EAC fails unity test ahead of common market launch

The EAC structure borrows a lot from the European Union, whose negotiators have severally questioned the brisk pace at which the EAC is implementing its integration schedule.

While it took the EU 11 years to set up a custom union and a total of 42 years to agree on a single currency, the EAC, which only revived its integration project 10 years ago launched a custom union in 2005 and is gunning for a single currency in 2012.

The crash integration programme is expected to be even more burdensome for country’s like Burundi and Rwanda that joined the project in 2007.

They have to domesticate the custom union protocol and adopt a common currency within two and four years respectively.”

A custom Union presupposes the establishment of a central custom institution linked to the national revenue bodies that takes charge of custom borders,” says Margaret Chemeng’ich, CEO of the Institute of Economic Affairs. “EAC does not have the legal framework for the establishment of such a body and neither has it agreed on how to invest the funds held in the regional pool.

Ms Chemengich, who is among the consultants hired by the EAC secretariat to help draft the common market era structures for regional institutions, says the governments will have to amend national constitutions to accommodate some of the regional integration proposals.

Powers of the semi-autonomous central revenue authority, designation of new exit and entry points to the region, and formula for sharing custom taxes among member states are some of the new changes that experts are seeking in the national constitutions.

Peter Malinga, a commissioner with Uganda Revenue Authority, is however upbeat, saying the national bodies can still collect the taxes and put it into a common kitty without having to cede the role to a semi-autonomous institution.

“The improved IT infrastructure in the region and the fact that revenue bodies across the region are already interconnected through Revenue Authorities Digital and Data Exchange (Raddex) makes it easier to share information, and with mutual trust, we’ll just carry on,” said Mr Malinga.

A study of the implementation and impact of the custom union in the region since 2005 released at the Arusha meeting over the weekend indicates that national institutions continue to erect non tariff barriers (NTBs) ahead of signing of the common market protocol.

The study identifies lack of EAC visa, numerous police road blocks, varying trade regulations among member countries and the different immigration procedures as some of the new barriers that prevent the region’s citizens from trading easily within bloc.

But heads of the national institutions have rejected the charges, shifting blame instead to the hurried integration process that has left many issues pending

“Most custom officials on the ground still have a problem interpreting the rule of origin properly because it has not been simplified for them, making it one of the NTBs in the region,” said Ms Wambui Namu, a commissioner of customs with Kenya Revenue Authority

This view is shared by Dr T Kahuma, the Executive Director of the Uganda Bureau of Standards, when he maintained that high volume of trade spawned by the launch of custom union in the region has stretched the capacities of testing laboratories in the region, forcing traders to queue for the services even in areas where quality regulations have been harmonised.

“Otherwise, if we listen to political sentiments and just allow goods without checking in the name of free trade, then custom union good be the greatest danger to consumer welfare in the region,” argued Dr Kahuma.