By Jean d’Amour Mbonyinshuti.
Traders from the East African Community (EAC) stand to benefit from faster clearance of their goods and lower costs of running their business following the signing of a Joint Action Plan between the EAC and the Government of India.
The Joint Action Plan will pave the way for a full Mutual Recognition Agreement (MRA) between the two parties.
The agreement was reached on Friday, May 13, 2021 in Arusha, Tanzania where the EAC is headquartered, according to the press release.
Once realized, the MRA, will benefit companies under the Authorised Economic Operators (AEO) Programme run by the EAC Partner States under the coordination of the EAC Secretariat since 2008.
Speaking on behalf of the Government of India, the Chairman of the Central Board of Indirect Taxes and Customs (CBIC), Ajit Kumar, emphasized the crucial role of having in place a robust, safe and largely digitized system, on one hand, and a pool of trusted and validated trading entities on the other hand.
Kumar said that a fully digitized system and valid trading entities would guarantee security in the entire supply chain in trading across borders, adding that an AEO-MRA agreement was one such endeavour.
The selection of India as an MRA partner was based on the principle of mutual recognition and the fairly steady trade between the EAC and India over the past five years (2014 – 2018), before Covid-19 disruptions, which cumulatively amounted to over $30 billion.
This timely MRA will enable facilitation of EAC traders under the AEO Programme while in India and vice versa, enabling fast clearance of their goods and as a result savings in costs and time. Currently, there are 135 AEOs under the EAC Regional AEO programme eligible for facilitation in any part of the EAC where they are conducting business.
Speaking at the virtual signing ceremony, the EAC Director General for Customs and Trade, Kenneth Bagamuhunda said that the MRA, once finalised and implemented, would have a big impact on the flow and growth of trade between East Africa and India.
“Besides the optimism, however, we are aware that the path to an MRA is usually lengthy, meticulous and tedious. The signing of the Joint Action Plan which we are doing today, signals an important milestone in this journey that we have started, and we are delighted to undertake it,’’ said Bagamuhunda.
The AEO programme is a concept derived from the World Customs Organisation (WCO) SAFE Framework of Standards, an instrument that was adopted by the WCO Council in 2005 to enhance facilitation and security of global trade.
It works on the principle of compliance, trust and partnership whereby, economic operators that demonstrate compliance with Customs supply chain security standards, are recognised as low-risk clients with whom Customs enters into a partnership arrangement.
One of the key benefits of being an AEO is, reduced Customs controls when transacting business with Customs Authorities and recognition as a low-risk and reliable business partner by other traders and government agencies.
Further to saving trading costs and time, the MRA between the EAC and India is set to foster growth in sustainable trade between the two trade partners while eliminating non-tariff barriers and enhancing cooperation between the Customs administrations of EAC and India.
In attendance at the virtual signing of Joint Action Plan were all the Commissioners of Customs in the Partner States, AEO National Project Managers and officials from the EAC Secretariat.