The East African Community (EAC) is intensifying efforts to align county-imposed levies on transit goods with the EAC Common External Tariff (CET), addressing concerns that inconsistent rates across partner states are undermining the customs union and stifling intra-regional trade.
With intra-EAC trade languishing at just 9.3 per cent despite a 300-million-strong market, stakeholders are calling for urgent reforms to enhance regional economic integration.
Challenges to regional trade integration
Hon. Beatrice Askul Moe, the Cabinet Secretary for the Ministry of EAC, ASALs & Regional Development, highlighted that varying levies on identical goods across partner states create selective cost advantages, distorting competition within the common market. This practice discourages regional investment in key value chains, ultimately hampering trade integration.
Askul identified several bottlenecks, including delays in operationalising the single customs territory and one-stop border posts, which are critical for streamlining cross-border trade.
Harmonising standards and rules
Efforts are underway to address these challenges. The EAC is working on harmonising regional standards to improve market access for East African products. A comprehensive review of the EAC Rules of Origin is also underway to facilitate smoother trade flows.
Additionally, the community is tackling non-tariff barriers, which significantly inflate the cost of doing business and impede the free flow of goods.
Call for equal treatment of EAC goods
Adrian Njau, Acting Executive Director of the East African Business Council (EABC), urged partner states to treat EAC-originating goods as domestic transfers rather than imports or exports. “Goods traded within the EAC should face the same fiscal measures, charges, fees, and levies as domestic goods,” Njau emphasised.
This shift is seen as critical to eliminating distortions caused by the current CET, a four-band schedule with a top rate of 35 per cent introduced in 2022 to support regional manufacturing in sectors like textiles, steel, plastics, paper, and leather.
Impact of misaligned policies
CS Askul noted that inconsistent policies often favour extra-regional imports, disrupting economies of scale across EAC supply chains. To counter this, the EAC plans to engage county governments to align their levies with the CET, ensuring a level playing field for regional trade. This move is expected to bolster local manufacturing and reduce reliance on external imports.
GIZ and private sector collaboration
A representative from GIZ, a German development agency, reaffirmed their commitment to working with EAC policymakers and the private sector to address trade barriers. “We are focused on advancing regional and continental integration while ensuring markets like AGOA remain accessible,” the representative stated.
These efforts aim to create confidence among farmers and workers that regional markets will enhance their livelihoods.
Upcoming business summit
The EAC Council of Ministers announced the East African Business and Investment Summit & Expo in October. The event will bring together stakeholders to discuss strategies for boosting trade and investment, offering a platform to address ongoing challenges and showcase opportunities within the EAC.
With these initiatives, the EAC is poised to strengthen its economic framework, fostering a more integrated and competitive regional market.