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Jul 14,2022

Notice! A Large Number of Products Will be Affected, and These Countries Will Impose a Unified 35% Import tax!

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A few days ago, the East African Community (referred to as the EAC) issued the latest statement, announcing that the ministers of finance and trade of the EAC officially adopted the fourth tranche of the Common External Tariff (CET) in early May, and decided to set the common external tariff rate at 35%.

 

According to the statement, the reviewed EAC fourth tranche of common external tariff rates will be officially implemented in July 2022.

 

Uniform collection of import duties of up to 35%

 

It is reported that after the new regulations take effect, furniture, ceramic products, paints, leather products, textiles, cotton, steel, and other products will be subject to a unified import tariff of up to 35%.

 

According to the statement, EAC ministerial officials believe that looking forward, the fourth tranche of a maximum tariff rate of 35% is the most appropriate rate, which has the most positive impact on regional economic growth.

 

At present, the tax rate structure of the EAC Common External Tariff is divided into three grades. The import tariffs for raw materials means of production, and finished products are 0%, 10%, and 25%.

 

Current EAC Secretary General Peter Mathuki called this a positive step towards boosting the industrial sector and maximizing the benefits of the African Continental Free Trade Area (AfCFTA).

 

This move will stimulate the development of intra-regional trade by encouraging the development of local manufacturing and increasing the value-added and industrialization of products.

 

 

EAC intra-regional trade revenue to increase by $18.9 million

 

According to Rwanda's "New Age", after the highest common external tariff rate is raised from 25% to 35%, the intra-regional trade revenue of the EAC will increase by 18.9 million US dollars, the employment rate will increase by 0.03%, and the trade revenue of each member state will increase by 5.5%.

 

It is understood that the EAC was first established in 1967 and its member countries include Tanzania, Rwanda, Kenya, Uganda, Burundi, South Sudan, and the Democratic Republic of Congo.

 

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One of its goals is to establish a customs union, a common market, etc., to achieve sustainable economic and social development of member states.

 

Some professionals have analyzed that raising tariffs can strengthen the diversification of local products and expand the possibility of intra-regional trade; however, at the same time, raising external tariffs may also lead to higher costs of consumer and industrial products, which in the short term will affect import-dependent enterprises and consumers. cause pain.

 

Chinese companies to raise tariff costs

 

Taking Chinese ceramic enterprises as an example, the EAC has set the fourth tariff rate at 35%, and ceramic exports will increase a series of tariff costs, and even be controlled, and market pressure may multiply.

 

In fact, in addition to tariff pressure, my country's ceramic tile exports have been subject to foreign anti-dumping investigations for many years, and exporting ceramic tile companies have been in a turbulent external quarrel. Constantly open up the market.

 

For example, Xinzhongyuan invested 150 million US dollars to establish 8 "intelligent and automated" ceramic tile production lines in Uzbekistan.

 

Keda's international layout is more extensive. In addition to building the largest ceramic production base in the Philippines in Subic Bay with Xinzhongyuan and Nengxing Holdings and the Philippines' Ayala Group, it is also sole proprietorship in India and Africa (Kenya, Ghana). factory.

 

Weimei Group invested in the construction of a ceramic tile production base in Tennessee, USA; Jinyi Tao Group and Malaysia Synthetic Group MML brand formally signed a cooperation framework agreement to open up the international market through the establishment of factories.

 

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Xinghui Ceramics and other companies have also cooperated with companies from Mexico, France, and the United States to sell their products to the EU.

 

In addition, Dongpeng, Mona Lisa, and Eagle also set up overseas exhibition halls in Vancouver, Canada, Malaysia, Thailand, Australia, Italy, and other overseas markets.

 

In a sense, anti-dumping can force companies to rethink and make efforts in external differentiation (product differentiation, scene differentiation, service differentiation) to continuously improve their processes and innovate to generate more, better, and better products.

 

It needs to be reminded here that Kenya and Uganda have always been high-incidence areas of commercial fraud in Africa. After the tariff adjustment, the import cost will increase. Please be sure to pay attention to the risk prevention of exporting to relevant areas!

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