Regional trade in times of crisis

“Experience is the best teacher of all. And for that, there are no guarantees that one will become an artist. Only the journey matters." - Harry Callahan, American philosopher.

The East African Community (EAC) has never had the opportunity to test its trade relations during a crisis until Covid-19 came calling.

There was no reference material on how regional trade could be managed in such trying times. The experience we are going through now is our only teacher.

As such, the region must record the experience to inform future Regional Trade Agreements (RTAs). The region never envisaged that there would ever be need to close the borders for health reasons. Now we know so as to manage future situations.

EAC was quick to issue the region’s Covid-19 plan but it forgot to mention trade in it. In spite of all the challenges, including willful political reticence, the region is becoming more integrated.

Trade volumes are on the rise and movement of people has fairly been free. Many of the member States, however, would rather have their borders closed to ward off the virus.

The future economic prosperity of Africa depends on how fast Africa becomes a single market with increased intra-continental trade. To achieve such a dream, regional trade blocs are critical test cases for greater integration.

During the Spanish flu pandemic in 1918, there were few boundaries in the continent but humanity still weathered the pandemic.

There are lessons that we can learn from other regional trade areas to enhance our RTAs. The European Union, for example, issued a policy statement concerning the application of customs provisions relating to the customs decision-making process, procedures and formalities.

This was an important intervention specially to ensure the functioning of the supply chain and free flow of essential goods needed in the member States.

Such provisions were not taken into consideration in the EAC, hence the reason why the border points are jammed with trucks carrying essential goods to neighbouring countries. Losses, especially perishables, continue to rise as customs officials enforce new directives.

One of the resolutions from the response plan was to minimise cross border movement of people while facilitating free movement of goods and services in the region. It is such self-contradictory statements that often lead to confusion at border points.

Perhaps they should have asked themselves how the goods would move without people.

Border restrictions are undermining economic activity, which is crucially important at this time within member states. The best option perhaps would have been to intensify testing in order to keep the supply chains going.

A recent World Bank policy note, ‘‘Managing Risk and Facilitating Trade in the Covid-19 Pandemic’’, noted that maintaining trade flows as much as possible during the Covid-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impact on jobs and poverty.

These will require increased internal and external border agency collaboration as well as enhanced use of risk management. The note highlights Brazil as one of the best practices so far where the government introduced new legislation that simplifies the customs clearance processes for articles used to combat the spread of Covid-19.

The legislation allows essential goods to move to the importer under expedited clearance. It also allows for the authorisation of importers to receive goods under expedited release.

The EAC governments should be having a rapid response unit to deal with emerging customs issues and if it is the legislation missing, each country can rapidly take it through their parliaments.

If a vaccine were to be found today only for it to be stuck at the customs union, it would do a great disservice to the people.

The spread of coronavirus will continue to affect many people across the world with dire economic implications.

Some of the problems, like movement of food, within established trading blocs would largely be self-inflicted.

There is wisdom in embracing best practices from elsewhere to ensure that supply chains are maintained.