Domestic and Foreign Market Access

Overview: Trade Policy and Business Environment

The Republic of Rwanda is classified as a low-income country with an aim to transform the country into a lower middle-income economy by improving its business environment and competitiveness. The country was ranked 51st out of 132 countries in the World Economic Forum (WEF) Enabling Trade Index (2012) which measures institutions, policies and services to facilitate trade in countries. For its marked improvements in the business and regulatory environment for private business, Rwanda has been internationally commended as a lead reformer in East Africa. The country’s improving business environment has contributed to its robust economic growth, by the government’s continuous efforts to promote a private sector led free market economy. Rwanda is committed to improving trade with neighbouring countries and tackling the numerous non-tariff barriers that continue to hamper intra-regional trade. A National Cross-Border Strategy developed in August 2012, aims to foster stronger linkages between producers and manufacturers in Rwanda and in neighbouring countries. In spite of the government’s efforts to diversify the economy, Rwanda is still heavily dependent on natural resources and commodities (WEF 2012; World Bank 2013; African Development Bank 2013).

WTO 2012, Trade Policy Review:EAC
WEF 2012, Global Enabling Trade Report

INDICATOR, UNITS RANK/132 SCORE
Domestic Market Access The pillar assesses the level and complexity of a country’s tariff protection as a result of its trade policy. This component includes the effective trade-weighted average tariff applied by a country, the share of goods imported duty free and the complexity of the tariff regime, measured through tariff variance, the prevalence of tariff peaks and specific tariffs, and the number of distinct tariffs. 42 4.97
Foreign Market Access The pillar assesses tariff barriers faced by a country’s exporters in destination markets. It includes the average tariffs faced by the country as well as the margin of preference in destination markets negotiated through bilateral or regional trade agreements or granted in the form of trade preferences. 20 3.75
Tariff rate (%) This indicator is calculated as a trade-weighted average of all the applied tariff rates, including preferential rates that a country applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2012 data). An applied tariff is a customs duty that is levied on imports of merchandise goods. 94 8.72
Complexity of tariffs , index 1-7 (best) This indicator is calculated as the average of the following indicators: Tariff dispersion, Specific tariffs and Number of distinct tariffs. See description of each individual indicator for more details. Prior to averaging, values for each indicator were transformed to a 1–7 score, using the min-max method. 45 6.40
Tariffs dispersion (standard deviation) This indicator reflects differences in tariffs across product categories in a country’s tariff structure. The variance is calculated across all the tariffs on imported merchandise goods, at the 6-digit level of the Harmonized Schedule. 105 11.66
Tariffs peaks (%) This indicator is the ratio of the number of tariff lines exceeding three times the average domestic tariff (across all products) to the MFN (most-favoured nation) tariff schedule. The tariff schedule is equal to the total number of tariff lines for each country. These tariffs are revised on a yearly basis. 41 0.77
Specific tariffs (%) This indicator is the ratio of the number of Harmonized System (HS) tariff lines, with at least one specific tariff, to the total number of HS tariff lines. A specific tariff is a tariff rate charged on fixed amount per quantity (as opposed to ad valorem) 59 0.15
Number of distinct tariffs This indicator reflects the number of distinct tariff rates applied by a country to its imports across all sectors. 47 16.00
Share of duty-free imports (%) Share of trade, excluding petroleum, that is imported free of tariff duties, taking into account MFN tariffs and preferential agreements. Tariff data is from 2013 or most recent year available and imports data is from 2012 38 66.50
Tariffs faced (%) This indicator is calculated as the trade-weighted average of the applied tariff rates, including preferential rates that the rest of the world applies to each country. The weights are the trade patterns of the importing country’s reference group (2012 data). A tariff is a customs duty that is levied by the destination country on imports of merchandise goods 21 4.93
Index of margin of preference in destination markets, 0-100 (best) This indicator measures the percentage by which particular imports from one country are subject to lower tariffs than the MFN rate. It is calculated as the average of two components: 1) the trade-weighted average difference between the MFN tariff and the most advantageous preferential duty (advantage score), and 2) the ratio of the advantage score to the trade-weighted average MFN tariff level. This allows capturing both the absolute and the relative margin of preference. 34 48.54

Trade Policy and Market Access

Rwanda has been a member of the WTO since 1996. Rwanda’s average MFN applied tariff in 2012 was 12.8 per cent. Agricultural products face higher barriers (19.9 per cent) compared to non-agricultural products (11.7 per cent). Rwanda acceded to the East African Community (EAC) in 2007, and began implementing the common external tariff (CET) in 2009. The EAC Council of Ministers approved an exception for Rwandan manufacturers to import specified raw materials and industrial inputs free of customs tariffs for five years from 2009 (WTO 2012). However, Rwanda’s exports to the EAC remain far smaller by imports, despite having risen greatly in recent years because exports are still destined to a few traditional trade partners, and utilization of preferential market access opportunities remains low. As a member of EAC, Rwanda has also participated in the negotiation of a comprehensive regional Economic Partnership Agreement with the EU. It also belongs to Common Market for Eastern and Southern Africa (COMESA) (WTO 2012; Bertelsmann Siftung 2014). According to these agreements, Rwanda has amended its legislation for free movement of goods, services, capital and limited types of labour.

African Development Bank, 2013, African Economic Outlook (Rwanda)

Bertelsmann Siftung, 2014, Rwanda Country Report

World Bank, 2013, Rwanda Economic Update

Standard Compliance and Other Relevant Import/Export Restrictions

The Rwanda Bureau of Standards (RBS) is in charge of promoting standards, quality management, and metrology activities, as well as ensuring their application. Technical regulations are developed by multiple ministries. According to the WTO Trade Policy Review (2012), 528 Rwandan standards were harmonized with EAC standards, and 304 with COMESA standards. Institutions responsible for the inspection system, quality control laboratories, and the certification system are fragmented. Moreover, the legal and regulatory framework on sanitary and phytosanitary measures is insufficient. Due to environmental concerns, Rwanda prohibits the importation of plastic bags. This may become a barrier to export together with the absence of packaging plants in Rwanda because exporters must obtain permission from the Rwanda Environment Management Authority to import plastic bags as packaging material for export.

WTO, 2012, Trade Policy Review: EAC