; champagne; ethyl alcohol; etc.
1J
?-J
Hints to Businessmen: Southern Africa, British Overseas Trade Board, 1976.
Hints to Business: Madagascar, British Overseas Trade Board, 1974
ECA/MULPOC/Lusaka/V/3/(iii) Page 19
In the case of lemonade and other non-alcoholic beverages, the excise tax is 2 cents (Ethiopian) per bottle not exceeding 250 cc or per litre in the case of mineral waterso Beer carries an excise tax of between 20 and 25 cents (Ethiopian) per bottle, or 30 cents (Ethiopian) per 650 ce.
Champagne and dessert wines are subject to excise taxes at 25 cents
(Ethiopian) per bottle cf 100 cc or less, 1075 Birr (Ethiopian) per bottle exceeding 100 cc but less than 700 cc and Birr 2075 (Ethiopian) per litre or per bottle exceeding 700 cCo
56. Ethyl alcohol and neutral spirits attract excise taxes of Birr 8.00 (Ethiopian) per litre; salt is taxed at Birr 8.00 (Ethiopian) per 100 kg. Iron 2nd steel including articles thereof are subject to an excise tax of Birr 1.00 (Ethiopian) per 100 kg. Silk yarns containing cotton or man-made fibres are taxed at 15 cents per kg, while fabrics
containing natural silk or man-made fibres are taxed at Birr 2.00 (Ethiopian) per kg. Perfumery, soap and other similar products attract an excise tax of up to 100 per cent of ad valorem. Importers in Ethiopia are liable also to the payment of a transactions tax of 15 per cent based on the value assessed by the Customs Department. All imports which are subject to a
transactions tax are also liable for the payment of one per cent Municipality tax.
51. A Tobacco Monopoly Board tax is levic~. in addition tc duties
and other taxes, on imports of tcbacco and tobac~o products (ohapter 24), matches (chapter 36), cigarettes paper (chapter 48), and pccket lighters (chapter
98). Some of these items may be imported subjcct to the payment of a surtax of 30 per cent for the import permit.
58.
It is clear from the above description that the range of application of taxes under the category of "Other Charges of Equivalent Effect", though varying from one country to another, are intended to encourage domestic prOduction, to discourage conmxmption of certain goods and to provide revenue for the government. The nature of the products affected indicates that the over-riding consideration, in many instances, is to discourage the consumption of luxury goods or non-essential goods as well as raising revenue. This is more so with re~ard to conmxmption or sales or transactions taxes where the tax rates increase for those goods classified as non-essential or luxury.59.
In the final analysis, these taxes reduce the competitiveness (price-wise) of exports originating in countries o[ the Eastern and Southern African subregion and thereby retard the development of intra- subregional trade. Since these taxes are additional to customs dutie~,the total effect is to increase the prices of these goods. A higher proportion of the relevant products can be produced by many countries
ECA/MULPOC/Lusaka/V/3/(iii) Page 20
of the subregion if their competativeness in the export markets is increased.
IV. SPECIAL RmULATIONS AND RULES AFFECTmG TRADE IV.l Trade Li censtllS
1
•1
60. Most of the countries of the Eastern and Southern African
subregion apply licensing, as a general policy, to a very significant number of imported goods. Over 90 per cent of imports into a country require
licences regardless of the origin of the products, unless specifically exemnt ed by special arrangements. The purposes of import licences may vary from country to country, but, generally speaking, they are used for regulating imports; controlling the consumption of a wide range of goods considered to be non-essential or luxurious; for facilitating the
determination and collection of import duties and taxes; and ensuring effective protection of domestically produced industrial and agricultural products as well as for balance of payments purposes •
61. Import licences are basically of two types: open general licences and specific licences. Usually, an over-all annual import programme underlies the issuance of licences. The ministries or departments concerned establish formal Quotas for individual products as well as drawing up lists specifying the size of such quotas over an annual period. Under such a system the issuance of open general licenoes remains flexible and adjustable to foreign exchange positions of the countries, to supply capabilities of domestic producers, and to the market requirements for certain goods. Specific import licences are intended to protect domestic industries and some sectors regarded as important for development.
62. In ~1auritius, for example, the Ministry of Commerce and
Industry which administers licensing draws up an annual list of commodities for which specific licences are reqUired irrespective of the country
of origin. Such specific licences are issued on the basis of domestic requirements and are attached to exchange control approvaJ.e to make import payment subject to currency regulations.
63. In Malawi, the administration of foreign trade is the responsibility of the Ministry of Trade, Industry and Tourism which
issues import licences usually valid for 6 months. For example, an import licence regardless of the country of origin of the goods, is necessary for certain agriCUltural products: flour, cement, fertilizers, cassava, certain drugs and poisons. Imports of soap are subject to special regulations set out in the Control of Goods Act,
ECA/MULPOC!Lusaka/V/3/(iii) Page 21
64.
In Kenya, Schedule I contains and describes import items that are subject to specific import licensing by the Director of Trade and Supplies in the Ministry of Commerce. Foreign exchange isgranted automatically by the Central Bank, once a licence has been obtained.
The products affected by this regulation include: live animals, some fruits and vegetables, hides and skins, petroleum products, fertilizers, and iron and steel manufactures.
65. Import items in Kenya's Schedule II are subject to specific licences and tied to foreign exchange which is provided on a quota basis by the Central Bank. Some of the items included are cereals and cereal preparations, dairy products, coffee, tea, cocoa, glass, china and ceramic goods. Schedule III contains import items for which foreign exohange will not be provided and some of the items affected include meat products, bread and cakes, fresh fruits and vegetables, crude minerals, tyres and tubes, insecticides, fungicides, etc. Import items falling under Kenya's Schedule IV do not require import licences although foreign exchange is allocated on a quota basis.
66. In Ethiopia, commercial importers are required to register with the Ministry of Foreign Trade which issues import licences subject to the approval of an application for foreign exchange. Allocation of foreign exchange to import licence holders is subject to the follOWing regulations or conditions:
goods to be imported must be free from any import prohibitions;
the application fer foreign exchange should be supported by manufacturer's or supplier's invoices in sufficient copies showing clearly the full description of goods, quantity, volumes, measurement, weight, unit and total price of goods at a named place of delivery.
67. In Madagascar, all imports inclUding those from countries within the Franc Zone and the European Economic Community, are subject to import licensing within annual quotas. Import licences are also regulated by quotas.
Applications for licences are made to the Service des Echanges Exterieurs, Direction du Commerce, and must be supported by detailed proforma invoices signed by the seller, showing unit price and total f.o.b. value in the
currency of the supplying country, quantities, the name and status of supplier, the method of payment and the port of shipment.
ECA/MULPOC/Lusaka/V/3/(iii) Page 22
68, Under the 1972 Tanzanian licensing regulations, a limited and decreasing number of commodities may be imported under open general Li.cencev.
The items requiring specific import licences may only be imported by, or with the endor-semorrt of, the Board of Internal Trade's importing parastatale,
or are similarly confined to parastatals which control indigenous production:
the National Development Corporation, the National Steel Corporation, etc.
69, The system of import licensing affects the development and expansion of intra-subregional trade more severely than tariff rates, Many products with trade potential are adversely affeeted, In some countries, it is through licensing systems that state trading corporations can obtain higher shares in foreign trade; that embarg~on certain imports are imposed;
and that intra-subregional trade can be frustrated accordingly, Thus, the existence of licensing procedures represents one of the most serious barriers to intra-subregional trade and also in many cases to the promotion of
subregional economic development and integration,
70. Some countries have industries operating at less th~_50 per cent of their capacity due to the inadequacy of raw materials which are available in neighbouring ceuntries but to which they have no access because of, inter alia, stringent export licensing regulations, In such cases, raw material inputs have to be obtained from abroad,
IV.2 Foreign Exchange Controls
71 Exchange control regulations and practices are instituted by
all the countries of the subregion to ensure adequate supply of foreign exchange to finance essential imports of goods and services, There are,
however, differences in the extent of application of exchange control measures
in the countries of the subregion. General restrictions are applied by all countries because of balance of payments positions of individual
countries.
72. Foreign exchange control measures take a variety of forms:
restrictions on payments for imports, charges for foreign exchange licences, and outright prohibitions of foreign exchange for certain goods, For
example, the exchange control regulations of Kenya, which were introduced in 1972, restrict or prohibit the provision of foreign exchange for a variety of goods, inclUding some not Bubject to importliconsing, by
requiring that Central Bank approval be obtained prior to importation. The goods affected are those for which locally produced eqUivalents or
substitutes are available and some luxury goods,
ECA/MULPOC/Lusaka/V/3/(iii) Page 23
73.
In Madagascar, as in all countries in the subregion, imports are subject to foreign exohange oontrols, but foreign exohange for importpnyments is automatically made avail~ble once an import licence has been granted. Advance import deposit requirements are not widely used in the subregion ( except in Kenya and Madagascar).
74.
There is no question that foreign exohange control measures, besides serving as instruments of direct control of the balance of payments, also serve a multitude of useful purposes. However, there is ~ number of faotors arising from foreign exohange oontrols that need to be analysed in terms of their affects on subregional trade and integration. The need for foreign exohange has a direct effect on the destination of the major exports of individual oountries. Because of a general shortage of foreign exohange thrcughout the subregion, exohange oontrol measures affeotintra-subregional trado more than they affect trade between the subregion and the developed countries. This is so because developed countries arG able to support their exports through a number of devices: aid and
export financing schemes and short and medium term export credit facilities.
Such supportive trade measures do not exist among the co~~tries of the subregion.
75.
The unharmonized foreign exchange oontrol regulations and the inconvertibility of national currencies operate to frustrate subregional integration as well as intra-subregional trade. The difficulties associated with executing payments for imports originating in the subregion and the denial of foreign exchange transfers to companies of the subregion in oonnection with freight charges, insurance and other trade-related serVice, are serious impediments to subregion~l integration and trade. Thesedifficulties apply, mutatis mutandis, to investments in subregional multinational enterprises owned by two or more member States, particularly in cases where
there are no contractual arrangements to overcome them.
IV.} Documentl>tion
76. The movement of goods is subject ot the preparation and
presentation of trade facilitation documents. Problems of trade documentation stem from the fact that, for reasons of national laws and regulations, export and import authorities require a variety of paper documents. The real
concern of import authorities is with the proper identification of goods and the commercial parties concerned, verification and valuation for import clearance, and for health, safety and technical standard purposes.
ECA/MULPOC/Lusaka/V/3/(iii) Page 24
77. Importers must meet certain requirements having to do with
presentation of supporting evidence as well as authentication and verification such as:
(i) commercial invoices which often have to be signed and authenticated,
(ii) customs or consular invoices, similarly signed and authenticated,
( iii) certificates of origin signed and authenticated;
bills of lading or airway bills;
(v) special certificates of health, weight, sanitary or characteristics;
(vi) import permits in respect of certain goods.
The divergence of national documents presents serious impediments to intra-subregional trade, in that some countries are unfamiliar
with and unaware of the documentation required by the others, so that failure to comply with the requirements actually retards trade. At country level, adminstrative regulations and rules regarding labelling, packaging and marking vr;ry greatly, so much so that these national requirements become barriers to intra-subregional trade.
78. While the reasons for requiring the presentation of such documents are Quite understandable many countries of the subregion find it difficult to meet these stringent requirements for many reasons including first and foremost lack of informetion c~ country re~uirements.
v,
SUMMARY AND RECOMMENDATIONS79.
It is quite clear from the analysis of existing trade legislations, rules, regulations and practices that trade and monetary policies and practices of the countries of the Eastern and Southern African subregion are generally inward looking and that, while the policy objectives being pursued can be justified at the national levels, the long-termdevelopment potential of the individual countries and the subregion as a whole is substantially frustrated by such policies. The development and expansion of intra-subregional trade is adversely affected by existing trade legislations, rules, regulations and practices as evidenced by the very small volume of trade among the countries of the subregion.
