THE TENTH MEETING OF THE COUNCIL OF THE REGIONAL CUSTOMS TRANSIT GUARANTEE (RCTG) SCHEME

Transcription

1 Distr. LIMITED CS/YC-RCTG/CS/X/13 September, 2016 Original: ENGLISH COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA Tenth Meeting of the Council of the Regional Customs Transit Guarantee/Bond (RCTG) Scheme Kinshasa, DR Congo September 2016 REPORT OF THE TENTH MEETING OF THE COUNCIL OF THE REGIONAL CUSTOMS TRANSIT GUARANTEE (RCTG) SCHEME 16(BG-CH-vnm)

2 Page 2 I. INTRODUCTION 1. The Tenth Meeting of the Council of Regional Customs Transit Guarantee (RCTG CARNET) was held from 28 th to 30 th September 2016, in Kinshasa, DR Congo, at Roméo Golf. II. ATTENDANCE, OPENING OF THE MEETING, ELECTION OF THE BUREAU, ADOPTION OF THE AGENDA AND ORGANISATION OF WORK 2. The meeting was attended by members of the Council of RCTG Scheme from Burundi, Congo DR, Djibouti, Kenya, Malawi, Rwanda, South Sudan, Tanzania and Uganda. The meeting was also attended by the Federation of East African Freight Forwarders Association (FEAFFA), the Federation of Clearing and Forwarding Associations of Southern Africa (FCFASA), RCTG Pool Managers: ZEP-RE (PTA Reinsurance Company) and the COMESA Secretariat. Northern Corridor Transit and Transport Coordination Authority (NCTTCA) and Central Corridor Transit and Transport Facilitation Agency (CCTTFA) also attended the meeting as observers. A list of participants is attached to this report as Annex I. Opening of the Meeting (Agenda item 1) 3. The Meeting was officially opened by Mr. Deo Rugwiza, Director General of the General Directorate of Customs and Excise (DGDA). In his Statement, the Director General welcomed the delegates to DR Congo and wished them a pleasant stay in Kinshasa. Mr. Rugwiza underscored the importance of Trade Facilitation, such as the RCTG Scheme, which matters a great deal particularly to landlocked developing countries in the reduction of transit and transport time and increasing efficiency in the removal, movement and clearance of Transits goods in the region. 4. Mr. Rugwiza highlighted the significant progress made in the operations of the scheme in the Northern, Central and Dar Corridor countries and commended all the stakeholders involved in the operations for their commitment and the success achieved. He then urged Member States especially those that are landlocked and at the end of the transit chain, who would gain most from the implementation of the scheme, such as Malawi, Zambia, Zimbabwe and Ethiopia to step up their efforts to implement the scheme without further delay. The Director General pointed out that due to the benefits realized on the use of the RCTG Carnet an increasing number of Small and Medium Clearing and Forwarding Agents (SMEs) were participating in the scheme and urged the COMESA Secretariat and Member States to strengthen the participation of SMEs by providing support in capacity building and regional networking. 5. The Director General concluded by thanking the COMESA Secretariat for organizing this annual meeting in DR Congo. He further thanked the participants for their positive response to come and participate in this meeting. 6. Earlier, Mr. Berhane Giday, Chief Programme Officer of the RCTG and Yellow Card Programmes of the COMESA Secretariat made a statement on behalf of the COMESA Secretary General. Mr. Giday joined the Chairperson in welcoming the delegates to the Tenth Meeting of the Council of the RCTG. He thanked the Guest of Honour for having found time in his busy schedule to come and open the meeting. He further thanked DGDA and SONAS for hosting the annual meeting.

3 Page 3 7. Mr. Giday highlighted the activities carried out and the progress made since the last meeting of the Council of RCTG. He informed the meeting that the number of RCTG Bonds executed had increased from 469 in 2015 to 869 in 2016 while the number of Clearing and Forwarding Agents had increased from 469 to 869 of which 90% are SMEs. He further informed the Meeting that the number of Carnets issued for goods in transit had increased from 40,000 in 2015 to 75,725 in He pointed out the lack of progress by Ethiopia and Djibouti to resolve the issue of premium sharing is the main cause for the delays in the implementation of the RCTG Carnet in the Djibouti Corridor and Burundi in starting the operations and urged the Member States to address the issues without further delays. Finally, he requested the Council of RCTG to thoroughly consider the agenda items tabled before the meeting and make decisions to strengthen the operations of the RCTG CARNET. Vote of thanks 8. The delegate from Djibouti, Mr David Boucher, Commercial Director GXA, moved a vote of thanks on behalf of the delegates. In his statement, he thanked the Guest of Honour for finding time from his busy schedule to come and open the meeting. 9. The 10 th Meeting of the Council of the Regional Customs Transit Guarantee (RCTG) Scheme was chaired by Mr. Bushiri Ramazani, Director for Katanga and Eastern Provinces, SONAS and the Chairperson of the Council of RCTG. Election of the Bureau (Agenda item 2) 10. The Meeting maintained the current bureau as follows: Chairperson Vice Chairperson Rapporteur : DR Congo : Uganda : Malawi Adoption of Agenda and Organisation of Work (Agenda item 3) 11. The meeting adopted the following agenda: 1. Opening of the meeting; 2. Election of the Bureau; 3. Adoption of Agenda and Organization of Work; 4. Progress Report on the operations and implementation of the Regional Customs Transit Guarantee (RCTG) Scheme; 5. Country Reports by KRA, URA, RRA, TRA, OBR and DGDA on the operations of the RCTG CARNET; 6. Report of the Ninth Meeting of the Management Committee of the Regional Customs Transit Guarantee (RCTG) Scheme;

4 Page 4 7. Managers Report on the Operations of the Reinsurance Pool of the RCTG Scheme; 8. Audited RCTG Reinsurance Pool Manager s Report and Financial Statement, for the year ended 31 st December 2015; 9. RCTG Reinsurance Pool Financial Highlights as at 31 st August 2016; 10. Proposal on the participation of the banks in the operations of the RCTG Scheme; 11. The Improved RCTG-MIS; 12. Report on the interface of the RCTG-MIS with ASYCUDA World, TANCIS and SIMBA; 13. Draft Operations Manual of the RCTG CARNET; 14. Proposed RCTG Annual Work Programme for 2016/17; 15. Date and Venue of the next meeting; 16. Any Other Business; 17. Adoption of the Report and Closure of the Meeting 12. The meeting agreed on the following hours of work: Morning Afternoon II. ACCOUNT OF PROCEEDINGS Progress Report on the Operations and Implementation of the Regional Customs Transit Guarantee Scheme (RCTG CARNET) (Agenda item 4) 13. A representative of the COMESA Secretariat presented document No. CS/YCRCTG/X/2: Progress Report on the Operations and Implementation of the Regional Customs Transit Guarantee Scheme (RCTG-CARNET). He informed the meeting that the focus of 2016 RCTG Work Programme was to strengthen the operations of the Scheme in the Northern and Central Corridor countries and to commence the operations in other Corridors. In line with the Annual Work Programme and pursuant to the decisions of the 9 th Meeting of the Council of RCTG and recommendations of the 9 th Meeting of the Management Committee of the RCTG several activities were carried out. 14. On the operations of the RCTG CARNET, the meeting was informed that an encouraging progress was made since the roll out of the scheme in 2012.

5 Page The Meeting was further informed that the highlights of the activities carried out during the period under review were as follows: A. Northern Corridor a) Kenya 16. During the mission to Kenya in May 2016, a meeting was held with the Officials of ZEP- RE: RCTG Reinsurance Pool Managers to discuss on the strengthening the capacity of the RCTG Reinsurance Pool and implementation of the decisions of the Council of the RCTG Scheme. Following the discussions, it was agreed that the Pool Managers should: a) Submit comprehensive reports to the MC and Council of RCTG; b) Effect payment of Administration fees to both the Secretariat and the National Sureties on finalization of the audit report; c) Provide to Secretariat a statement of all paid and outstanding premium returns; and d) Write to Customs Administrations requesting them to suspend Sureties with outstanding premium returns from issuing bonds. 17. A consultative meeting was held with the Africa Trade Insurance Agency (ATI) on 31 st May 2016 in Nairobi, Kenya to explore the possibilities of ATI participate in the operations of the RCTG Carnet and the following was agreed: i) ATI to provide technical support to support Banks to participate in the issuance of RCTG Bonds; and ii) Offer counter guarantees to Banks for them to reduce collateral requirements. 18. The Secretariat also held a consultative meeting with Kenya-Re, the National Suety of Kenya on 31 st May 2016 and discussed on the operations of the RCTG Scheme in Kenya. During the meeting, the following observations were made: a) Payment of 80% premium cession: Kenya-re to implement the decision of the Council of RCTG and issue a notice of suspension to Primary Sureties with a copy to KRA for those who will not have paid their cessions; b) Delays by Primary Sureties in signing Reinsurance Treaty: Secretariat to provide to Kenya-re a template letter for use; and c) Kenya-Re to implement decisions of the Council of RCTG and recommendations of the Management Committee including on the payment of budget contribution arrears. 19. In addition, a consultative meeting was held with the Gulf African Bank in Nairobi on 31 st May 2016 and discussed on the modalities for the bank to participate in the operations of the RCTG Scheme. During the consultation, the following observations were made: a) KRA had accepted a bond which was issued by Gulf African Bank but rejected the one issued in May 2016 citing change of procedures; b) Banks request for 100% collateral while Insurance companies issue RCTG Bonds under a Reinsurance protection hence the relaxed condition on collateral needs; and

6 Page 6 c) Secretariat to prepare a proposal on the modalities for the banks to join the Scheme through their mother body, Kenya Banks Association. 20. In the discussion that followed, the Pool informed the meeting that the inclusion of the suspension clause in the Reinsurance Cover Note yielded positive results in terms of the submission of returns and payment of premium cessions.by the Primary Sureties in Kenya. Decisions 21. Taking into account the above, the meeting decided that: a) National Sureties should adhere to the decision of the Council of RCTG and issue notice of suspension to Primary Sureties that had not submitted returns and effect payment to the Pool ; b) Secretariat should engage banks to participate in the operations of the RCTG Carnet; and c) The Secretariat should continue its engagement with ATI to facilitate their participation in the RCTG Carnet particularly with Banks. b) Uganda 22. On submission of premium returns and payment of cession, Primary Sureties in Uganda were up to date. 23. The National Surety of Uganda paid the RCTG budget contribution arrears for the fiscal year 2014/15. On behalf of the Council of RCTG Scheme, the Secretariat commended NIC- Uganda for its commitment and urge other National Sureties to do the same. 24. The Secretariat informed the meeting that it had received complaints from the Clearing Agents on delays of Carnet acquittal by Uganda Revenue Authority which resulted to holding their bond for a long time thus affecting the operations of the RCTG Scheme. Despite the Secretariat Engagements with URA, there were un-acquitted Carnets. 25. In the discussion that followed, the meeting was informed that URA was conducting enhancements on the ASYCUDA World to automatically acquit Carnets upon termination of transit. Decision 26. In view of the above, the meeting decided that URA should expedite the introduction of an automatic system to acquit Carnet upon termination of transit. c) Rwanda 27. On payment of premium cession, the meeting was informed that despite several reminders to SONARWA, no Primary Surety had settled premium cessions to the RCTG Reinsurance Pool.

7 Page In the ensuing discussion, the delegate of Rwanda raised a concern that implementing the Council decision of suspending non-compliant Primary Sureties would make the bonds issued invalid thus there was need to introduce soft sanctions which would not affect Customs operations. The meeting noted with concern the non-payment of the premium cession by the Primary Sureties in Rwanda and reiterated its decision on sanction as it had yielded positive results. Decision 29. In view of the above, the meeting decided that SONARWA in consultation with RRA should suspend the Primary Sureties who would not have effected payment of premium cessions to the Pool by 1 st January B. Central Corridor 30. The meeting was informed that TRA was yet to reappoint a focal person to coordinate the operations of the RCTG CARNET in Tanzania. The meeting was further informed that TRA had developed the solution to allow capturing of the chassis number of the motor vehicle units but was yet to be deployed. Regarding the commencement of the operations of the RCTG CARNET in Burundi, the meeting was informed that despite the finalization of all preparations activities in early 2016, Burundi had not yet started the operations. 31. In the discussion that followed, the delegate of Burundi informed the meeting that OBR was technically ready to implement the RCTG Carnet and requested the Secretariat to send the documents requested by SOCABU, the National Surety. The Secretariat assured the meeting that the remaining French documents would be sent to SOCABU immediately after this meeting. Decisions 32. Taking into account the progress made on the operations of the RCTG CARNET in the Central Corridor, the Council of RCTG decided that TRA should: i) re-appoint a focal person to coordinate the operations of the RCTG CARNET in the country; and ii) Deploy the developed solution to allow capturing of the chassis number of the motor vehicle units by 30 th November The Council of RCTG expressed concern on the delays in starting the RCTG CARNET operations in Burundi and decided that OBR and SOCABU should commence operations as soon as they receive the remaining documents from the Secretariat. Operational issues in the Northern and Central Corridor 34. The Council of RCTG was informed that during the consultations and follow up mission on the operations of the RCTG CARNET in the Northern and Central Corridors, the following operational issues were identified: a. Delays in Bond acquittal; b. Need for more stakeholder training and awareness;

8 Page 8 c. Delays in submission of premium returns and payment of cession by primary Sureties to the Pool; d. Capacity limitation of the National Sureties; and e. Limited engagement between Revenue Authorities and Sureties. 35. In the discussion that ensued, the meeting observed that each Member State should have a national Team that would be responsible for coordinating the sensitization of the stakeholders on the operations of the RCTG Scheme. Decisions 36. In order to address the operational issues identified, the Council of RCTG decided that: i) Revenue Authorities should put in place a system to automatically acquit RCTG Carnet upon termination of transit. ii) Revenue Authorities should sensitize Sureties and Clearing Agents on new developments related to the operations of the Scheme; iii) Sureties should submit quarterly premium returns and payment of cession to the Pool; iv) Revenue Authorities should collaborate with National Sureties on suspending Primary Sureties Primary who have not submitted their returns to the Reinsurance Pool within the prescribed time limit; and v) CEO s of the Corporations or Institutions designated as National Sureties should provide support to officers responsible for the administration and coordination of the RCTG Carnet. C. Djibouti Corridor 37. The Council of RCTG was informed that no progress was made by Djibouti and Ethiopia on the negotiations of sharing of premiums of RCTG Bond, despite the effort by COMESA Secretarial to engage the National Surety of Ethiopia in May 2016 and this had stalled the commencement of operations in the Djibouti Corridor. 38. In the discussion that followed, the delegate of Djibouti requested the Secretariat to organize a meeting between Djibouti and Ethiopia on the negotiations of sharing of premiums of RCTG Bond. Decisions 39. The Council of RCTG decided as follows: a) Secretariat should organize a meeting between Djibouti and Ethiopia on the negotiations on the modalities of sharing premiums on the RCTG Bonds. b) Djibouti, Ethiopia and Sudan should commence the process of interfacing RCTG-MIS and ASYCUDA; and c) Secretariat should provide necessary technical support to Djibouti, Ethiopia and Sudan during 4 th quarter of 2016.

9 Page 9 D. South Sudan 40. The Council of RCTG was informed that following consultation with the Officials of the Ministry of Trade, the Secretariat visit to South Sudan to proceed with the preparations for the commencement of the operations of the Scheme was postponed until the situation in the country improves. Decision 41. The Council of RCTG decided that the COMESA Secretariat should provide necessary technical support to South Sudan to facilitate the commencement of the operations of the RCTG Scheme in the country. E. Dar-Es Salaam and North-South Corridor i) Democratic Republic of Congo 42. The meeting was informed that the Secretariat jointly with Directorate of Customs (DGDA) and National Surety (SONAS) conducted Stakeholders Workshop and held consultation in Kinshasa in June 2016 on the operations of the RCTG CARNET. The meeting was further informed that detailed activities were agreed with a view to commence the operations. 43. In the ensuing discussion, the delegate of DR Congo informed the meeting that DGDA had formed a team to work on the incorporation of the RCTG CARNET in the Customs Act and the draft Act would be submitted to the Parliament soon. iii) Malawi 44. With regard to the implementation of the RCTG in Malawi, the Council of RCTG was informed that the Secretariat mounted a mission to Malawi in August 2016 and the Secretariat held a consultative meeting with Malawi Revenue Authority and key stakeholders and conducted stakeholders workshop on the implementation of the Scheme in the country and the following were observed: i) MRA was migrating from ASYCUDA++ version to ASYCUDA World; ii) The importance to engage Mozambique to join the Scheme as most of the imports into Malawi pass via Mozambique; and iii) MRA was requested to include RCTG on the MoU on trade facilitation that would be signed with Mozambique. 45. The Council of RCTG was informed that detailed preparations activities for the commencement of the operations of the RCTG Scheme was agreed. 46. In the discussion that followed, the delegate of Malawi informed the meeting that MRA had already identified Clearing and Forwarding companies to roll out the RCTG Scheme with Tanzania and was ahead of schedule in implementing the other agreed activities. 47. With regard to the implementation of the Scheme in Zambia, the Council of RCTG was informed that the Secretariat held a meeting with Zambia Revenue Authority on 22 nd August

10 Page and discussed on the implementation of the COMESA Programmes including RCTG and the following observations were made: Decisions i) The need to interface/integrate ZRA and ZIMRA ASYCUDA World Systems ; ii) COMESA to provide necessary support for the integration of the ZRA and ZIMRA Systems and coordinate the activities; iii) UNCTAD regional office to prepare Concept Paper for the interface of the two systems ; and iv) Technical Working Group to be formed consisting Customs (Functional), IT (Technical) and COMESA Secretariat. 48. In order to expedite the commencement of operations of the RCTG CARNET in the Dar and North-South Corridors, the Council of RCTG decided that: a) DGDA should carry out the activities agreed for the commencement of the operations of the RCTG CARNET without delays; b) MRA should carry out the activities agreed for the commencement of the operations of the RCTG CARNET with Tanzania; c) COMESA Secretariat and MRA should engage Mozambique to implement RCTG with Malawi in the Biera Corridor by January 2017; and d) The COMESA Secretariat should provide the necessary support for the integration of the ZRA and ZIMRA ASYCUDA World. OTHER ACTIVITIES F. Popularizing and promoting the RCTG Scheme 49. The Council of RCTG was informed that the Secretariat had secured Euro 23,600 from the European Union through Regional Integration Support Programme (RISP) for carrying out popularising and promoting the Scheme. The meeting was further informed that the procurement process was done and the promotional materials would be produced and circulated soon. G. Study on the assessment of the implementation of the RCTG CARNET 50. The Council of RCTG was further informed that the Secretariat had secured US$48,000 from the European Union through Technical Cooperation Facility for carrying out a Study on the Assessment of the implementation of the RCTG CARNET and that the recruitment of the Consultant was under processes. H. The Funding of the RCTG CARNET 51. The Council of RCTG was informed that Management of the COMESA Secretariat had allocated funding for the RCTG Scheme from the CVTFS programme and that the limited funding was used to extend the contract of the professional staff and convening 10 th Meeting of the Council.

11 Page The Council of RCTG was further informed that the Pool Manager had transferred US$96,484 to the Secretariat in September 2016 as the Administrative Fee allocated to the Council of RCTG for the year The meeting was further informed that the Pool had requested the National Sureties to send their bank details to the Pool to facilitate remittance of the Management Fee. Decision 53. The Council of RCTG noted with appreciation progress made in the transfer of the Management fees to the Secretariat and decided that: a) The Pool Manager should transfer the funds collected for 1 st and 2 nd quarters 2016 to COMESA Secretariat; and b) Transfer the Management Fee to the National Sureties. Country Reports by KRA, URA, RRA, TRA, OBR and DGDA on the operations of the RCTG CARNET (Agenda Item 5) 54. The representatives of the Revenue Authorities of Kenya, Uganda, Rwanda, Tanzania and Office of Burundi Revenue and DR Congo Customs Authority presented their country reports on the status of operation and implementation of the RCTG CARNET as follows: Burundi 55. The Council of RCTG was informed that OBR had carried out the following activities: a) Identified 5 Clearing and Forwarding companies to participate in the roll out of the RCTG CARNET; and b) Finalized integration between the RCTG-MIS with ASYCUDA World. 56. The meeting was informed that the Secretariat was yet to send French version of the following documents to SOCABU: a) RCTG and Inter-Surety Agreements; b) Bond forms; c) Counter indemnity; d) Bond proposal form; and e) RCTG Operations Manual. 57. In the discussions that followed, the meeting was informed that the Secretariat had sent some of the documents to SOCABU. The French version of the summarized processes on the operations of the RCTG Scheme would be sent latest by 15 th October 2016 pending the finalization of the Operations Manual and other documents would be resent on 3 rd October DR Congo 58. The Council of RCTG was informed as follows:

12 Page 12 Kenya a) The draft law on the incorporation of the RCTG CARNET in the Customs Act of DR Congo would be submitted to Parliament soon; b) In readiness for the interface of ASYCUDA World with RCTG-MIS, DGDA had: i. Acquired and set up a data centre and procured a server; and ii. Would carry out the integration process in the next one month. 59. The meeting was informed that KRA had phased out National bonds with effect from 1 st February 2016 except for sensitive goods like rice, sugar, tyres which use bank particular bonds. The meeting was further informed that KRA developed the interface between SIMBA and RCTG-MIS and was operational and information exchange between the two systems and with other Partner States was done via IDES. 60. KRA pointed out the following operational issues: Decisions a) The design of SIMBA does not allow for apportioning of Bond per truck load/container which is the basis of issuing Carnet and hence partial acquittal of the bond is not possible; b) In the event that IDES cannot communicate with the Central server the bond balances in different countries shall be at variance; c) Kenya is in the process of acquiring a new Customs System thus integration with RCTG-MIS will be done twice; d) Variance in period of bond validity, 1 year, 3 years or calendar year); e) Banks have not yet started issuing RCTG bonds; f) Agents need adequate training on the operations of the RCTG bonds; g) Competition on premium rates; h) South Sudan and DR Congo have not been integrated into the Scheme; and i) Bond cancellation issues. 61. To address the operational issues, the Council of RCTG decided that: Rwanda a) Secretariat and KRA should train Clearing Agents by 15 th November 2016; b) With effect from 1 st January 2017 the period of validity of the new RCTG Bonds executed should be twelve (12) months and all Customs Authorities implementing RCTG Carnet should review their directive accordingly; c) Banks should participate in the issuance of RCTG Bonds as proposed by the Secretariat; d) The RCTG Bond premium rate should be limited between a minimum of 0.50% and maximum of 1.5%. 62. The meeting was informed that the RCTG Carnet was fully operational for transit goods to and from Northern and Central Corridors and the RCTG-MIS was integrated with ASYCUDA World. The Meeting was further informed that the use of RCTG Carnet was expanded to cover goods under customs control while being transferred from one customs control /bonded

13 Page 13 warehouse to another. The meeting was informed that RRA had executed 223 RCTG Bonds and issued Carnet since inception in The meeting was further informed of the following operational issues: a) Clearing Agents submit to RRA copies of RCTG Bonds issued from other Member States without approval by respective Customs Authorities; b) No expiry date on RCTG Bonds issued from other Member States; c) Creation of a NEW bond account reference during the annual renewal process for an already existing Clearing Agency results in many active RCTG Accounts; d) Incorrect Bond numbering format results in bond account discrepancies between National Customs System and RCTG-MIS; and e) Lack TIN/PIN harmonization and automation of creation of bond account reference across Member States National Customs Systems. 64. In the discussions that followed, the Secretariat informed the meeting that the improved RCTG-MIS was rejecting incorrect bond numbering format while the issue of automatic bond update would be addressed during the 3 rd Meeting of the RCTG Technical Working Group which would be convened in October Decisions 65. To address the challenges, the Council of RCTG decided that: a) Revenue Authorities should transmit in time a recommendation letter with a list of approved Clearing Agencies who wish to operate from a given Partner State; and b) The copies of RCTG Bonds stating the validity period should be transmitted by the Revenue Authorities of the issuing country instead of Clearing Agents. Uganda 66. The Council of RCTG was informed that since Uganda started issuing the RCTG Bond in 2014, over 135 RCTG General bonds were executed and 40,583 Carnet were issued, showing growth in usage of the RCTG Bond and transit transaction. This was attributed to the introduction of the Single Customs Territory and integration of RCTGMIS with ASYCUDA World. The meeting was further informed that the implementation of the RCTG Carnet had benefited stakeholders in saving time and cost. 67. The Council of RCTG was further informed of the following operational issues: a) Some bonds issued in Uganda were rejected by KRA; b) Some RCTG-MIS data was corrupted during data migration ; c) The RCTG-MIS allowing multiple creation of the same RCTG Bond;; d) Expiry of the RCTG Bond before transit is terminated ; e) System failure to automatically acquit Carnet;; and f) Cases where more than one (1) Carnet is generated for the same T1.

14 Page In the discussion that followed, it was observed that: a) URA should automatically acquit the Carnet upon validation of T1 without waiting for a warehouse entry to be lodged; b) RCTG Carnet remains valid irrespective of the expiry date of the bond; and c) Customs Administrations should create one RCTG Bond account for one Agent. Decisions 69. To address the operational issues, the Council of RCTG decided that: a) The RCTG-MIS should restrict multiple bond creation; b) URA should enhance ASYCUDA World by March 2017 to automatically acquit the Carnet upon lodging of a warehousing entry; and c) RCTG-MIS should be enhanced to strictly allow generation of one (1) Carnet per T1. Report of the Ninth Meeting of the Management Committee (MC) of the Regional Customs Transit Guarantee (RCTG) Scheme (Agenda item 6) 70. The COMESA Secretariat presented document No CS/YC-RCTG/MC/IX/4: Report of the Ninth Meeting of the Management Committee (MC) of the Regional Customs Transit Guarantee (RCTG) Scheme. The Council of RCTG was informed that the 9 th Meeting of the MC was held from 5 th to 6 th May 2016, in Mombasa, Kenya. The meeting was attended by MC members from Burundi, DR Congo, Kenya, Rwanda and Uganda. The Council of RCTG noted that the meeting was also attended by the Federation of East African Freight Forwarders Association (FEAFFA), Kenya International Freight & Warehousing Association (KIFWA), Rwanda Clearing Agency Association ( ADR ), ZEP-RE (PTA Reinsurance Company) and the COMESA Secretariat. The Council of RCTG further noted that South Sudan and Northern Corridor Transit and Transport Coordination Authority (NCTTCA) also attended the meeting as observers. In considering the report, the Council of RCTG noted the highlights of the report as follows: a) Operations of the RCTG CARNET in the Northern Corridor 71. The Council of RCTG noted the highlights of the activities carried out in Kenya, Uganda and Rwanda as follows: Kenya 72. A Sensitization Workshop on the operations of the RCTG Scheme was conducted in Mombasa in February The issues raised and observations made were as follows: a) High premium rate being charged in Kenya compared to other countries within the region; b) Only six (6) out of thirty (30) Primary Sureties had signed the Reinsurance Treaty of the RCTG Pool ; c) Collateral was still being demanded on all bonds;

15 Page 15 d) Some Primary Sureties had indicated that the premium retention of 20% was high while others stated that the 20% was low; and e) Delays in acquittal of Carnet. 73. The Secretariat jointly with Kenya-Re conducted a Workshop of the Primary Sureties in Nairobi on 7 th March 2016 and the following issues were raised and discussed: Decisions a) The need to introduce online Bond application in the new RCTG-MIS; b) KRA would replace SIMBA with a new system in January 2017; c) The need to harmonize the period of Bond validity. The period of validity in Kenya is three years, in Rwanda is one year and in Tanzania it is indefinite. d) South Sudan has been admitted into the EAC thus should be included in the geographical scope of the RCTG Scheme after joining the Scheme. e) The Maximum limit of RCTG Bond of US$2million per client on Particular Bond is high as no claim can go up to this amount. f) Minimum and maximum premium be between 0.50% and 1.5% respectively. g) 20/80 Treaty limit: some Primary Sureties raised concern that the 20% of the premiums retained was low and requested for a review. h) Treaty renewal: the current practice of signing the treaty on annual basis is cumbersome and the Pool should come with a system where primary Sureties would not be required to renew every year; and i) US$300,000 cash call limit: the National Surety requested for a review downwards as this amount was high. 74. The Council of RCTG endorsed the following 9 th Management Committee Meeting recommendations: a) Pool Managers to review the RCTG Bond to include risks of National transit movement of cargo, which were covered by the National transit bond; b) Annual RCTG Bond Premium rate should be limited to a minimum of 0.50% and maximum of 1.5%; c) Primary Sureties who want to retain more than 20% of the premiums should liaise with the RCTG Reinsurance Pool Managers: Zep Re d) National Sureties should adhere to the decision of the Council of RCTG and issue notice of suspension to Primary Sureties that had not submitted returns and ceded 80% of the premium to the Pool for the year 2015; e) COMESA Secretariat should work with Revenue Authorities and regional and national Clearing and Forwarding Associations to develop local capacity for training of stakeholders; f) COMESA Secretariat should engage Banks to facilitate their participation in the RCTG Scheme; g) The RCTG collateral requirement should be counter-indemnity and even for particular/specific RCTG Bonds covering high risk goods provided the Principal or Agent has a well-established record on trust worthiness and financial status and experience in the operations; and h) Pool Managers to circulate the Treaty to the National Sureties with amended terms and conditions.

16 Page In the ensued discussion, the meeting emphasized there was need to set minimum and maximum RCTG Bond Premium rate as 0.50% and 1.5% to ensure that the rate is regulated. Uganda 76. The Council of RCTG noted that the Secretariat conducted a Workshop of training of trainers for URA and KRA Customs Officials in Tororo, Uganda from 7 th to 8 th April 2016 and the following observations were made: a) RCTG Bond form: i) Customs should reject bonds which are incorrectly filled. ii) The RCTG Bond should include a field for the period of validity, approval and effective date. b) The period validity of the RCTG Bond: i) Validity of bonds in Uganda is subject to annual renewal. ii) RCTG Bonds issued in Kenya starting from February 2016 are valid for 12 months. c) KRA should introduce automatic Bond and Carnet cancellation. d) Delays in acquitting Carnets: actions in Carnet management not performed in time thus delaying acquittal. e) Carnet acquittal on non-homogeneous goods: i. New KRA system (icms) which is yet to be rolled out has a functionality of apportioning the invoice value and weight as well as clearance of partial shipment and hence the issue of non homogeneous goods would be resolved; and ii. URA still awaiting full implementation of the new version of the ASYCUDA World which would resolve the issue above. f) Time frame for settling claims: harmonize the EAC CMA with the provisions related to claims processing stipulated in RCTG Operations Manual. g) Limit of Guarantee per transit: observed that the Revenue Authorities do not have the mandate to limit transit. 77. The meeting also noted that the National transit bonds were replaced with RCTG Bonds and that RCTG bonds were used for both national and regional transit goods. Decisions 78. The Council of RCTG endorsed the following 9 th Management Committee Meeting recommendations: a) Clearing and Forwarding Agents should ensure that RCTG Bond are correctly filled and Revenue Authorities should reject RCTG Bonds which are incorrectly filled; b) Secretariat should amend RCTGbond form to include the period of validity, approval and effective date; c) KRA and URA trainers should train their staff based in all regions in their respective countries; d) Revenue Authorities should sensitize Sureties and Clearing Agents on new developments related to the operations of the RCTG Scheme, and e) Harmonize the EAC CMA with the provisions related to claims processing stipulated in RCTG Operations Manual.

17 Page 17 b) Operations of the RCTG CARNET in the Central Corridor 79. The Council of RCTG noted the highlights of the activities carried out in Tanzania and Burundi as follows: Tanzania 80. The Council of RCTG noted that the Secretariat jointly with TRA and NIC (T) conducted a Workshop of the Primary Sureties in Dar-Es Salaam on 3 rd March 2016 and the following issues were raised and discussed: a) Capacity limitation of the TRA staff; b) Delays in acquitting Carnet; c) Delay in responding to stakeholders queries; d) TRA and NIC (T) Ltd to engage Primary Sureties and Clearing and Forwarding companies to enhance their participation in the RCTG Scheme; and e) TRA and NIC (T) Ltd should sensitize Sureties and Clearing Agents on new developments related to the operations of the Scheme. 81. The Council of RCTG further noted that the Secretariat trained new Customs Officials on the operations of the RCTG CARNET and measures were agreed to address operational issues raised. 82. The Council of RCTG noted the recommendations made by the 9 th Management Committee Meeting to address RCTG operational issues and urged Tanzania Revenue Authority to implement the recommendations. Burundi 83. The Council of RCTG noted that Stakeholders Workshop on the operations of the RCTG Scheme was conducted in Bujumbura on 9 th March 2016 and the following understanding was reached: a) OBR, SOCABU and Association of Clearing Agents should reach consensus on the date for the commencement of the operations of the RCTG Scheme in Burundi; b) OBR to issue Public Notice in good time before the commencement of operations of the RCTG Scheme; c) OBR should liaise with Tanzania and other Member States on the commencement of the RCTG Carnet operations; d) OBR to select a number of staff across the country to be trained as Trainers (TOT) and create a database; and e) COMESA and OBR to organize specific sensitization and awareness workshops for Clearing and Forwarding Agents. 84. The Council of RCTG further noted that the Secretariat conducted in-house training for the staff of OBR and Sureties on 10 th March 2016 on the operations of the RCTG Scheme and activities with timelines agreed in preparation for the commencement of the operations of the Scheme in Burundi.

18 Page The Council of RCTG noted the recommendations made by the 9th Management Committee Meeting on the commencement of the operations of RCTG CARNET without further delays. c) Implementation of the RCTG CARNET in the Djibouti Corridor 86. The Council of RCTG noted that no progress was made on the negotiations between Djibouti and Ethiopia National Sureties on the modalities of sharing of premiums on the RCTG Bonds issued in Ethiopia. d) Implementation of the RCTG CARNET in the Dar-Es Salaam and North-South Corridors 87. The Council of RCTG noted that the Secretariat held discussions with DGDA Customs visiting team in Lusaka, Zambia in April 2016 and agreed on the required activities for the commencement of the operations of the RCTG CARNET in DR Congo by May and June e) South Sudan joining the RCTG CARNET 88. The Council of RCTG noted that Speed Insurance, the National Surety of South Sudan signed the Inter-Surety Agreement on 5 th May 2016 during the 9 th Meeting of the Management Committee of the RCTG and became a member of the Council of RCTG. The members of Council of RCTG welcomed South Sudan to the Council of RCTG. Decision 89. The Council of RCTG endorsed the 9 th Management Committee Meeting recommendations that South Sudan Customs Administration should fulfil the following requirements for the implementation of the RCTG Carnet in the country: a) Customs and Excise Law to recognize the RCTG Carnet as customs security for customs duties and other charge of equivalent effect; b) Interface RCTG-MIS with ASYCUDA; c) Identify Clearing and Forwarding Agents to commence the operations of the RCTG CARNET; and d) Appoint a Focal Person to coordinate the implementation of the RCTG Carnet in South Sudan. f) Meeting between COMESA Secretariat and EAC Secretariat 90. The Council of RCTG noted that the COMESA Secretariat held a meeting with EAC Secretariat in Nairobi, Kenya in February 2016 to discuss on the RCTG utilization and address issues raised. The Council of RCTG further noted the way forward agreed by COMESA and EAC Secretariats. Decision 91. The Council of RCTG endorsed the recommendation made by the 9 th Management Committee Meeting and decided that Revenue Authorities, Clearing and Forwarding

19 Page 19 Agents and Sureties should advocate for the adoption of the RCTG CARNET as the Regional Customs Transit Bond/ Guarantee for the Eastern and Southern Africa region. Reports of the Focal Persons of DGDA, KRA, URA, RRA, OBR and NTTCA on the operations of the RCTG CARNET 92. The Council of RCTG noted that the country reports were presented by the representatives of the Customs Administrations of Burundi, DR Congo, Kenya, Rwanda Uganda and Northern Corridor Transit and Transport Coordination Authority (NCTTCA) to the 9 th Meeting of the Management Committee of the RCTG CARNET. Decision 93. The Council of RCTG endorsed the 9 th Management Committee Meeting recommendation that the COMESA RCTG Carnet should be domesticated by EAC and National Regulatory framework of the NCTTCA Member States. Proposed changes to improve the operations of the RCTG 94. The Council of RCTG noted that a presentation had been made to the 9 th Meeting of the Management Committee on the following proposed changes to improve the operations of the RCTG: a) Limit guarantee amount per transit on sensitive and non-sensitive goods; b) Set the minimum and maximum premium rates; c) Waive the collateral requirement on RCTG Bonds; d) RCTG Bond should cover all risks covered by national transit bonds ; and e) Sureties participation in RCTG Reinsurance Pool be mandatory without a requirement for annual renewal. 95. The Council of RCTG further noted that the 9 th MC Meeting had made the following observations: Decisions a) There was no consensus on the need to classify transit goods into non- sensitive and sensitive and hence the need for the Secretariat to further consult the stakeholders on the issues; b) The meeting noted with appreciation the setting of the minimum and maximum premium rates and emphasised the need to continue the engagement with the Sureties to further reduce the minimum and maximum premium; and c) Removing the annual renewal requirement of Primary Sureties on RCTG Reinsurance Treaty would have a negative impact on the overall management of the Primary Sureties and therefore arrangement should continue as the existing practise. 96. The Council of RCTG endorsed the following 9 th Management Committee Meeting recommendations:

20 Page 20 Decision a) The annual RCTG Bond premium rate should be limited between a minimum of 0.50% and maximum of 1.5% subject to periodical review; b) The RCTG collateral requirement should be counter-indemnity and even for particular/specific RCTG Bonds covering high risks goods provided the Principal or Agent has a well-established record on trust worthiness and financial status and experience in the operations; c) The Council of RCTG noted the recommendation of the 9 th Meeting of the Management Committee that following the replacement of the national transit bond with regional or RCTG bond, the RCTG bond should cover risks that had been covered by national bonds including the following: i. Movement of goods from customs areas for consumption or storage prior to payment of duties; ii. Movement of goods between two customs area such as from port to customs bonded warehouse or from bonded warehouse to bonded warehouse; and iii. Clearance of goods imported under a duty remission scheme. 97. After some discussion on recommendation that the RCTG bond should cover risks that had been covered by National transit bond, the Council of RCTG decided that the Secretariat should review the recommendation to clearly define risks that were coved by national transit bond and re-submit to the next meeting of the Management Committee. Proposed Budget of the Management Committee of the RCTG Scheme for 2016/ The Council of RCTG noted that a presentation had been made to the 9 th Meeting of the Management Committee on the proposed Budget of the Management Committee of the RCTG Scheme for 2016/2017. The Council of RCTG further noted that the Secretariat had not received any budget contribution from National Sureties thus the 9 th Meeting of the MC was held with the financial support from cooperating partners. 99. The Council of RCTG further noted that for the fiscal year 2016/17, the Management Committee would require US$ 85,800 as shown in the table1 below: Table 1: Proposed Annual Budget for the MC of the RCTG Scheme-July 2016 to June 2017 Budget Item Estimated Expenditure Total Cost (US$) Cost of return air tickets MC is composed of five National 19,600 Sureties and four ex-officio members. cost of return air ticket for fourteen (14) members: US$1400 x 14 DSA US$250 per day x 14 x 3 days 10,500 Conference package US$2,000 2,000 Cost of air ticket and DSA for cost of air ticket: $1,400 x 4 5,600 four Secretariat staff members DSA: US$250 x 3 x 4 days 3,000 DSA: US$300 x1 x4 days 1,200 Contingency 1,000 Total cost for one MC 42,900

21 Page 21 Meeting Total cost for two MC Meetings 85, The Council of RCTG noted that the Budget of the Management Committee shall be shared in equal proportions by all the current twelve (12) National Sureties each contributing US$7,150 as shown in Table II below: Table II: Total amount of contribution required from each National Surety, including arrears NATIONAL SURETY 2016/17 CONTRIBUTION TO THE ANNUAL BUDGET OF THE MC US$ ARREARS ON TOTAL AMOUNT REQUIRED FROM EACH NATIONAL SURETY US$ Burundi 7,150 43, , Djibouti 7,150 25, , DR Congo 7,150-7, Ethiopia 7,150 58, , Kenya 7,150 51, , Malawi 7,150 58, , Rwanda 7,150 28, , South Sudan 7,150-7, Sudan 7,150 58, , Tanzania 7,150 8, , Uganda 7,150 8,040 15, Zimbabwe 7,150 25, , TOTAL 85, , , The Council of RCTG noted with concern the non-payment of the contributions to the budget of the Management Committee by the National Sureties In the discussion that followed the delegate of Djibouti raised a concern on the arrears on the budget contribution by the National Surety of Djibouti and yet operations had not started. In response to the concern raised by Djibouti the meeting was informed that this was not specific to Djibouti but also applying to all Member States of the scheme as their commitment to the RCTG Carnet and COMESA Regional integration The meeting was informed that the National Surety of Uganda had paid their arrears for 2014/2015. The Council of RCTG commended the National Surety of Uganda. Decisions 104. The Council of RCTG adopted the Annual Budget of the Management Committee and endorsed the following 9 th MC Meeting recommendations: i) The annual budget of the Management Committee of the RCTG for the period 1 st July 2016 to 30 th June 2017 be US$85,800; and

22 Page 22 ii) National Sureties should each contribute US$ 7,150 to the annual budget of the Management Committee. iii) National Sureties should clear the arrears by charging Primary Sureties an annual participation fee between US$500 and US$1000, determined or established on the basis of the number of Primary Sureties participating in the scheme, the extent of the arrears amount and period required to clear the arrears; iv) Primary Sureties who have not paid their annual participation fee during the signing of the Reinsurance Pool treaty renewal should not be allowed to participate in the RCTG; v) The annual participation fee collected by the National Surety should be used to settle budget contribution arrears to the Council of RCTG; vi) Revenue Authorities should be involved in enforcing the payment of the annual participation fee by the Primary Sureties; and vii) In Member countries that are party to the RCTG scheme and have not yet commenced operations, the National Sureties should clear the arrears by charging Primary Sureties an annual membership fee between US$500 and US$1000, determined or established on the basis of the number of Primary Sureties in the market, the extent of the arrears amount and period required to clear the arrears. Managers Report on the Operations of the Reinsurance Pool of the RCTG Scheme (Agenda Item 7) 105. A representative of the Pool Managers presented document No. CS/YC-RCTG/CS/X/5: Managers Report on the operations of the Reinsurance Pool of the RCTG Scheme. On the activities carried out by the Pool, the meeting was informed as follows: a) Inward Business 106. For the year 2016, forty one (41) Primary Sureties signed the inward Quota Share Treaty with the Pool compared to (24) in the year 2015 and 23 in the year b) Outward Protection Contract 107. The Pool Manager arranged outward Excess of Loss protection for inward liabilities emanating from their 80% acceptance for 2014 and 2015 as follows: c) Excess of Loss 2016 EGNPI=US$. 500,000: Figs in US$ Layer Cover Deductible Rate M&DPs First Layer 600, , % 36, Second Layer 880, , % TOTAL 1,600,000 80,910.00

23 Page 23 d) Excess of Loss 2015 EGNPI=US$. 500,000 Layer Cover Deductible Rate M&DPs First Layer 600, , % 56, Second Layer 880, , % 63, TOTAL 1,600, , e) Claims: Five claims have been reported to the Pool Managers under the Scheme out of which one was closes while four were still under process. f) The cover for the year 2016 was placed with various Reinsurers in and out of the region Regarding the Inward Quota Share Treaty for 2016, the meeting was informed that the following changes were made: i) Rate: Particular Bonds: minimum 0.50%, General Bonds: minimum 0.50%; ii) Commission: 20%; iii) Cover Limit: maximum of US$2million any General/Particular Bond. Any additional or expansion of cover from US$2million to US$10million must be referred to the Pool Manager for approval of terms and conditions; iv) Accounts: Submitted Quarterly in arrears, within 30 days after close of each quarter, on cheque attaching basis. v) Currency: settlement currency of US$ converted at the rate ruling on the statement s due date; vi) Notice of suspension was included for Primary Sureties who will fail to submit quarterly returns and effect settlement of premiums to the Pool; vii) Collateral requirement: should be counter-indemnity and even for particular/specific RCTG Bonds covering high risks goods provided the Principal or Agent has a well-established record on trust worthiness and financial status and experience in the operations The Council of RCTG noted the RCTG Reinsurance Pool Managers Report. Audited RCTG Reinsurance Pool Manager s Report and Financial Statement, for the year ended 31 st December 2015 (Agenda Item 8) 110. The representative of the Pool Managers presented the Audited Annual Report and Accounts for the year ended 2015, in line with provisions of the Constitution of the RCTG Scheme Reinsurance Pool. In doing so, they gave the highlights of the Manager s Report and Financial Statement for the Year ended 31 st December In the ensuing discussion, the meeting made the following observations: a) There was no breakdown and schedule of substantive items and advised the Pool to include such items in the next report; b) There was significant variation between the actual premium reported and collected compared to the premium that would be expected from the total guarantee amount on RCTG Bond executed during the same period and such a irregularities in statistics should be corrected; and