Free Movement of Goods, Persons a Reality
Ministers from the five EAC member states have signed the Common Market Protocol paving the way for the free movement of goods, labour, services and capital. However, the Protocol will have to undergo fine-tuning by the attorney-generals of the member states after which it will go to the EAC Council for approval and then for signature by the presidents at the Heads of State Summit on November 20, 2009.
The Protocol was signed by Kenya’s Minister for EAC Amason Kingi, Uganda’s Minister of EAC Affairs Eriya Ketagaya, and Burundi’s Minister for East African Cooperation Hafsa Mossi, Rwanda’s Minister of Justice and Attorney-General Tharcisse Karugarama and the Tanzanian Minister for East African Cooperation Dr Diodorus Kamala.
EAC Offer Better Prospects to Kenya
Kenya’s economy is set to grow at a much slower pace than Uganda and Tanzania as the latter are less integrated into the global economy which has been in recession in 2009. Uganda and Tanzania will experience robust growth of six and 5.6 percent respectively compared to Kenya’s 1.4 percent, creating the need for Kenya to tap into an anticipated rise in regional demand for capital and manufactured goods and a growing need for transactional services. The expected strong performance of the two leading destinations of Kenya’s exports provides an opportunity for businesses to make up for slow growth in the local market.
Trade in Services Holds Back EPAs Deal
Trade in services is one of the unresolved issues holding back further negotiations between the EAC and the European Commission (EC) on the Economic Partnership Agreements (EPAs). Silver Ojakol, Commissioner, External Trade, Trade Ministry, explained that further negotiations were halted as the EAC region sought a common position on trade in services under the just-concluded EAC common market negotiations.
He said getting a position on trade in goods was easier because the region already had experience in trading in goods. But the services sector is still unsophisticated and developing. The EAC is negotiating as a bloc with the EC. Economic Partnership Agreements (EPAs) are a scheme to create a free trade area (FTA) between the EU and African, Caribbean and Pacific (ACP) countries.
Country’s Trade Deficit Widens
Uganda recorded a trade deficit of US$58.4m in September 2009 due to a reduction in informal cross-border exports, the Central Bank data showed. It said the September deficit expanded compared to August’s US$43.39m deficit. The exports were also hit by the closure of three key retail markets in Juba in June 2009 and the introduction of import and value added taxes on imports by the South Sudanese government.
Informal cross-border exports declined from US$223.98m in June 2008 to US$168m in September 2009. Total exports amounted to US$280.27m in September 2009, slightly up from US$276.75m recorded in August 2009.
Customs Union Needs a Single Voice
The Customs Union (CU), the first stage in the integration process of the EAC, will have come of age after a five-year transition period. Launched on January 01, 2005, the CU aims at boosting cross-border trade among the EAC partner states – Kenya, Uganda, Tanzania, Rwanda and Burundi – by eliminating internal tariffs and applying common duties (usually referred to as Common External Tariff) on goods coming into the region.
According to the EAC, CU protocol, all goods from all the five member states are to be traded duty-free as from January 01, 2010. On paper, the expiry of the EAC CU transition period on December 31, 2009, will mark the transformation of the CU into a Single Customs Territory.