Arusha — The East African Business Council (EABC) has congratulated the region's heads of state on signing the common market protocol.

EABC chairman Faustin Mbundu said the pact was signed here on Friday after 18 months of negotiations because leaders in the East African Community (EAC) partner states were committed to regional integration.

"That initiative has made the region stronger, through bringing about significant economic reforms, liberalised markets, and diversified trade," he said. He was happy that the business environment in EA had improved from what it was five years ago.

"Many of the stringent restrictions which hampered trade and investment in the region, such as different policy regimes, fiscal laws, permits and high tariffs have been removed."

However, he bemoaned infrastructural hurdles, non-tariff barriers (NTBs), frequent policy reversals and lack of an active private sector involvement in formulating trade policy for impeding intra-regional trade.

He urged EAC member countries to urgently improve road and railway networks, and make electricity cheap and reliable for the region to attain the desired competitiveness.

"The current poor infrastructure continues to have a negative impact on the business environment in the region," he warned here. He described the suspension of some common external tariffs (CETs) by some member states in the bloc as "arbitrary".

According to him, some of the incidents where CET has been suspended without proper consultation with industry stakeholders include the Dar es Salaam Rapid Transit project where an import duty on buses with a capacity of more than 25 seats was reduced to 10 per cent from July 2007 to June 2009.

Others are duty exemptions on refrigerated trucks, insulated tankers, garbage collection trucks and four wheel drive tourist vehicles and trucks with gross vehicle weight of 5-20 tonnes.

He also cited duty reductions on trucks with gross vehicle weights of over 20 tonnes (from 25 per cent to 0 per cent) and the sensitive status accorded to the cement sector was removed in June 2008 with import duty being reduced from 40 to 25 per cent as other instances where CETs had been waived.

He noted that such frequent and unclear policy changes were undermining the CET aim of boosting domestic production and promoting intra-regional trade.

"Frequent and un-transparent policy changes affect the conditions upon which investment are based and affect the competitiveness of local industries," he said.

"EAC partner states should be committed to the spirit of the customs union protocol." He explained that all due process should involve transparent consultations and discussions of all stakeholders before decisions are made.

He reiterated EABC's commitment to continue tracking NTBs through constant monitoring and reporting. He asked EAC member states to put more effort in eliminating NTBs such as police roadblocks, weighbridges, lack of mutual recognition of quality atandards and curbs in agricultural trade.

He noted that EAC time-bound programme for eliminating NTBs was still slow. He asked the partner states to harmonise policies, regulations and other pieces of legislation.