Services sector to benefit from East African Common Market

A meeting of the Multi-Sectoral Council of the East African Community (EAC) held in Kampala on September 25th 2009 adopted the Draft EAC Common Market Protocol together with eight annexes.

A meeting of the Multi-Sectoral Council of the East African Community (EAC) held in Kampala on September 25th 2009 adopted the Draft EAC Common Market Protocol together with eight annexes.

The annexes to the Draft Common Market Protocol contain provisions on the free movement of persons, removal of restrictions on the free movement of workers, right of residence, right of establishment, mutual recognition of academic and professional qualifications, free movement of capital, trade in services, and safeguard measures within EAC.

Concluding the negotiations of the annexes to the Common Market Protocol is a significant step in the integration process of the EAC.

While the East African Customs Union, which came into force in January 2005 with progressive elimination of restrictions to free movement of goods across EAC until January 2010, allows free movement of goods within EAC, the Common Market goes a step further to extend this liberal approach to free movement to labour and other services.

Most notable is the fact that the draft Common Market protocol spells out liberalization of Trade in services, which will open up one of the fastest growing sectors in the region. Unlike the manufacturing and agricultural sectors, the services sector was until recently relatively undeveloped.

Most people scarcely appreciated the industry’s potential. However, recent developments have shown its growing impact on national economies.

Trade in services ranges from the simplest functions of a cleaner at your office to the more developed functions of information and communications technologies to the less understood functions of a broker in capital markets. 

It is this industry that stands to benefit most from the East African Common Market through removal of restrictions on movement of workers, free movement of capital, mutual recognition of academic and professional qualifications, and liberalizing trade in services—annexes that pre-occupied negotiating teams with undertones of a possible deadlock.

Now that the negotiating teams have finally reached consensus on how to move forward regarding the East African Common Market, it is incumbent upon players in the services sector to take provisions of the protocol from paper to practice.

The draft Common Market protocol identifies financial services, tourism, education, communication, transport, distribution and business services sectors as some of the sectors to be liberalized while Partners States will continue negotiations to progressively liberalize other sub-sectors in the services industry after the protocol comes into force on July 1st, 2010.

EAC is also involved in protracted negotiations with the European Commission for liberalization of trade in services under the Economic Partnership Agreements. 

While negotiations can be quite challenging, experience has shown that implementation often proves an even bigger task.

That is why participants at the two-day meeting in Kampala, which drew players from different sub-sectors of the service industry, were unanimous on the need for a regional services coalition to address such challenges.

The writer is a Communications Officer with the East African Business Council

 

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