New taxes add to trade barriers within EAC, Comesa blocs

The introduction of domestic taxes such as excise duty in countries under the Common Market for Eastern and Southern Africa (Comesa) has raised concerns of uncompetitive practices in the region amid a push for a unified trade bloc.

These taxes have also been highlighted by the East African Community (EAC), where all member States except Tanzania are also signatories to the Comesa treaty.

Introduction of taxes such as excise duty, permits and flexing of standards of products have been cited by businesses as discriminatory ploys by some countries in the economic blocs to protect their markets.

At the recently held Comesa Heads of State Summit in Nairobi, Vice Chairperson Kenya Association of Manufacturers (KAM), Hitesh Mediratta said this practice risks being onboarded in new agreements such as the African Continental Free Trade Area (AfCFTA) and the Tripartite Free Trade Area (TFTA).

TFTA is an agreement between Comesa, EAC and the Southern African Development Community (SADC) to which Tanzania belongs.

“We are increasingly seeing new barriers to trade through the introduction of domestic taxes and levies, particularly excise duties on intermediary and raw materials,” said Mediratta. “In some cases, these taxes are even being applied to imports from our own Comesa region.”

He said that while these measures may be driven by well-intentioned local policy objectives, they distort regional markets as they go against the TFTA.

These tax policy measures also disrupt supply chains, raise production costs and discourage cross-border trade and investment.

“Ultimately, they weaken the very integration we have all worked so hard to achieve. If left unchecked, these protectionist actions could invite retaliation and undo years of progress,” said Mediratta.

 “And if carried forward into new frameworks such as the TFTA and the AfCFTA, they would stall progress and prevent these agreements from achieving their goal of a truly unified African market.”

Comesa Secretary General Chileshe Kapwepwe said such issues can easily be addressed at the Head of State level.

“Just listening to the representative of the KAM, a number of pertinent issues have already been raised which I feel should form part of the declarations to bring to the attention of the Heads of State the challenges and bottlenecks being experienced by the private sector and which should be addressed at that level,” she said.

“Sometimes we know it is only political will that will remove some of these constraints.”

Such protectionist tendencies have been cited as among the reasons behind the 14 per cent intra-EAC and intra-Comesa trade levels, an issue that James Chimwaza, President Comesa Business Council pointed out.

“We must confront reality that the 3.6 per cent decline in intra-Comesa trade in 2024 from Sh1.85 trillion (USD 14.2 billion) to Sh1.78 trillion (USD 13.7 billion) represents lost opportunity,” he said. “Behind these statistics are real entrepreneurs struggling to access finance and farmers and manufacturers unable to compete due to infrastructure constraints.”

These challenges of new unprecedented taxes have been documented in the EAC Trade and Investment Report 2024. The report published by EAC, notes that despite the progress in resolving some of the non-tariff barriers (NTBs), 2024 saw a resurgence with reported cases rising from 10 to 48 between November 2024 and May 2025.

“New domestic taxes, permit requirements, and discriminatory standards have reversed earlier gains, contributing to the decline in intra-EAC trade from 15 per cent to 12 per cent of total trade,” the report says. “Affected products included sugar, milk, beer, cement, and forest products.”

Cabinet Secretary Ministry of Investments, Trade and Industry Lee Kinyajui, while speaking during the summit said to ensure trade within the region grows, bottlenecks associated with business must be addressed in full.

“I think that conversation must not be academic. We must go to the real issues that continue to hamper trade within ourselves,” he said.

To iron out these issues, the report says the regional bloc employed a multi-faceted approach which such as launching a mobile to streamline the process of reporting and eliminating NTBs, developed standardised trade documents for perishable goods like fruits and vegetables, resolved several NTBs through bilateral engagements and monitoring committees.

The EAC Sectoral Council in February 2024, further directed Partner States to rationalise permits and licensing requirements, and adopt risk-based compliance.

“However, despite these ongoing efforts, several factors complicated the elimination of NTBs including inconsistent enforcement, weak coordination, and policy reversals that continue to undermine credibility, raising questions about the true level of commitment from Partner States to deep integration,” the report says.

Trade Among EAC Partner States is governed by the EAC Common External Tariff (CET) which the report describes as the cornerstone of the customs union.

However, it adds, its implementation remains uneven, with Partner States continuing to invoke “Stay of Application” (SoA) clauses, ostensibly temporary but increasingly recurrent.

“These derogations, coupled with non-harmonized policies, discriminatory domestic taxes, technical barriers to trade (TBTs), and administrative bottlenecks, have eroded the predictability of the trading environment,” the report says.

It adds that such fragmentation not only increases the cost of doing business, but also violates core principles of non-discrimination and Most Favoured Nation (MFN) treatment.

“In response, the EAC Secretariat has intensified efforts to harmonize standards, rationalize SoAs, and enforce compliance with the EAC Development Strategy and Customs Union Protocol,” the report says.