Are EAC Partner States benefiting from integration?

YESTERDAY, July 1, 2012, marked two years since EAC Common Market Protocol was signed. This however is many years since the sister Protocol; the Customs Union came into force. Well two years for the Common Market Protocol but virtually no tangible progress to write home about.Perhaps for one to understand correctly about the nutty reasons hindering trade flourishing then suffice to give a brief perspective. Regional integration is a strategic action (means not an end) of re-arranging regional trade(s) with an objective of benefiting integrating nations from trade and investment. This new kind of arrangement normally aims at altering the prices of imports from member countries (as tariffs are phased out) relative to imports from non-members. This is important to grasp.Subsequently, as a result of this initiative (regional integration), demand pattern is anticipated to change, resulting in trade adjustments and output flows. Gains from trade would occur if higher-cost domestic production (or/and imported products) is replaced by cheaper imports from a partner country—what is commonly referred to as trade creation.Nevertheless, gains from regional integration (read trade) depend on a number of factors, key among them being the products produced by Partner States if they are in direct competition with, or complementary to, each other. In our EAC case it is the latter – our products are more complementary to each other. With this, as expected, regional integration would render in substantial gains from trade among Partner States.In anticipation of benefiting from trade, EAC Partner States hoped that Customs Union would facilitate and promote efficiency in domestic production, increase cross-border trade and create more investment opportunities while encouraging diversification of industrial and non-industrial products.So far, in respect of facilitating trade, Partner States have gone even further in eliminating internal tariffs, to a reasonable extent. Rules of origin for the region were developed along with a manual on their application including the relevant documentation such as certificates of origin. These spell out in detail the application of the criteria in determining the origin status of goods, procedures of administering the rules, treatment of small scale cross border trade and institutional framework for the implementation of the rules of origin.Further, one notices some efforts in harmonizing and development of EAC standards, even though challenges remain largely unabated.But what has been the experience so far? Overall, trends in trade across the region/EAC indicate that the pattern of trade is progressively shifting towards more in-ward trading (trading within the community). This is supported by increased volume/value (in constant prices) of trade among Partner States.The product composition of intra-trade reveals that unlike trade with non-EAC members, agriculture and manufactures play an important role. Indeed one can reasonably conclude that market for the two sectors (agriculture and manufacturing) is progressively expanding as a result of regional integration.However to optimally benefit from trade, Partner States need to do more than the usual average work.If the current state (of trade and investment) is subjected to an observant eye, you would notice a number of feeble, hassle and disheartenment actions (barriers) against regional trade. Unfortunately and most shocking is that some of these challenges can easily be eliminated over a pick of phone! Then you wonder why can’t somebody pick up the phone and direct the things in right course of action, especially on soft NTBs? Look, small things in this region are tending to crowd out big issues! There have been some degree of pretence to fight NTBs – but it does not require the kind of resources to fight this war. It is not the fight that is totally lacking. Who cannot fight anyway? It is rather the skill and determination in the fight that is most required. Well, this region is yet to identify those serious leaders to champion this cause.Yet frankly speaking (or writing), the implications of these barriers are reflected in added costs. To a significant level these unfortunate barriers are progressively eating through the overall gains from trade created.The formation of the EAC Customs Union is an important step in the process of deepening regional integration. But EAC needs a new and robust style of direction to protect what has so been achieved from integration process.I truly believe the kind of actions we need to eliminate the prevalent NTBs, especially the soft ones (police road blocks; multiple weighbridges and laborious documentation and procedures) do not require the monitoring mechanism at national and regional levels. Some of these barriers can be eliminated overnight at the helm of an order. That is it! And we reduce unnecessary costs denying the region trade gains.If we cannot act against these small but costly barriers, which are obstructing realisation of full benefits from regional trade, then EAC Common Market Protocol will hardly move with ease from offices to the field, where it should belong anyway!