Ethiopian's Authority to Set Lab for Import Inspection, Levy Duty

The Ethiopian Revenues & Customs Authority (ERCA) is to establish a customs laboratory to be used for tariff classification of imported items based on their chemical and material composition.

The decision came following a recommendation by customs laboratory experts from the Dutch Customs Authority (DCA) and representatives from the World Customs Organisation (WCO). They were contracted by the ERCA to evaluate the current tariff classifications in place and recommended possible solutions through a sponsorship deal from the Swedish International Development Agency (SIDA).

During their three-day stay here, the experts visited the customs operation of the Authority and held a workshop for 32 employees about customs laboratories. The team visited the laboratory of the Ethiopian Standards Agency (ESA) and the Addis Abeba branch of the Commercial Commodities Facilitation Office located off Debre Zeit Road, where 90pc of the country's imports are cleared.

Almost half of the 52 billion Br revenue collected by the Authority last year came from custom duties. Due to the lack of a laboratory, the tariff on imports is based on what importers declare. When cases are disputed, the Authority uses the laboratory of the ESA to settle it.

However, this lengthy process sees imports held in warehouses until they are cleared, affecting their businesses, importers claim.

"There have been times where I had a fall-out with clients because I could not deliver orders because my imports were held for up to a month," a textile importer who wished to remain anonymous, told Fortune.

Out of the all different products that are imported in to the country, juice, chemicals and textiles are the top commodities that cause disagreement between importers and the Authority in tariff calculation, according to Fekadu Bekele, director of customs tariff valuation for the Authority.

Imports of textiles made up 214,881tn of the 6.9 million tonnes imported that passed through the clearing process of the authority in 2010. Juice and chemicals comprised 1,941tn and 11,250tn, respectively.

The dispute between the Authority and importers arose due to the different tariffs that are dependent on the composition of imports, for which the latter has an incentive to falsely declare items.

"Since the authority did not have a laboratory to test, it just accepted the importer declaration which has an impact on revenue collection," Fekadu told Fortune. "Sending it to the ESA's laboratory takes too much time to clear."

In cases of imports of juice, the excise tax on organic is zero while artificially flavoured have 30pc levied on them.

However, Tekiye Berehane, public relations officer for the Ethiopian Conformity Assessment Enterprise (ECAE) of the Agency, refutes the claim by the Authority.

"We have enough equipment in six labs for the testing of all sorts of materials," he told Fortune. "They rarely come to us and I do not remember them negotiating."

During their visit, the team of experts noted that the laboratory at the ESA was in possession of good equipment and the personnel were capable of handling it.

"It is not clear why the ERCA is not using these laboratories," the team report reads. They also stated that another laboratory for the customs will create duplication of equipment in the Ethiopian administration, according to experts.

This was strongly opposed by Fekadu, who argued that using the Agency's laboratory involves many lengthy procedures, including writing request letters, which affect the facilitation of trade.

"There have been many instances where the Authority has requested to use the laboratory and the agency has returned the letter stating that it has its own tests to undergo," Fekadu told Fortune.

This was the same argument for the need of an independent laboratory that was presented to experts in a meeting with Nebiyu Samuel, deputy director of the ERCA on October 27, 2011 at its headquarters.

The experts recommend that the authority should create small laboratories nearby the warehouses to speed up the process of inspection. They also suggested that the two institutions should negotiate to share the laboratory together in a short-term plan.

Based on the findings and recommendation, experts at the Authority have been tasked to prepare a detailed project proposal for the establishment of the laboratory. SIDA is one of the organizations the Authority plans to request financing from for the project.