A HIGHLIGHT OF COMESA IMPORT DUTY AS APPLIED IN UGANDA

Below is a highlight of COMESA duty preferences Uganda offers. These are offered on a reciprocal basis by COMESA member countries to firms registered in Uganda and doing business in the region.

 

Item Range	General import duty %	COMESA duty preference %
Live animals	7	4
Meat and edible meat offal	15	6
Fish and other aquatic invertebrates	15	6
Dairy produce, bird’s eggs and honey	15	6
Products of animal origin not elsewhere specified	15	6
Live trees and other plants, bulbs, roots and cut flowers	7	4
Edible vegetables	15	6
Edible fruits and nuts	15	6
Coffee, tea, mate and spices	7	4
Cereals	7-15	4-6
Products of the milling industry, malt, starches	15	4-6
Oil seeds and Oleaginous grains	7	4
Lac, gum, resins and other vegetable saps and extracts	7	4
Animal or vegetable fats and oils	7	4
Sugars and sugar confectionery	15	6
Preparations of meat or fish or mollusks etc	15	6
Cocoa and Cocoa preparations	15	6
Preparations of cereals, flour, starch or milk	15	6
Preparations of vegetables, fruits and nuts	15	6
Beverages, spirits and vinegar	15	6
Residues and wastes from food industries, prepared animal fodder	15	6
Tobacco and manufactured tobacco substitutes	15	6
Salt, sulphur, earths and stone, plastering materials, lime and cement	7	4
Ores, slag and ash	7	4
Mineral fuels, mineral oils and products of their distillation	7	4
Inorganic chemicals, inorganic or organic compounds of precious or rare earth metals	7	4
Organic chemicals	7	4
Pharmaceutical products	0	0
Fertilizers	0	0
Tanning or dyeing extracts	7	4
Essential oils and resinoids, perfumery and cosmetics	15	6
Soap or organic surface- active agents	15	6
Explosives and pyrotechnic products	15	6
Photographic or cinematographic goods	15	6
Plastics and articles thereof	7	4
Rubber and articles thereof	7	4
Leather	7	4
Articles of leather	15	6
Wood and articles of wood	7-15	4-6
Pulp of wood or other fibrous cellullosic materials	7	4
Paper and paper board	7	4
Printed books and other products of the printing industry	7
Textile articles	15	6
Cotton	7	4
Carpets and other textile floor coverings	15	4
Ceramic products	15	6
Glass and glass ware	15	6
Articles of iron or steel	7	4
Machinery	0 for the majority, 7 for a few	0-4

Note: Minor variations may occur and not all items have been reflected here. Fell free to contact us for specific details.

COMESA TRADE REMEDIES

Although the mission of the COMESA treaty is the promotion of intra-COMESA Trade, it is recognized that member countries can suffer adverse effects and allows exceptions, in some instances. These are explained below for the benefit of our exporters.

(i) Emergency measures to limit imports temporarily, to “safeguard” domestic industries.

(ii) Actions taken against dumping (selling at an unfairly low price).

(iii) Subsidies and “countervailing” duties to offset export subsidies.

The Twelfth Meeting of the Council of Ministers in Lusaka, Zambia, on 30 November 2001, adopted Trade Remedy Regulations for invocation of safeguard, anti-dumping, subsidies and countervailing measures.

Safeguards

A member may restrict imports of a product temporarily (i.e. take “safeguard” measure) if its domestic industry is injured or threatened with injury caused by a surge in imports.

Pre-conditions for taking Safeguard Action:

(i) Increase in import, either absolute over past imports or relative to domestic production.

(ii) Cause of serious injury or threat of serious injury.

      iii.        Causal link between increase in imports and injury or threat of injury.

A member can take import-restraint measures in the form of a tariff-type measure, (e.g., import surcharge, levy, increased tariff, etc) or

quantitative restrictions on the import of that product.

Duration and Repetition of Safeguard Action

The general provision is that safeguard action should apply only for such period which is necessary to:

(i) remedy serious injury or prevent serious injury; and

(ii) facilitate adjustment of industry.

The duration of action for safeguard action is four years.

The total period of a safeguard measure, including provisional measure, initial and extended duration of measure, cannot exceed eight years.

Repetition of Safeguard Action

A safeguard measure can be extended, if competent authorities of member country have determined the following:

a. The safeguard measure continues to be necessary to remedy or prevent serious injury.

(b) There is evidence that the domestic industry is adjusting.

A safeguard measure cannot be reapplied to import of a product for a period of time equal to that during which such measure was previously applied.

Liberalisation of Safeguard Action

If a safeguard measure is proposed to be taken for more than one year, the member applying the measure has to liberalise it at regular intervals. If the duration exceeds three years, the member must review it by mid-term, and either remove it or increase the pace of liberalisation.

Compensation for Safeguard Measure

A member applying a safeguard measure is required to give compensation to other members which would be affected by such a measure. Such compensation is generally in the form of concessions on some product(s) of export interest to other concerned members. For this purpose, a member has to enter into consultations with those members which have a substantial interest as exporters of the product.

If no agreement is reached within 30 days, the affected members can suspend the application of substantially equivalent concessions, 90 days after application of the measure, in respect of trade of the member applying safeguard measure.

This right of suspension cannot, however, be exercised for the first three years in which the safeguard measure is in effect, provided measure has been taken as a result of an absolute increase in import.

Subsidy and Countervailing Duty

A subsidy exists if a government or public body within a member State makes a financial contribution which confers a benefit on the recipient enterprise.

Damages a Subsidy can cause:

(i) One country's subsidies can hurt a domestic industry in an importing country.

(ii) They can hurt rival exporters from another country when the two compete in third markets.

      iii.        Domestic subsidies in one country can hurt exporters trying to compete in the subsidizing country's domestic market.

Pre-Conditions for Countervailing Duty against Subsidy

(i) Subsidization should not be de minimis i.e. not less than 2% of product value;

(ii) Import of subsidized product accounts for not less than 4% of imports of like product or not less than 9% for supplying countries with market shares of less than 4%;

      iii.        Import of subsidized product causes injury or threat of injury; and

(iv) There is a causal link between the subsidy and injury or threat of injury.

The remedy against subsidy is countervailing duty process. A member can levy a countervailing duty equal to subsidisation rate, after following the prescribed procedure.

Dumping

A product is dumped if it is sold in an export market at a price lower than the price it normally sells in its own home market.

Problem of Dumping

Exporting products at abnormally low prices is an unfair trade practice. Such practice is taken by firms sometimes as a predatory measure to eliminate competition. Member States are therefore allowed to take action against dumping in order to protect their domestic industries, following certain disciplines.

Determination of Dumping

(i) Determine export price and normal value;

(ii) Compare export price with normal value.

Conditions for Anti-dumping Action

To take action against dumping the following conditions should be met:

(i)   Dumping exists;

(ii) Dumping margin is not less than 2% of normal export price;

(iii) Imports of dumped product constitute not less than 3% or less than 7% for individual countries with less than 3%, of total imports of like products;

(iv) There is material injury or threat of material injury to domestic industry or material retardation of establishment of a domestic industry,

(v) There is a causal link between dumping and injury.

Initiation of Safeguard Measure or Actions Against Subsidy and Dumping

Generally the process for safeguard, countervailing or anti-dumping action is started by sector of the domestic industry producing the product in question which is adversely affected by imports. The domestic industry keeps a watch on the flow of imports and on its own condition. When it considers that it needs protection and the pre-conditions mentioned above are satisfied, it moves government to start appropriate action.

Domestic Industry for Initiation of Safeguard, Countervailing or Anti-Dumping Action

A domestic industry means producers of the product as a whole, or those producers whose collective output of the product constitutes at least 50% of total domestic production of the product in question. Hence, if only a few units of the industry having a small share of total production are suffering, no safeguard, countervailing or anti-dumping measure can be taken.

Injury

Serious injury means a significant overall impairment in the position of a domestic industry. The following factors are evaluated to determine the existence of injury or threat of serious injury:

(i) Increase in import of product and rate of increase.

(ii) Share of domestic market taken by increased imports.

(iii) Dumping margin,

(iv) Subsidization level,

(v) Changes in level of certain parameters, viz., sales, production, productivity, capacity utilization, profits and losses, and employment.

Investigation

There are procedures for carrying out investigation on request for safeguard, countervailing or anti-dumping action. The following steps are necessary:

(i) Even before initiating the first action, a member should have established its procedures for taking action and established a competent authority to carry out investigations into the existence of the pre-conditions for safeguard, countervailing or anti-dumping action.

(ii) Competent authority conducts investigation about:

(a) the increase in import;

(b) the existence of serious injury or its threat; and

(c) the causal link between the increased import and injury.

(iii) In all investigations, public notice is given to all interested parties. Opportunity is given to importers, exporters and other interested parties to present their views and evidence. Opportunity is given to them to respond to presentations of other parties. These also have opportunity to express their view as to whether the proposed measure is in public interest.

(iv) Competent authority prepares and publishes report containing its findings and reasoned conclusions on issues involved.

Imposition of Safeguard, Countervailing or Anti-dumping measure

After report is received, the member has to decide if a trade remedy measure should be taken. If it decides to take a measure, it has to hold consultations with the members having substantial export interest, or with subsidizing or dumping members. Thereafter, measures can be taken either:

(i) in the form of increased tariff or additional similar charges, or

(ii) in the form of quantitative restrictions,

(iii) In the form of anti-dumping duty,

(iv) in the form of countervailing duty.

The measure is taken only to extent necessary to:

(a) prevent or remedy serious injury; and

(b) facilitate adjustment.

Quantitative Restrictions

For safeguard measures in the form of quantitative restrictions, certain disciplines are specifically prescribed, as follows:

(a) The import level must not be reduced below the average level of last three years. Clear justification must be provided if lower level is sought.

(b) If after laying down quantitative limit or quota for import, with shares of quotas allocated to exporting members, the member applying the measure must seek agreement with Members having a substantial interest in supplying the product. If this is not reasonably practicable, a member can allot shares to members having substantial interest on the basis of past imports during a representative period.

(ii) Reasons for departure from shares allocation based on past imports are justified.

(iii) Conditions of such departure are equitable to all suppliers of product.

Provisional Measure

A member can take a provisional trade remedy measure when delay would result in damage, which would be difficult to repair and preliminary determination has indicated clear evidence of injury or its threat. Such measure should be in the form of a tariff increase and promptly refunded if subsequent, detailed investigations do not prove existence of injury or threat of serious injury.

Termination of Pre-existing Measures

All measures put in place prior to the coming into force of the Trade Remedy Regulations must be terminated within one year of entry into force of Trade Remedy Regulations, i.e. by 30 November, 2002.

The Committee on Trade Remedies must be notified of all these measures.

Notifications

There are obligations on notification to the Committee on Trade Remedies. One set of obligations relates to taking of specific safeguard measures, another set is of a general nature. The general obligations are:

(i) Members have to notify the Committee on Trade Remedies of their laws, regulations and administrative procedures regarding safeguard measures.

(ii) The Committee must be notified of measures maintained by the members.

(iii) Counter-notifications can also be made, i.e., members can inform the Committee about the laws, regulations and procedures of other members, if they have not done so. Such counter-notifications are provided as a safeguard against any deliberate attempt by some members not to notify the Committee about their laws, regulations, procedures, etc.

(iv) Any member can notify the Committee about non-governmental measures of any member country which are equivalent to voluntary export restraint (VER), orderly marketing arrangement (OMA) or other similar agreements).

What a government has to do to defend itself against a trade remedy measure

(i) On receipt of notice from a member country initiating investigation, a government should examine the facts regarding serious injury as alleged in the notice. It can contest the matter before the competent authority of the investigating country mainly on grounds of non-existence of serious injury, or its threat or lack of linkage between increased import and injury.

(ii)            If a member whose exports have been subject of investigation is dissatisfied with the actions of the member investigating the matter, it can refer the matter to a dispute settlement panel established by COMESA.