Business Daily (Nairobi)
Allan Odhiambo
19 November 2007
The interim trade agreement that East African Community (EAC) member states are set to sign with Europe will help fast track economic integration in the region, senior government officials said.
Mr David Nalo, Kenya's Trade and Industry permanent secretary, told the Business Daily that pursuit of joint deals with a major player such as the EU should prompt EAC member states to harmonise their operations in key areas such as tariff regime.
This in turn means the region could realise its dream of becoming a common market earlier than planned for under the EAC protocol.
On going negotiations for a new EPA has included binding pacts in key areas such as market access and development that have direct cross-border impact on the economies of each member state.
Mr Nalo gave the example of EAC's exclusion list that protects sensitive agricultural and industrial products from adverse effects of the EPA with Brussels. The list consists of items that have been picked after a careful consideration of the prevailing scenario in the economies of each of the five member states.
Though the EAC has been pushing for the establishment of a common market, indecisiveness among member states has slowed down progress paving the way for political integration to take centre stage.
Differences over the list priorities spilled into the public during the sixth extra-ordinary EAC heads of State summit in August where the leaders agreed on a plan for economic integration after a protracted debate.
"There is need to move expeditiously towards establishing a common market and a monetary union by 2012 as the EAC transforms into a political federation," a communique released at the end of the summit said.
Member states urged the Secretariat to first explore the possibility of achieving a threshold of the customs union before developing a framework to fasttrack the establishment of the common market and a monetary union.
EAC member states' signing later this week of a new economic Economic Partnership Agreement (EPA) with Brussels is expected to give impetus to the drive towards a seamless regional economy.
The regional bloc is now expected to sign a comprehensive EPA with the EU by December 2009. Though the EU had initially wanted the pact to be signed by end of next year, the EAC appealed for a-two-year moratorium to allow its new members -- Rwanda and Burundi to complete implementation of the provisions of the Customs Union.
Analysts said the biggest gain that EAC member states have made from the new pact is the 25-year safeguard that the regional markets have received against EU imports.
"I see the harmonisation of regional tariff structures with unifomity on how commodities are handled," Peter Wachira of AIG, East Africa Limited told the Business Daily.
Away from talks with the EU, East Africa is also expected to develop a common ground in their dealings with other economic and development partners, including China that is fast making inroads into Africa.
"Ongoing talks will also determine how we relate with other development partners and not just Europe alone," said Mr Nalo. "We must have a common ground on areas such as customs procedures to smoothen our dealings with different clusters."
Last week, US Treasury secretary Henry Paulson called for closer EAC integration when he met Finance ministers from the region in Arusha Tanzania.
Negotiations for a common market within the EAC were officially launched last month in Kampala -- and a task force appointed to collect and collate the views of trade experts in the region.
A key mandate of the taskforce is develop a Protocol that would govern a common market by December next year.
Though there has been growth in the region following the formation of the customs union, experts argued that progress has been slowed down by differences over a number of issues including customs documentation procedures, daunting immigration procedures, and harsh inspection standards.
Problems have also arisen from non-uniformity in transport regulations on key areas such as axel load.
Another big threat to trade under the Customs Union has been the clash in declarations by member states.
Notable in this area are the special tax exemptions that individual member nations offer but often affect the activities of other members.
"The EPAs being pursued with the EU gives us a chance to iron out most of these barriers in that we can now proceed and apply the Standards and Quality legislation as a bloc. Similarly there would be room to jointly use provisions on meteorology and anti-counterfeint regulations," Mr Nalo said.
Experts in trade have raised concern over the unilateral tax exemptions and even proposed that they be replaced by duty remission scheme that have clearly spelt out terms and conditions underwhich such measures would be taken.
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