Did the East Africa Community’s Common External Tariff (CET) Help Uganda Diversify its Export Products?
The East African Community (EAC) States are exporters of mainly primary products, concentrated in the agricultural sector. In 2005, the EAC adopted EAC Custom Union and one of the objectives was to increase the variety and quality of EAC manufactures. As part of the customs union, the EAC partners adopted a Common External Tariff (CET) on commodities designated as sensitive items (SI). There are at least 53 products on the SI list and these attract an import duty of 25% and above. This brief examines whether the adoption of the CET helped Uganda attain structural transformation of its exports—given this was one of the objective of establishing a SI list. The study follows the analysis by Shinyekwa and Katunze (2016)—a study which examined the trade and welfare implications of adopting the CET. The brief applies indices of structural transformation based on “quality upgrading”—to examine the transformation objective of the CET. The results show that, overall, CET had constrained the ability to upgrade the quality of commodities and manufactures. However, Uganda has made advances in upgrading two commodities—maize and rice. This calls for intensification of research and development, increased investment and incentivising labour to participate in both maize and rice as well as other products with a scope for quality improvement such as milk and cream, and sugar.