What can EAC learn from the EU at 60 years?


Transporters queue for clearance at the Kenya -Uganda border at malaba. FILE PHOTO | NMG

On March 25, the leaders of the European Union member countries returned to Rome to celebrate 60 years since the signing of the Treaty of Rome, which marked the start of the European unification project.

Over the 60 years, the European Union has achieved tremendous success, creating an economic juggernaut of 28 countries with a GDP of USD 14.6 trillion.

The Union holds seven per cent of the global population and accounts for 20 per cent of global trade, with 62 per cent of this trade carried out among the EU member countries.

Even as they toasted champagne, the leaders had reason to be apprehensive of the future.

The UK has voted leave the European Union (Brexit), formally starting two years of negotiations on the terms of its exit from the Union.

Brexit is a nightmare for the European Union as it provides an example for other dissatisfied countries that may wish to leave the union in future.

The problems facing the European Union resonate well with the East African Community (EAC).

The EAC has dreams of following in its steps under a four step plan, starting with the establishment of a customs union, followed by a common market and monetary union, and finally the ultimate prize, a political federation.

However, like the EU before it, national needs are increasingly getting in the way of regional aspirations.

These problems are inherent in the clamour for supremacy, one-upmanship on infrastructure projects, divergent domestic tax policies, reluctance to eliminate non-tariff barriers and half-hearted commitments to free movement of capital and labour.

As a customs union, actions by one member can have adverse implications on the others.

This is evident in the negotiations between the EAC and the EU on a new Economic Partnership Agreement to replace the existing non-reciprocal agreement which allows EAC member countries duty free access to the EU while charging duties on imports from the EU.

One of the most visible signs of EAC integration is the synchronisation of the budget process for the East Africa countries culminating in the presentation of budgets to the respective national assemblies on the same day in June.

However, with the elections looming, Kenya had little option but to push forward its budget presentation.

Inevitably, this caused jitters among a number of countries which fretted that the presentation would prematurely leak to the other EAC countries common tax policies especially on customs.

Similar to the EU, different countries have different growth priorities and are at different stages of development.

Thus, common monetary policies and a common currency deny individual countries the tools to make interventions necessary to spur growth.