The
East Africa Integration once again is a dream come true to many believers of
unity for strength. After its previous challenges that led to its untimely
disintegration the EAC has been resuscitated, this time with clear aims and objectives,
with its main agenda being increasing the social welfare of East African
citizens through regional economic, social, political and cultural integration.
It is under the regional economic integration where the Custom Unions falls.
A
Customs Union can be simply understood as an association of nations to promote
free trade within the union and set common tariffs for nations that are
not members.
The
EAC’s Custom Union was the first success story in the East African Community’s
integration process. The whole process was a test of fire, given the sacrifices
and the stringent and tight measures that were to be adhered to by the three
states. It acted as a show of commitment and the resilience showed meant that the
region was serious and wholly committed to deliver, and be able to reap the
benefits.
The
EAC Customs Union was launched on 31st December 2004. This process
initiated common tariffs on both internal and external trade carried out by the
Union partners. The Custom Union assimilated the principle of Asymmetry. In
this case Uganda and Tanzania were to charge tariffs on Kenyan exports at the
rates of 10% and 25% reducing by the rate of 2% and 5% every year for 5 years
respectively.
Benefits of the custom union
The
EAC Custom Union came packaged with great benefits and opportunities for the
EAC members. The entry of Rwanda, Burundi and the prospective plans of joining
by countries like South Sudan and Somalia will leave the Community with a
further increased opportunities and benefits to exploit. The tremendous
economic capacities and potential within the EAC is a hot cake to both local
and foreign investors, who are streaming into the region with several
international MNCs setting office in the region.
The
opportunities and benefits resulting from the EAC Customs Union
- The increased competition in the market, has lead to cheaper consumer goods and increased choice of products for the inhabitants within the EAC community
- The Customs Union has led to increased market size. With more than 130 million people it has enabled firms to benefit from economies of scale in production and service delivery resulting in cheaper goods and services within the East African region. This has had a tremendous and positive effect on the living standards of the citizens within the Union.
- A bigger economy attractive to investors has been realized thanks to the EAC Custom Union. The EAC has a combined GDP of about 79 billion USD. With such a handsome figure investors around the globe have made efforts to have a piece of the cake.
- There has been an easy cross-border trade among the five EAC member countries. The Customs Union has led to the harmonization of trade policies within all the member countries within the Union. This has incredibly enhanced trade. The primary factor behind the trade increase has been due to removal of tariff and non-tariff barriers.
The Customs Union however has had its
share of challenges too. The infrastructural and procedural problems such as
the poor state of roads, frequent road blocks, lengthy inspection and the
insufficient port capacities within the EAC has made importing and exporting
lengthy and expensive. These problems are currently being looked into so as to
smoothen and improve the levels of trade and other related matters within the
East African Community.
