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Country Commercial Guides FY 2000: Eritrea Report prepared by U.S. Embassy Asmara, released July 1999 Note*

CHAPTER VI: TRADE REGULATIONS AND STANDARDS

TRADE BARRIERS, TARIFFS AND IMPORT TAXES:

CUSTOMS DUTIES ON IMPORTED PRODUCTS VARY WIDELY. IN AN EFFORT TO DIRECT THE USE OF SCARCE FOREIGN EXCHANGE FOR GOODS THAT WILL FURTHER DEVELOPMENT OBJECTIVES, THE GSE HAS IMPOSED TARIFFS RANGING FROM 2% TO 50% ON ESSENTIAL GOODS SUCH AS CAPITAL EQUIPMENT, INDUSTRIAL INPUTS, PHARMACEUTICALS, SCHOOL SUPPLIES, BOOKS, FOOD, LIVESTOCK, AND SEED. HOWEVER, CUSTOMS DUTIES ON IMPORTS OF CAPITAL GOODS, INTERMEDIATE INDUSTRIAL SPARE PARTS, AND RAW MATERIALS ARE FIXED AT A NOMINAL 2%. ON LUXURY GOODS, LIQUOR, TOBACCO, PREPARED FOODS (PARTICULARLY THOSE THAT COMPETE WITH DOMESTIC PRODUCTS), AUTOMOBILES, AND ELECTRONIC EQUIPMENT THE TARIFF IS BETWEEN 50% AND 200%. ALL GOODS ARE FOUND IN THE CUSTOMS IMPORT TARIFF SCHEDULE. SLOW BUREAUCRATIC DECISION-MAKING PROCEDURES CAN ALSO HAMPER TRADE AND INVESTMENT.

THE ABSENCE OF A HARMONIZED TARIFF SYSTEM MAKES THE CUSTOMS CLEARING PROCESS VERY CUMBERSOME. THE GSE IS AT PRESENT CONDUCTING STUDIES ON WAYS TO HARMONIZE CUSTOMS DUTY. HOWEVER, AN INTERNATIONALLY BASED HARMONIZED SYSTEM OF PRODUCT CLASSIFICATION MAY NOT BE INTRODUCED BEFORE THE TURN OF THE CENTURY.

TARIFFS ARE HIGH ON LUXURY GOODS THOUGH CUSTOMS EXEMPTIONS ARE GRANTED TO DIPLOMATS. ARTICLES AND EQUIPMENT SPECIALIZED FOR USE BY THE DISABLED OR HANDICAPPED ARE EXEMPT FROM IMPORT TAXES.

IMPORTS OF CARS AND OTHER MOTOR VEHICLES REQUIRE PRIOR PERMISSION FROM THE MINISTRY OF TRANSPORT AND COMMUNICATIONS TO ENSURE THEIR SUITABILITY FOR EXISTING INFRASTRUCTURE AND OTHER SIMILAR CONSIDERATIONS.

CUSTOMS VALUATION:

THE CUSTOMS OFFICE VALUES ITEMS BASED UPON THE ORIGINAL BILL OF SALE. IF, HOWEVER, THE ORIGINAL BILL OF SALE IS UNAVAILABLE AT THE TIME OF TARIFF ASSESSMENT, OR DEEMED TO BE UNREALISTIC, THE CUSTOMS OFFICE WILL VALUE GOODS BASED UPON SIMILAR SHIPMENTS IN THE PAST.

IMPORT LICENSES:

ALL IMPORTS MUST BE CLEARED BY A BUSINESS WITH AN IMPORT LICENSE. IN GENERAL FOREIGNERS CANNOT EASILY OBTAIN AN IMPORT LICENSE FROM THE BLO, WHICH IS UNDER THE MINISTRY OF TRADE & INDUSTRY. THE INVESTMENT PROCLAMATION RESERVES IMPORT BUSINESS FOR ERITREANS AND FOREIGN INVESTORS WHERE ERITREA HAS A BILATERAL AGREEMENT OF RECIPROCITY WITH THE COUNTRY OF THE INVESTOR.

EXPORT CONTROLS: TO PROMOTE THE DEVELOPMENT OF EXPORT INDUSTRIES, ALL EXPORTS ARE EXEMPT FROM DUTIES AND SALES TAXES. HOWEVER, MANY ITEMS CANNOT BE EXPORTED FROM ERITREA INCLUDING NATIONAL/CULTURAL TREASURES AND ENDANGERED WILDLIFE. AS A SIGNATORY OF THE CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES (CITES), IT IS ILLEGAL TO IMPORT OR EXPORT WILD SPECIMENS OF ENDANGERED FLORA AND FAUNA. CERTAIN COMMODITIES MAY REQUIRE CLEARANCE FROM SPECIFIC GOVERNMENT BODIES; I.E. LIVESTOCK AND CEREALS REQUIRE THE PERMISSION OF THE MINISTRY OF AGRICULTURE, MARINE PRODUCTS REQUIRE THE PERMISSION OF THE MINISTRY OF FISHERIES.

IMPORT-EXPORT DOCUMENTATION REQUIREMENTS

THE FOLLOWING ARE NECESSARY FOR IMPORTED GOODS: COMMERCIAL INVOICE, BILL OF LADING/AIRWAY BILL, CERTIFICATE OF ORIGIN, AND HEALTH (WHERE APPLICABLE), AS WELL AS AN IMPORT LICENSE.

THE FOLLOWING EXPORT DOCUMENTS ARE REQUIRED: EUR1 CERTIFICATE FOR EXPORT OF GOODS TO THE EUROPEAN UNION, PTA CERTIFICATE OF ORIGIN FOR EXPORTS TO THE COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA.

DOCUMENTARY REQUIREMENTS ARE STRINGENT, AND DOCUMENTS ARE SOMETIMES DELAYED IN BUREAUCRATIC CHANNELS. ALTHOUGH A SOMEWHAT CUMBERSOME SYSTEM CAN SLOW CLEARANCE OF DOCUMENTS, MINIMAL CORRUPTION AND THEFT MITIGATE THESE PROBLEMS.

TEMPORARY ENTRY:

PEOPLE ARRIVING TO TAKE UP RESIDENCE IN ERITREA ARE ALLOWED TO BRING PERSONAL EFFECTS TAX-FREE WITHIN THE FIRST THREE MONTHS UPON ARRIVAL. ITEMS MAY BE TAXED UPON ARRIVAL WITH THE UNDERSTANDING THAT THE TAX WILL BE REIMBURSED UPON DEPARTURE FROM THE COUNTRY WITH SAID ITEMS. TRADE SAMPLES AND MACHINERY, NOT IMPORTED AS MERCHANDISE, CAN ENTER ERITREA TAX FREE.

RE-EXPORTS, WHETHER PROCESSED OR OTHERWISE, ARE EXEMPT FROM EXPORT DUTIES AND SALES TAX.

LABELING AND MARKETING REQUIREMENTS:

WEIGHTS AND MEASURES MUST BE IN METRIC FORM. FOOD LABELS SHOULD INCLUDE THE NAME OF THE FOOD, NAME AND ADDRESS OF THE MANUFACTURER, INGREDIENTS, COUNTRY OF ORIGIN, AND MANUFACTURE AND EXPIRATION DATES.

PROHIBITED IMPORTS:

THE IMPORT OF OLD OR USED CLOTHING, CONSTRUCTION MATERIALS MADE OF ASBESTOS, IVORY, SECOND GRADE (DENATURED) ALCOHOL, ARMS AND WEAPONS AND NARCOTICS ARE PROHIBITED. A PUBLIC ENTERPRISE PRODUCING TOBACCO AND MATCHES CONTINUES TO HOLD A MONOPOLY OVER THE IMPORT OF THESE PRODUCTS. IMPORT OF PHARMACEUTICALS WHICH WAS UNTIL RECENTLY MONOPOLIZED BY A GOVERNMENT ENTERPRISE, THE ERITREAN PHARMACEUTICAL PRODUCT CORPORATION, IS NOW ALLOWED TO CERTIFIED PRIVATE COMPANIES. EXPORTS OF UNPROCESSED HIDES AND SKINS HAVE BEEN SUSPENDED SINCE 1993 IN AN ATTEMPT TO IMPROVE THE SUPPLY TO DOMESTIC TANNERIES.

STANDARDS:

THE ERITREAN STANDARDS INSTITUTION (ESI) IS A GOVERNMENT REGULATORY BODY FUNCTIONING UNDER THE MINISTRY OF TRADE AND INDUSTRY. THE INSTITUTION IS MANDATED TO ENSURE CONFORMANCE TO INTERNATIONAL CLASSIFICATION OF STANDARDS AND ERITREAN STANDARDS. IN A LEGAL NOTICE ISSUED ON DECEMBER 15, 1997 THE MINISTRY OF TRADE AND INDUSTRY DECLARED 126 STANDARDS RELATING TO 11 PRODUCTS TO BE COMPULSORY ERITREAN STANDARDS. THE LIST INCLUDES RAW HIDES AND SKINS, PULSES, SALT, OIL SEED, CLAY BRICKS AND BEAM TILES, STEEL SHEETS, CEMENT, STEEL WIRES AND NAILS AND SAFETY BOX MATCHES, WEIGHTS AND MEASURES. THIS IS THE FIRST SERIES OF STANDARDS AND THE MINISTRY IS EXPECTED TO EXPAND THE LIST, BEFORE END OF 1999, TO INCLUDE MANY OTHER PRODUCTS. THE USE OF THE MARK (ESI) BY PRODUCERS AND TRADERS IS MANDATORY REGARDING PRODUCTS THAT HAVE BEEN STANDARDIZED. ESI CONDUCTS PERIODIC QUALITY ASSURANCE TEST ON SAMPLES OF THE DECLARED PRODUCTS. THE ESI MARK IS PLACED ON CERTIFIED PRODUCTS TO INDICATE CONFORMANCE WITH MANDATORY PRODUCT REQUIREMENTS. PRODUCTS THAT DO NOT MEET ESI STANDARDS ARE WITHDRAWN FROM THE MARKET AND RESPONSIBLE PRODUCERS OR TRADERS PROSECUTED. CUSTOMS OFFICIALS ARE AUTHORIZED TO PROHIBIT THE IMPORT OR EXPORT OF COMMODITIES IN RESPECT TO WHICH STANDARDS HAVE BEEN ISSUED UNLESS THEY BEAR AN AUTHORIZATION CERTIFICATE FROM THE ESI. SIMILARLY, IN ORDER TO OBTAIN FOREIGN EXCHANGE PERMIT FROM THE BANK OF ERITREA OR OTHER FINANCIAL INSTITUTIONS, IMPORTERS HAVE TO PRODUCE A LETTER FROM THE ESI CERTIFYING THAT THE IMPORT PRODUCTS CONFORM TO THE RELEVANT ERITREAN STANDARDS. TO OBTAIN ESI STANDARDS, U.S. EXPORTERS MAY CONTACT THE ERITREAN STANDARDS INSTITUTION, TEL. 291-1-120328/115624, FAX: 291-1-120245 OR THE U.S. EMBASSY COMMERCIAL OFFICE, ASMARA, ERITREA.

MEMBERSHIP IN FREE TRADE ARRANGEMENTS:

ERITREA IS A MEMBER OF THE "COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA" (COMESA), WHICH OFFERS PREFERENTIAL TERMS FOR TRADE AMONG ITS MEMBERS. ERITREA IS ALSO A SIGNATORY TO THE "EU-ACP LOME CONVENTION", WHICH ALLOWS GOODS TO ENTER THE EUROPEAN UNION MARKET DUTY AND QUOTA FREE, AS LONG AS THE GOODS MEET THE RULES OF ORIGIN CRITERIA. VERY RECENTLY ERITREA JOINED THE COMMUNITY OF SAHEL-SAHARAN COUNTRIES (COMSSA). ERITREA WILL BE ADMITTED TO THE U.S. "GENERALIZED SYSTEM OF PREFERENCES" FOR SIMILAR DUTY AND QUOTA FREE TREATMENT OF EXPORTS TO THE U.S. ONCE IT RESOLVES ITS BORDER CONFLICT WITH ETHIOPIA.