Editorials

Support EAC organs to stop endless trade wars

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EAC flags. FILE PHOTO | NMG

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Summary

  • The Kenya-Uganda trade war should be a wake-up call to the East African Community (EAC) whose key mandates include enhancing and smoothening commercial relations among the member states.
  • It is now common to see countries making unilateral trade decisions, striking side deals and fighting each other, completely usurping the role of the EAC secretariat and negating the whole point of belonging to a common market.

The Kenya-Uganda trade war should be a wake-up call to the East African Community (EAC) whose key mandates include enhancing and smoothening commercial relations among the member states.

It is now common to see countries making unilateral trade decisions, striking side deals and fighting each other, completely usurping the role of the EAC secretariat and negating the whole point of belonging to a common market.

The latest tiff pits Kenya against Uganda, with the former seeking a review of taxes imposed on its exports by Kampala. Uganda is charging an 18 percent value added tax (VAT), a six percent withholding tax and a one percent railway levy on poultry products imported from Kenya.

Nairobi says the taxes are discriminatory, breaching the protocol of the EAC Customs Union.

Officials from the two countries have since met and agreed that Uganda will resolve the row by amending the relevant laws with effect from July 1, 2021.

The developments demonstrate that the institutions established by the EAC are not working as they should. The secretariat, in particular, has been sidelined in important policy developments at the core of the community. The secretariat is the executive organ of the community. Its mandate is to ensure that the regulations and directives adopted by the council of ministers are properly implemented, and provides the council of ministers with strategic recommendations.

There appears to be great difficulty in reining in member states that routinely go against the spirit of the common market in pursuit of their selfish interests. When the common market was created, it was envisaged that member states would agree on a uniform set of tariffs to enhance trade and investment in the bloc.

Countries that felt the need to protect certain sectors have a leeway to impose higher taxes on imports but only these are approved jointly.

It is time the structures and institutions of EAC take centre stage in driving trade in the region with the full political support of the heads of state.

Chaos engendered by unilateral decisions and side deals needs to end if the member states are committed to the EAC.