East Africa’s intra-regional trade has declined for the second
year in a row, due to the failure by partner states to agree on trade
liberalisation and integration. These hitches are eroding the benefits
of Customs Union and Common Market.
The East African
Community Secretariat, in a draft trade and investment report, says that
the total value of intra-EAC trade fell by 14.6 per cent to $4.4
billion in 2016, from $5.1 billion in 2015.
The
decline, according to the report dated August 2017, was mainly due to a
33 per cent drop in total trade for Tanzania to $851.3 million, from
$1.3 billion in 2015. The total trade for Kenya and Uganda fell by 10.1
per cent and 11.4 per cent respectively.
According to
the report, intra-regional trade constitutes only 9.4 per cent of the
total trade of the bloc despite the implementation of the Single Customs
Territory that provides for removal of tariffs and other barriers to
trade among the partner states.
The report cites a
trading regime that restricts the export of certain commodities to
partner states, lack of product diversification, and non-tariff barriers
as hurdles to intra-regional trade.
Kenya, however,
continued to dominate intra-EAC trade, accounting for 34.8 per cent
while Uganda and Tanzania accounted for 28.3 per cent and 19.4 per cent
respectively.
Common external tariff
The
Secretariat recommends a review of the common external tariff (CET) and
the exemption regimes to allow goods produced in the region to enter
the bloc’s market with few restrictions.
“The region
should consider reviewing restrictive policies on the sale of goods
produced under the exemptions and remission schemes as well as
restrictions arising from application of the Rules of Origin,” the
report says.
“Fully fledged Customs integration will
also eliminate non-tariff barriers and increase movement of goods.”
Tanzania’s declining contribution is attributed to falling export
volumes of rice and dairy products to Kenya due to restrictions. Kenya
and Tanzania have been involved in a trade dispute that has seen them
trade import bans on some commodities.
Tanzania has
banned cigarettes and dairy products from Kenya while Nairobi has banned
wheat flour and liquefied petroleum gas from Tanzania.
EAC trade has continued to be dominated by agricultural commodities: Coffee, tea, tobacco, cotton, rice, maize and wheat flour.
Manufactured
goods such as cement, petroleum, textiles, sugar, confectionery, beer,
salt, fats and oils, steel products, paper, plastics and pharmaceuticals
were also traded across the region.
According to the
report, the decline in intra-EAC trade for Uganda was due to a fall in
the import bill for petroleum products coupled with a reduction in
imports of manufactured goods like cement, pharmaceuticals, iron and
steel and sugar arising from increased industrial production.
Burundi
and Rwanda recorded an increase in intra-EAC trade during the period
under review, with Bujumbura reporting a 2.2 per cent increase to $169.5
million, from $165.9 million in 2015.
Rwanda’s intra-EAC trade increased by 0.2 per cent to $596.4 million, from $593 million in 2015.
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