The heads of state directed the Council of Ministers to resolve longstanding non-tariff barriers (NTBs) and report back at the 19th Summit. At the same sitting, the heads of state noted that some EAC partner states had not signed the Economic Partnership Agreement (EPA) due to pending issues that were yet to be clarified.
While we cannot underrate the importance of being locked out of the EU market, the region should worry more about the declining intra-EAC trade, which has been a cause of concern for regional traders.
Statistics show that intra-EAC trade fell by 13 per cent over three years, with total value dropping from $5.8 billion in 2013 to $5.06 billion in 2015. Between 2014 and 2015, intra-EAC trade shrank by 10 per cent from $5.6 billion to $5.1 billion.
During that time, most EAC exports were destined to the Common Market for Eastern and Southern Africa (COMESA) and the European Union (EU), totalling to 14.6 per cent and 15 per cent, respectively, while intra-EAC exports amounted to 19.6 per cent of total exports.
A raft of challenges, which have led to the declining intra-EAC trade, have forced EAC countries to seek ties with other trading partners outside the region, such as the EU and COMESA. Others have sought partnerships with the Southern African Development Community (SADC), the United States, the United Arab Emirates, India and China.
The challenges posed by NTBs, poor infrastructure at ports and mainstream transport corridors, lack of a comprehensive investment plan on how to promote EAC countries as a single investment destination, lack of a common position on the implementation of duty exemption regimes by partner states, and low value addition in the EAC region are some of the major factors stifling intra-EAC trade.
It is unfortunate that NTBs have remained a major problem on the economic front and one that should be addressed by all partner states as a matter of urgency.
The region's leaders must realise that the economies of partner states are interdependent, with none exclusively independent. As a result, economic wars and counter-measures will only hurt regional economic development and not necessarily one partner state.
The best approach, therefore, is not to shoot missiles of NTBs at each other, but rather to work together to reduce the costs of doing business.
Businesspersons through their umbrella body, the East African Business Council, have over time raised concerns over the numerous hindrances to trade across the region. They have on many occasions presented their grievances to the EAC partner states, with little change to the status quo.
Women-run businesses have been the biggest casualties in cross-border trade, mostly occasioned by NTBs. And unless the regional partner states act with urgency, regional integration will lose its meaning to business persons.
Apart from the traditional challenge of lack of access to reliable and affordable sources of credit, women traders have been crying foul over sexual harassment by border officials.
The women have over time raised issues over bribery demands at borders, where a woman trader is asked for a higher bribe than a male trader. In some instances, sexual favours have been demanded when border officials detain or confiscate their goods.
It is now crucial for EAC partner states to stop offering lip service and empty promises to elimination of NTBs and other factors hurting cross-border trade and commit themselves to promoting intra-EAC trade.
Enhancing value addition, mitigating unfavourable trade positions by EAC partner states, reducing the cost of doing business in the region, and developing strategies to attract investment through policies that support investment promotion are all important in dealing with the current stalemate.
Even as the region deals with hindrances to declining intra-EAC trade, it is prudent to ensure no country gets locked out of the EU.
While Burundi, Rwanda, Uganda and Tanzania have the option of benefiting from the Everything But Arms (EBA) trade agreement which they can use to enjoy duty-free market access to the EU, Kenya does not have that advantage since it is considered to be more developed. Kenya sells 30 per cent of its exports to the EU.
East African News Agency
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