EAC governments biting more than they can chew

East African Community (EAC) member states within a period of one year are supposed to be discussing a number of cross cutting issues, most of them being economic.

East African Community (EAC) member states within a period of one year are supposed to be discussing a number of cross cutting issues, most of them being economic.


The main focus however is the EAC customs union and the EAC common market. But what we should note as stakeholders and beneficiaries of this integration is the modalities, forms, structures and what should be included in the discussions.


Integration is very important like President Paul Kagame’s special envoy to the Great Lakes Region Dr. Richard Sezibera says it’s no longer a choice but a must.


Economically, politically and socially it is very important especially for African countries to integrate if they are to have strong bargaining power on the world market.


What beats my understanding as a stakeholder is how this integration is supposed to be handled. Is it an event or a process?
Economic integration is a process that has to take five steps which the East African community countries have overridden.


Economic integration begins with a Preferential Trade Area. This is a trading bloc which gives preferential access to certain products from certain countries. It is done through reducing tariffs but does not abolish them completely.


At this stage, trading is free. However, each partner applies an independent trade policy with respect to the rest of the world.
On paper this has been achieved by the East African countries but realistically there are very many loopholes that indicate that we have not achieved this stage of economic integration.


This is evident by the fact that most businessmen have continuously complained about non-tariff barriers. Non-tariff barriers to trade are trade restrictions to imports that are not in usual form of tariffs.


These may be in form of red tape (delays), axle load limit and manufacturing or production requirements.
MTN Rwanda complained recently that in their bid to avail airtime cards to their   clients in other EAC countries, they pay double taxes.


The chief executive officer of MTN Rwanda Themba Khumalo said that they pay VAT in Rwanda and when same airtime cards are exported to other EAC member states, they are as well taxed. According to Khumalo, this is double taxation.


The second stage of economic integration is the free trade area, where there is free trade among the member states. The union here has a common trade policy through the application of external tariffs on imports from non-member states.


At this stage a designated group of countries agree to eliminate tariffs, quotas and preferences on most (if not all) goods. Countries choose this kind of economic integration form, if their economical structures are complementary. If they are competitive, they will choose the customs union.
It is presumed that the EAC economic integration is at the level of customs union.


Normally at this stage partner states enjoy free trade among themselves and the union has a common external tariff on imports from non-member countries.
The latest now is that EAC countries at the national level are preparing for discussion of a common market slated to begin next year.
The discussions will involve around issues concerning free movement of goods and services, capital and labour.


Whereas discussions of a common market have started at national level the customs union is not yet implemented. The question therefore is whether one stage shall be ignored and the other implemented or implementation will be concurrent.


Economic and monetary union is the final stage in economic integration. This stage encompasses all aspects of the common market and additionally incorporates cooperation in economic and monetary affairs. Member states have a common currency and monetary authority, harmonised fiscal system and deeper cooperation in other economic fields.


Then if it is possible and okay not to follow stages in their order we should opt for discussions on economic and monetary union to save our limited resources.


High Level Task Force responsible for Rwanda’s East African Community Common Market negotiations already says it lacks enough time and resources to handle key issues. John Bosco Kalisa , Private Sector Federation director of trade and regional integration argues that the country is negotiating many things within a limited time frame.


“We are supposed to negotiate the EAC Customs Union, Common Market and the Economic Partnership Agreements (EPAs) concurrently within a period of one year,” he recently said. 


The experts also said the country lacks capacity especially in technical fields, which require experts to evaluate the report before presentation for negotiations.


The Private Sector Federation Director of Trade and Regional Integration John Bosco Kalisa argues that the country is negotiating many things within a limited time frame.


“We are supposed to negotiate the EAC Customs Union, Common Market and the Economic Partnership Agreements (EPAs) concurrently within a period of one year,” he recently said. 


Indeed you can’t have all these things at the same time given the limited resources of countries.
Where as they are all good, there is need for our economists to advice on how to make some of these issues opportunity cost. 

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