Domestic and Foreign Market Access

Overview: Trade Policy and Business Environment

The United Republic of Tanzania is classified as a low income country. In the World Economic Forum (WEF) Global Enabling Trade Index (2012), which measures institutions, policies and services to facilitate trade in economies, Tanzania was ranked 94th while its neighboring countries of Kenya, Uganda, and Zambia were ranked 103rd, 98th and 88th respectively out of 132 countries. Tanzania fared relatively well in both domestic and foreign market access but lacked somewhat in transport and communications infrastructure. It can be stated as an import oriented economy with imports being USD 11.7 billion (2012) and exports being USD 5.5 billion (2012). Mineral production (gold, diamonds and tanzanite) represents the biggest source of economic growth and foreign exchange through exports. The economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85 per cent of exports, and employs about 80 per cent of the work force.

WEF, 2012, Global Enabling Trade Report

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. 87 4.59
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. 17 3.87
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. 102 9.69
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. 49 6.37
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. 108 11.86
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. 49 0.86
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) 61 0.22
Number of distinct tariffs This indicator reflects the number of distinct tariff rates applied by a country to its imports across all sectors. 52 19.00
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 82 54.67
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 17 4.87
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. 29 49.90
Source : World Economic Forum, Global Enabling Trade Report 2014

Trade Policy and Market Access

Tanzania has been a member of WTO since 1995. Tanzania bound only 13.5 per cent of its tariff lines, with ceiling rates of 120 per cent for both agricultural and non-agricultural products. As a founding member of the East African Community (EAC) the country is undertaking trade liberalization within this customs union, and applies the EAC Common External Tariff (CET). Therefore, Tanzania follows a three tiered tariff structure (0 per cent for raw materials and capital goods; 10 per cent for intermediate goods; and 25 per cent for finished goods) with some exceptions, while it eliminated all tariffs on intra-EAC trade in 2010. Also, as a member of the Southern African Development Community (SADC), as of 1 January 2011, Tanzania grants duty-free treatment to goods imported from all SADC countries. As an LDC, it is a beneficiary from the Everything-but-Arms initiative of the EU, the African Growth and Opportunity Act of the US, and the Generalized System of Preferences (GSP) of many WTO members. Tanzania, with the combination of its strategic location, stable political climate, positive macroeconomic outlook, and its membership in EAC (Customs Union with Kenya, Uganda, Burundi and Rwanda) is a relatively attractive destination for investors.

WTO, 2012, Trade Policy Review (EAC: Tanzania)

Standard Compliance and Other Relevant Import/Export Restrictions

Tanzanian standards and technical regulations do not distinguish between domestically produced and imported goods. Tanzania continued to harmonize its national standards and technical regulations with international or regional standards. Its national standards and technical regulations are generally adopted or adapted from international standards, and relate mainly to food and agriculture, chemicals, textiles and leather, engineering, the environment and general techniques. Moreover, as a EAC member, Tanzania has harmonized some 1,200 voluntary standards for uniform application within the economic bloc. Compared to issues of technical barriers to trade, less effort has been made for the harmonization of sanitary and phytosanitary (SPS) measures at the EAC level. Tanzania is a member of the Codex Alimentarius, the World Organisation for Animal Health, and the International Plant Protection Convention. A National SPS Committee was established in August 2009 to serve as a platform for consultations and coordination among stakeholders on SPS issues. The committee is also meant to advise the Government on SPS-related policies and regulations, monitor promulgation and implementation of national SPS measures, and ensure adoption of international standards and guidelines. However, improving enforcement capacity, agency coordination, and information and notification mechanisms is some of the key challenges.

TPSF, Tanzania Private Sector Foundation: SPS Policy and Advocacy