Personal Finance

Harmonise all business laws to ease EAC trade

trade law

There is a need to consider harmonisation of major business laws to make trade between nations easier. SHUTTERSTOCK

The opening remarks by President Samia Suluhu of Tanzania during her State visit to Kenya two weeks ago were, “Mko na Uhuru upande wa Kenya na upande wa Tanzania tuko na Suluhu.” Her witty remarks were derived from the names of both presidents Uhuru and Suluhu. Translated into English her remarks meant that we have freedom in Kenya while Tanzania has the solution.

The visit offers renewed hopes of increased trade between the two countries. There have been issues including allegations of discriminatory trade practices as well as non-tariff barriers to trade. It is hoped that the visit by the Tanzanian president is a sign of better times to come.

World trade is moving away from protectionism and towards liberalisation which is enhanced by the removal of trade barriers between two countries, be they tariff or non-tariff.

The East African Community (EAC) of which both Kenya and Tanzania are members, supports liberalisation and removal of trade barriers. The EAC Treaty and the EAC protocols especially the EAC Common Market Protocol contain very good provisions on liberalisation. However, there still exists a lot of non-tariff barriers.

For the intention of the EAC Treaty to come to fruition, then these barriers to trade ought to be removed. There need to be proactive steps by all the member states to eliminate barriers and avoid trade-related spats.

Each member state in the EAC is governed by national law and the regional law applies at the regional level. There may be a need to consider harmonisation of major business laws to make trade between nations easier. This is especially for businesses that have a presence across all the EAC countries.

It is easier for such multinationals to operate in a harmonised legal environment rather than be faced with conflicts of laws in their operations. Some major business laws, for example, customs and tariffs have been harmonised resulting in easier intra-regional trade. It may be worthwhile to consider harmonising other business laws such as intellectual property laws to ease trade.

While the place of national legislation cannot be ignored, one way in which harmonisation can be attained is by passing more business-related legislation at the regional level. In the event of trade that involves two or more member states then regional business law can be applied where relevant.

Harmonisation ought to be considered during dispute resolution. Currently, many businesses include arbitration clauses for dispute resolution where the parties get to determine the choice of law and place of law.

The East Africa Court of Justice (EACJ) is a judicial institution whose mandate includes dispensing with disputes where an arbitration clause designates it as the governing body. If the EACJ is strengthened in terms of capacity, then it can be a good avenue through which trade disputes between regional businesses can be dispensed with.

There has been very slow progress in legislating business laws that would facilitate integration and trade between EAC member states.

Mutual Recognition Agreements (MRAs) would liberalise the professional services sector. MRAs between member states would allow professionals such as lawyers, doctors, engineers and other regulated professions practise in other member states without much red tape. This would mean Kenyan lawyers for example would not have to take a bar exam to practice in Tanzania and vice versa.