Non-tariff barriers and unharmonised rules and regulations have been the biggest impediments to the full implementation of the 11-year-old Common Market Protocol, stifling trade between partners of the EAC.
Currently, trade between partners is at 20 percent, lower than the expectations of leaders at the time of the launch. EAC members are trading more with countries outside the bloc than partner states, becoming importers of products and services that ideally should be sourced among them.
The low level of trade is attributed to private sector demands, bureaucracy by civil servants in charge of the process and partner states’ failure to cede sovereignty over the free movement of goods and services.
At the just-ended high-level retreat for the EAC Summit held in Arusha from July 20-22, varying economic development among partner states was said to have contributed to the slow implementation of the protocol.
The retreat provided a way forward on the Common Market post-negotiations that have been pending. Its launch was supposed to collapse national tariffs and other non-tariff barriers and pave the way for a harmonized process.
However, new tariff and non-tariff barriers have emerged in the past decade and member states have been dragging their feet in implementing ad-hoc decisions and agreements by the Heads of State Summits to improve trade.
Recurring NTBs are either denial of preferential tariff treatment or discriminatory practices against goods and services.
Betty Maina, the chair of the EAC Council of Ministers and Kenya’s Cabinet Secretary in the Ministry of Trade, Industrialisation and Enterprise, said: “The region has witnessed increased regional trade and many companies are expanding to various countries in sectors such as finance, manufacturing, hospitality, tourism and education, and so in that sense the Common Market is working. ”
In spite of the hitches, the region has recorded achievements in the implementation of the Common Market including the use of the EAC passport and visa-free travel for EAC citizens.
“These are significant efforts to implement the Common Market protocol laws and regulations, yet partner states continue to present barriers to cross-border trade and investment,” said Ms Maina. “In goods, for instance, partner states have deviated from their commitments through the application of tariff equivalent measures resulting in an increase in NTBs. In services, partner states remain non-compliant in implementing their commitment with the number of non-conforming measures rising.”
In addition, there are still restrictions against the freedom of movement of capital.
Peter Mathuki, the secretary-general of the EAC, said it was important for the private sector, civil society, media and the Heads of State to take stock of the progress and challenges in the implementation of the Common Market and to provide strategic direction and impetus to accelerate its implementation.
John Kalisa, the chief executive of the East African Business Council, said, “EAC partner states had agreed to remove, with immediate effect, all the existing NTBs as outlined in Article 13 of the EAC Protocol on Customs Union but free movement of the goods is still frustrated by the persistence of the NTBs”.
“The African Continental Free Trade Area is an opportunity and prospect for East Africa’s and Africa’s economic growth. But we are likely to miss out on it if we continue to allow fresh NTBs,” said Mr Kalisa.
Low integration was blamed for the non-harmonization of taxes. The business community now wants harmonized domestic taxes starting with excise duty, followed by VAT and income tax by January 1, 2023.