BizCLIR

Following substantial economic liberalization in the business and trade environments in the 1990s, Tanzania’s international trade regime has markedly improved from its recent past. The contribution of international trade to Tanzania’s gross domestic product (GDP) has grown, on average, by seven percent between 1999 and 2005, and now accounts for nearly three-fifths of GDP.

Tanzania is poised to continue its reforms, both with respect to its international trade regime generally and the facilitation of trade at its borders. The country is endowed with an abundance of natural resources and is strategically located to engage in trade. It borders five landlocked countries and offers the port of choice for eastern Congo. As a Least Developed Country (LDC), Tanzania receives preferential treatment in all of the world’s largest export markets, including the European Union (EU), United States, Japan, and China.

Recently, Tanzania enhanced its trade potential by incorporating international and regional agreements into its legal and regulatory frameworks and by creating or strengthening a variety of institutions charged with implementing these agreements. The country is a founding member of the World Trade Organization (WTO), a member of the East African Community (EAC), and a member of the Southern African Development Community (SADC). In 2005, Tanzania took the significant step of establishing an EAC customs union with Kenya and Uganda (Rwanda and Burundi joined in June 2007). By adopting the EAC Common External Tariff (CET), Tanzania replaced a four-band tariff structure with a simplified three-band tariff structure of 0, 10, and 25 percent.

Tanzania has also made important strides toward improving the facilitation of movement of goods at its borders. As detailed in this chapter, initiatives are underway to ensure integrity, transparency, and consistency for the trade community. These initiatives, if continued in earnest, can improve the enabling environment for private-sector growth and investment over the next generation.

Notwithstanding recent developments, a great number of reforms have yet to take place. Tanzania runs a trade deficit – for a variety of reasons, the value of its imports outweighs the value of its exports. In 2005, the deficit reached US$987 million, or more than 5.4 percent of GDP. With respect to trade in goods, a number of taxing schemes, bureaucratic delays, and other regulatory constraints continue to limit the competitiveness of Tanzanian exports. Trade in services is similarly not reaching its potential, due in significant part to continuing restrictions on the free movement of labor. In addition, Tanzania has not committed to important international standards in trade facilitation. It has not signed the International Convention on the Simplification and Harmonization of Customs Procedures (the Revised Kyoto convention) and does not yet engage critical international transit procedures.

Thus, Tanzania faces challenges both in trade policy development and implementation of trade reforms. This chapter first discusses the country’s international trade law and policy regime generally, including the extent to which the country’s major stakeholders and decision-makers understand international trade. Then, the chapter examines key aspects of facilitation of trade at Tanzania’s borders, with an emphasis on the activities of the Customs and Excise Department (CED) of the Tanzanian Revenue Authority and other border institutions.