The need to strike a balance between sovereignty and economic integration

The past couple of weeks have seen local and regional media saturated with concerning findings of the recently released EAC Secretariat and the East African Business Council study, "Costs and Benefits of Open Skies in the East African Community".

The past couple of weeks have seen local and regional media saturated with concerning findings of the recently released EAC Secretariat and the East African Business Council study, “Costs and Benefits of Open Skies in the East African Community”.

It has been shown as not only more expensive to travel within the region, but that opening the skies in the five EAC countries in line with the 1999 Yamoussoukro Declaration could result in additional 46,320 jobs and over $200 million per annum in GDP.

 

Protectionism concerns expressed at the just concluded 2nd East African Manufacturing Business Summit in Kigali only add to the growing worries of a return to economic hedging between EAC member states.

 

If one also adds the many unresolved issues on non-tariff barriers that continue to beset the region, it presents a compromising scenario towards realising a common dream. The obvious concerns raised have made some skeptics wonder whether it’s a coincidence that the perceived individualistic approach merely jeopardises efforts towards a common East African market.

 

Still, even some of the observers cast a shadow over member states’ commitment, it is likewise apparent to be an issue of continuous national re-assessments and adjustments to each other’s economic projections as the EAC countries struggle to find a common ground. It is a fluid situation not unlike water finding its own level on uneven ground.

There is some optimism therefore with the realization, as the meetings and the concerns raised suggest, of a need to strike a balance between sovereignty and economic integration.

For instance, the EAC Heads of State Summit that concluded last Sunday in Dar es Salaam echoed the general plaint with the declining intra-EAC trade. It directed the EAC council of ministers to resolve the outstanding non-tariff barriers (NTBs) and report to the 19th summit.

While the extent of the council’s resolution of the many difficult and national-centric barriers remains to be seen, it still boils down to the individual countries willingness to cede on their national economic ambitions.

The fact is, whatever barriers exist in one country, they affect the neighbours differently depending on how each country severally or individually interacts with any or some of the member states.

As one analysis by the United Kingdom’s Overseas Development Institute (ODI) released last November noted, “Overall, NTBs have affected Kenya and Uganda relatively more than they have affected Rwanda, Tanzania and Burundi. Tanzania has generated the most NTBs that have now been resolved, followed closely by Kenya. Uganda, Rwanda and Burundi have been significantly more affected by NTBs than they have been a source of NTBs.”

The degree to which member states have been either responsible for establishing NTBs or affected by NTBs has therefore varied across the EAC.

Generally, NTBs have been categorised according to the tax-like measures they impose, which may be monetary costs on imports; quality and safety standards and the measure of their enforcement; outright Import bans; and, customs and trade facilitation measures.

The ODI analysis shows that whereas tax-like and quality and safety measures were more prevalent on the list of unresolved NTBs, political economy constraints as well as inadequate communication channels between authorities and institutions responsible for implementing EAC commitments are, at least in part, to blame.

As of June 2016, some 104 barriers identified by the EAC Monitoring Mechanism of NTBs had been resolved while new ones had emerged. So far at least 19 non-tariff barriers remain unresolved.

But if we take the EAC definition of NTBs as quantitative restrictions and specific limitations that act as obstacles to trade, it goes without saying that the various concerns expressed at the manufacturing business summit and those noted in the study on costs and benefits of open skies are unnecessary trade barriers that neither serve the individual member states nor the EAC as a block unless they are addressed.

It is no consolation that the trend is continent-wide. Available statistics indicate that intra-African trade accounted for only 16 per cent in 2014, yet trade with Asia averaged 61 per cent, 69 per cent with Europe, and 56 per cent with the US.

Something has to be done.

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