Ethiopia and Kenya to introduce a Simplified Trade Regime (STR) at the Moyale border


The Government of Ethiopia is set to introduce a Simplified Trade Regime (STR) to allow its small scale traders to legally trade with Kenya through the Moyale border. The STR is a scheme that allows informal traders to benefit from a simplification of formalities at the border with exoneration from payment of customs duties and taxes referred to transactions under a threshold value which in the COMESA region is currently of USD 2,000 per consignment.

Launched by COMESA  in 2010, the STR is based on the Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures (Transitional Standard 4.13), that encourages Customs to exonerate from payment of customs duties and taxes for transactions under a threshold to be specified by the national legislation. This measure aims at facilitating trade of goods whose value is of negligible amount, by simplifying the paperwork for informal and small-scale traders.

One of the conditions for COMESA Member States to implement the STR, is that they must participate to the COMESA Free Trade Area (FTA). However, also those countries not participating to such FTA, like Ethiopia, can develop specific bilateral arrangements or Protocols with their neighbors in order to introduce simplified regimes equivalent to the STR. In practice, such Agreements or Protocols indicate a list, approved by both the exporting and importing country, of products originating from the territory of their counterpart that can be traded duty-free benefiting from simplified procedures at the border, like the lodgment to Customs of a simplified customs declaration form that can be filled out directly at the border post, and the exoneration from the obligation to submit a Certificate of Origin (CoO) or presentation of a simplified CoO certificate. Normally products included in this list are those that are more commonly traded in small quantities at the border.

The Government of Ethiopia is finalizing a protocol that will allow small scale traders to apply the STR equivalent at Moyale, at the border with Kenya, that recently started to operate as One Stop Border Post (OSBP), in the attempt to convert part of informal trade occurring at this border into formal trade. Indeed, the new mechanism will encourage informal traders to declare to Customs their transactions and clear them duty-free and with minimal formalities at the border.

The Protocol will contain a common list of goods to which the simplifications will apply with the relevant volumes that can bet traded across the Moyale OSBP, which registered a progressive growth of trade in the last year, although at bilateral level the total trade between the two countries has declined in the last 3 years. On the other hand, the increased volume of trade at the Moyale OSBP is reported to have led to an increase of the number of import documents to be processed at the border by 26 percent from Kenya to Ethiopia and of 57 percent from Ethiopia to Kenya. Commodities exchanges at the Moyale OSBP concern different type of products, mainly represented by agricultural goods for Ethiopia, such as beans, maize seed, tea, khat (known in Kenya as miraa), onions and tomatoes, while the main exports of Kenya to Ethiopia via Moyale are predominantly manufacturing and industrial products such as  shoe polish creams, agriculture chemicals, ballpoint pens, printed papers and labels, and crown corks among others.
During the Ethiopian budget year concluded July 7, 2021, Ethiopia has exported via the Moyale border goods for 11.5 million USD for about 9.5 million kilograms. In 2020, Ethiopia’s total export to Kenya has declined to 11.9 million USD, while in 2018 this trade reached more than double this figure (28.2 million USD). Similarly, the total export of Kenya to Ethiopia has almost halved from 78.7 million USD in 2019 to 47.3 million USD in 2020.