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EOI: To Conduct Analytical Review of the Current Threshold of the Simplified Trade Regime (STR)

HomeConsultanciesEOI: To Conduct Analytical Review of the Current Threshold of the Simplified Trade Regime (STR)
21
Apr
EOI: To Conduct Analytical Review of the Current Threshold of the Simplified Trade Regime (STR)

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  1. INTRODUCTION

The Common Market for Eastern and Southern Africa (COMESA) in its budget for the year 2020 set aside funds towards the cost to conduct analytical review of the current threshold of the Simplified Trade Regime (STR).

  1. BACKGROUND

The Common Market for Eastern and Southern Africa (COMESA) is a regional integration grouping of 21 African States which have agreed to promote regional integration through trade development and transport facilitation.

The COMESA is implementing the Simplified Trade Regime (STR) in eight Member States with the aim of facilitating small-scale trade at selected border posts. For Member States to implement the STR, they must be participants under the COMESA Free Trade Area (FTA). Other Member States not participating under the FTA have applied STR equivalents under bilateral preferential arrangements. DRC, which is not participating under the COMESA FTA, falls under this category. Under the Great Lakes Trade Facilitation Project (GLTFP), COMESA received a grant from the World Bank towards activities related to enhancing implementation of the Simplified Trade Regime (STR). The GLTFP is part of the wider World Bank Great Lakes Initiative (GLI) which reflects the commitment of the World Bank to assist countries of the Great Lakes Region (GLR) to reduce poverty and promote shared prosperity by targeting some of the most vulnerable groups in the border regions of the Democratic Republic of Congo (DRC) and neighbouring countries (Burundi, Rwanda, Tanzania, Uganda and Zambia). The project aim is to support peace and stability in the region through programs to improve livelihoods in the border areas, promoting cross border trade and strengthening economic interdependence.

Similarly, COMESA has received funding under the 11th EDF to support activities under the COMESA Cross Border Trade Initiative. The aim of this programme is to increase formal small scale cross border trade flows in the COMESA/tripartite region leading to higher revenue collection by governments at the borders as well as increased security and higher incomes for small scale cross border traders. The main beneficiaries of the of the programme are the small-scale cross border traders.

2.1 The main pillars of the STR are:

  1. The threshold value of goods that can be traded per transaction under the regime which current stands at USD 2000 or less. This value has changed over time and is determined through the COMESA Policy Organs processes;
  2. Common List of Goods to be traded under the regime that has been agreed upon by the trading partners at bilateral level; and
  3. Simplified Customs Documentation.

The Simplified Certificate of Origin is no longer a requirement as long as the goods being traded are on the Common List.

Historical Background to the current Threshold level of USD Two Thousand 2,000) and rationale for the Study

The first threshold level at the launch of the STR in 2010 was USD 500. However, small scale traders complained that this amount was too little and did not allow them an opportunity to grow their businesses and incomes, and hence requested for an increase to USD 1,000. The Council decided that the threshold be raised to USD 1000 in 2011. The threshold was further raised to USD 2000 by a Council of Ministers Decision in the year2014. One of the challenges experienced in the implementation of the STR has been reluctance by DRC to uphold and apply the threshold of USD 2000.  Officials from DRC have complained that the current level was injuring their economy and negatively impacting on Government revenue. Through STR dialogue and meeting of experts that have been held under the projects, even though the issue keeps coming up it has  not been resolved.  The matter was also raised during the Regional Coordination Committee (RCC) meeting of the GLTFP held in Kinshasa, DRC in May 2019 during which the RCC recommended that all policy matters relating to the STR should be channelled through the COMESA Policy Organs.

The Technical meetings discussed the issue of the STR threshold and the Council of Ministers at its 40th meeting, held in Lusaka, Zambia, decided that the COMESA Secretariat should undertake a study to review the suitability of the current threshold of USD 2,000  so that findings of this study can inform decision making by the policy organs on whether the threshold should be maintained or reviewed upwards or downwards and to which level.

Click on the link below for more details.

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