Free Trade Area
COMESA Member States established a Free Trade Area (FTA) on 31 October 2000 after a sixteen-year period of progressive trade liberalization through reduction of intra-COMESA tariffs. As at December 2017, 16 countries were participating in the Free Trade Area. The other three Member States, namely Ethiopia, Eritrea and Eswatini were at different levels regarding their participation in the FTA. The existence of the FTA and the tariff reductions effected by the other Member States has the result that average tariffs on intra-COMESA trade have fallen significantly. According to COMESA statistics, intra- COMESA trade has grown at average of 7 percent every year since the establishment of the Free Trade Area with a higher increase reflected between the intra-FTA states.
Rules of Origin
The COMESA Rules of Origin are used to determine whether goods produced in the COMESA region are eligible for preferential treatment within the FTA. The COMESA Rules of Origin have five (5) independent criteria. The COMESA Rules of Origin have five criteria and Goods are considered as originating if they meet any of the following five criteria:
- The goods should be wholly produced;
- The CIF value of any non-originating material should not exceed 60% of the ex- work price of the goods;
- Goods must attain the value added of at least 35% of the ex-factory cost of the goods;
- Goods should fulfill the CTH rule; and
- Good must have importance to the economic development of the member states and should contain not less than 25% of value
The exporter is free to base his claim to COMESA duty-free or preferential tariff treatment on any one of the criteria, according to which of them has been complied within the production process. With the exception of small consignments, goods being exported under COMESA FTA or preferential tariff reduction treatment have to be accompanied by the COMESA Certificate of Origin, which is issued by the designated competent authority in a Member State.
COMESA Simplified Trade Regime (COMESA-STR)
The COMESA developed the Simplified Trade Regime (STR), which was launched in in 2010 recognising that cross border trade constitutes a significant component of trade in the region.
The STR aims to formalize informal cross-border trade (ICBT) by putting in place instruments and mechanisms tailored to the trading requirements of small-scale traders that are decentralized to border areas where informal trade is rampant with the view to facilitate ease of access by small traders. The STR targets small-scale traders importing and/or exporting goods worth US$ 2,000 or less, which are on the Common list of eligible products negotiated and agreed by the two neighbouring countries. The STR reduces costs for small traders and increases the speed of crossing the border by the use of a simplified Certificate of Origin and a Simplified Customs Document (SCD) as well as simplified customs clearance procedures.
Trade Information Desk Officer (TIDO) have been deployed at some border posts to assist small scale traders with information on border crossing procedures and form filling. As part of the coordination of cross border traders, Cross Border Trade Associations have been set up in most of the border posts which improves the sensitization and use of the STR. However, membership to these associations is not a prerequisite for use of the STR.
The COMESA Member States implementing the STR are Burundi, Kenya, Malawi, Rwanda, Uganda, Zambia and Zimbabwe.
Great Lakes Trade Facilitation Programme
The Great Lakes Trade Facilitation Programme (GTLFP) is a World Bank Funded programme that is targets DR Congo, Rwanda and Uganda. The Project objective is to facilitate cross-border trade by increasing the capacity for commerce and reducing the costs faced by traders, especially small-scale and women traders, at targeted locations in the borderlands. The total project amount is USD $79 million which is disbursed through loans to the participating countries and a grant to the Secretariat. The project consists of components that will be executed at the national level while others will be executed at the regional level to provide for sharing experiences and best practices. In addition, the project supports regional peace and stability through programs to improve livelihoods in border areas, promote cross- border trade, and strengthen economic interdependence.
The project commenced implementation in 2016 and put in place Trade Information Desk Officers at select borders to assist small scale traders utilize the Simplified Trade Regime (STR). This is in addition to collecting vital data on small scale trade using a newly developed application (App).
COMESA Customs Union
The COMESA Customs Union established in accordance with Articles 4 and 45 of the Treaty with the view to: further liberalize intra-regional trade in goods; promote efficiency in production within COMESA; enhance domestic, cross border and foreign investment in COMESA; and promote economic development and diversification in industrialization in COMESA.
The Customs Union was launched on 7 June 2009 by Heads of State and Government of the COMESA Authority at Victoria Falls in Zimbabwe. The Authority endorsed the key principles and rules that form the basis for the operation of the Customs Union. A transitional period of three years was provided, during which time the Member States would align their national customs laws with the regionally agreed Customs Union instruments namely, the Customs Management Regulations (CMR) regional customs law, the Common Tariff Nomenclature (CTN) as the harmonized system for coding and describing the traded products, and the Common External Tariff (CET) as the uniform tariff system in trade with non-COMESA third countries.
The establishment of the FTA in COMESA by the year 2000 was a prelude to the establishment of a Customs Union. There are various administrative, legal, institutional and logistical preparations for the operation of the Customs Union. Once fully implemented, it is expected that the Customs Union will bring great benefits to the region such as: enhancing cross-border investment, price advantage for regionally produced goods, wider choice of goods, faster clearance of goods, lower cost of production, and larger and wider market for producers. This however, requires Member States to converge their national tariffs towards the agreed CTN/CET and CMR. The COMESA Council of Ministers in 2016 adopted the transposed CTN to Harmonized System (HS) 2017 edition and Member States are in the process of transposing their Tariff Books to the HS 2017, considering their migration to the COMESA CTN/CET.
The COMESA Customs Document (COMESA-CD)
The COMESA-CD was officially adopted by COMESA at the Council of Ministers’ meeting in April 1996. The Secretariat runs training courses for Customs officials in other COMESA countries on how to use the COMESA-CD as part of a programme to harmonize customs and trade statistics systems (including ASYCUDA1).
Removal of Non-Tariff Barriers
Steady progress has been made in elimination of non-tariff barriers (NTBs) such as in liberalization of import licensing, removal of foreign exchange restrictions, removal of taxes on foreign exchange, removal of import and export quotas, removal of road blocks, easing of Customs formalities, extending times border posts are open, creation of pilot “one stop border posts”, among others. The COMESA Council of Ministers in December 2014 adopted the NTB Regulations which streamline the way NTBs are resolved in the region.