Why EAC Member countries fail to trade together under EAC Protocols

by Christopher Kiiza
0 comment

The East African Community (EAC) was established in November 30, 1999 by three countries; Uganda, Kenya, and Tanzania. The bloc has since enlarged to seven member countries, admitting Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC). The bloc’s primary objective is to facilitate inter and intra-regional trade in goods.

In 2004, member states signed the EAC Customs Union Protocol which came into force in 2005.

The EAC Customs Union Protocol aims to eliminate customs duties and other charges of equivalent effect on goods traded between the member states; establish a common external tariff on goods imported from non-member states; adopt common rules of origin for goods traded within the customs union; eliminate internal tariffs for goods meeting the EAC rules of origin criteria and eliminate Non-Tariff Barriers.

Although the EAC Customs Union Protocol has registered reasonable success in promoting trade and economic integration in East Africa, there are several challenges that hinder the effective implementation of the EAC integration agenda.

One such challenge is non-compliance to signed protocols by partner states, including EAC Customs Union Protocol itself which remains a crucial hurdle for the community.

In 2019, the then EAC Secretary General, Liberat Mfumukeko while speaking at the Strategic Retreat of the EAC Council of Ministers and Heads of EAC Organs and Institutions in Kigali, Rwanda, said that since the Treaty for the Establishment of the EAC was signed over two decades ago, the bloc had registered great achievements, but added that there existed several challenges that hinder the effective implementation of the regional integration agenda.

“Non-compliance to signed Protocols by Partner States remains a crucial hurdle for the Community. In July 2019, we will be marking nine years since the Common Market Protocol came into force. Unfortunately, some Partner States are yet to approximate or harmonize their national laws, policies and systems,” said Mfumukeko.

 “As a result, the full implementation of the Common Market protocol remains challenging. Subsequently, the free movement of persons and factors of production anticipated to spur regional economic growth remain restrained,” he added.”

But why are regional countries failing to do business together under the EAC protocols?

There is a lack of political will/ commitment from the EAC governments to fully implement the protocols. This is due to a number of factors, such as vested interests, corruption, and the need to balance the competing priorities of different countries.

Additionally, there are still a number of trade barriers that restrict the free movement of goods, services, and people within the EAC. These barriers include tariffs, non-tariff barriers, and regulatory differences.

Furthermore, the EAC countries have different business regulations, which can make it difficult for businesses to operate across borders.

The above factors, among others have resulted in trade disputes between EAC members which caused losses in billions of dollars to the peoples of the East African Community.

Uganda – Kenya Trade War

In March this year, the Government of Kenya reinstated its 2021 ban of Ugandan milk products, sparking anger from Ugandan farmers and Government officials.

The Kenyan Government said the ban was intended to “cushion the industry from surplus production and low producer prices.”

Consequently, the Kenya Dairy Board suspended the issuance of dairy import permits.

The ban which was never the first to be imposed by Nairobi, would be lifted a few weeks later.

The ban of Uganda’s milk into Kenya in March was just weeks after Kenyan President William Ruto lifted the ban on Ugandan agricultural products that included; milk, eggs and chicken at the start of February.

It took a meeting between President Museveni and Kenyan Trade Minister, Moses Kuria in Kampala in late January to lift the ban on Uganda’s agricultural products.

The Ugandan products had been banned by Ruto’s predecessor, Uhuru Kenyatta’s government in 2021.

Similarly, in July 2020, Kenya banned sugar imports, opting to solve challenges facing the country’s sugar industry. It (Kenya) banned all sugar imports and subsequently revoked all sugar import permits, some of which were held by Ugandan manufacturers and exporters.

However, in January 2021, Kenya lifted the ban and allowed to import 90,000 tonnes of sugar from Uganda after Uganda through the Uganda Manufacturers Association (UMA) clarified to Kenya that it had enough sugar both for domestic and export markets and denied importing sugar from outside the Common Market for Eastern and Southern Africa (COMESA) region.

Before the ban was lifted, the two EAC allies later agreed that Kenyan Government would post trade facilitation officials in Uganda to gather information, intelligence, monitor that Ugandan sugar exports into Kenya were wholly obtained from Ugandan factories, and that Kenyan Government would send a bilateral sugar verification mission to Uganda.

Nairobi had declined to allow a section of Ugandan products into the country over concerns that the goods did not meet the Rules of Origin and tariff obligations.

Uganda – South Sudan Trade Dispute

In May this year, over 74 Ugandan registered trucks transporting maize flour were held by South Sudan Bureau of Standards in an isolated parking, 7kms into South Sudan and on their way to Juba from Nimule.

The South Sudan government alleged that the trucks had been impounded for carrying aflatoxin affected maize flour which is not fit for human consumption.

On June 5, the Permanent Secretary in the Ministry of East African Community Affairs, Edith Mwanje wrote to her South Sudanese counterpart suggesting various remedies to solve the crisis.

The Permanent Secretary called on South Sudan to make use of the Uganda National Bureau of Standards (UNBS) Laboratory facility in Gulu that was provided by TradeMark Africa (TMA) in July 2022 to check and confirm that the cargo poses no health threat, and is safe for human consumption.

Uganda also called on South Sudan to allow the truck drivers to offload the maize flour in a particular designated area and South Sudan Bureau of Standards continues with their investigation into the quality of the maize flour.

Uganda further called on its neighbor to release both the trucks and drivers to come back to Uganda for other businesses.

However, South Sudan turned a deaf ear, and never responded to Uganda’s requests.

It would take Uganda’s move to diplomatically escalate the matter to the EAC, and the meeting between both countries’ leaders for South Sudan to release the cargo trucks.

Uganda – Rwanda Border Closure

Uganda – Rwanda relations strained from 2019 to 2022 over political reasons that caused massive effect on trade and business between the two EAC allies.

Rwandan President, Paul Kagame closed the Gatuna border with Uganda, accusing Kampala of supporting rebel groups in eastern Democratic Republic of Congo (DRC) and Rwanda’s dissidents with the aim to destabilise his Government.

Kampala would later issue counter accusations that Kigali had infiltrated its security forces with aim to destabilise Museveni’s government. Both countries also raised accusations of supporting each other’s enemies.

The two countries would later work out their differences, and on January 28, 2022, Rwanda announced that it was re-opening the Gatuna border with Uganda on January 31.

The border closure heavily disrupted trade between Uganda and Rwanda.

If the EAC countries are able to overcome these challenges, they can create a more integrated and prosperous regional economy. This will benefit businesses, consumers and the economies of the EAC countries as a whole.

You may also like

Leave a Comment

About Us

Business Times Uganda, is a leading Business news website focusing on Finance, Energy, Infrastructure and Technology. 

Feature Posts

Newsletter

Subscribe our newsletter for latest news. Let's stay updated!

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?
error: Content is protected !!