States blocking trade in the region to face punishment

The East African Community Council of Ministers has agreed on the principle of invoking sanctions against member states that are not doing enough to eliminate non-tariff barriers

Regular assessments of partner states will be conducted and sanctions will be slapped on those that fail or refuse to downsize NTBs soon after the Summit gives its greenlight to the proposal.

Last week, at the 3rd EAC Investment Conference in Kampala, there was intensive lobbying by the East African Business Council and senior officials from Uganda, Tanzania and Burundi to have the proposal endorsed.

“We shall create something like a matrix under which each country’s NTBs will be identified and registered. And after we have carried out other assessments and those NTBs have not been eliminated, action must be taken,” said Aston Kajara, Uganda’s Investment Minister.

The proposal was reportedly fronted by ministers from the five EAC members from different sectors of the economy, especially trade and investment, and was taken up and approved by the Council of Ministers last month. By last Friday, the Heads of State were expected to have endorsed it.

“We have agreed to enforce sanctions against those partner states that are non-compliant. A team of experts is studying the Treaty to see how enforcement should be done. The position for all these years has been that we should eliminate the non-trade barriers in the region to create a favourable trading and investment market. It’s time to act on it” Mr Kajara said.

Some partner states accuse Kenya of being quick to sign onto decisions but dragging its feet when it comes to actual elimination of NTBs.

“We invariably agree with the Kenyans on these issues but they never implement them,” said Mr Kajara.
 Verification

The executive director of the Tanzania Investment Centre, Emmanuel Ole Naiko, added that Kenya always insists on verifying the standards of goods from Tanzania even after the traders have shown proof that they have been cleared by Dar es Salaam.
“This is contrary to what we agreed,” the Tanzanian official said.

NTBs include both trade-restricting measures (quotas, technical barriers and others) and trade-promoting measures (export subsidies). In their application, NTBs are increasingly raising market access concerns at both global and regional levels.

The Investment Conference, attended by at least 2,000 delegates, was themed, “EAC Common Market: The Preferred Investment Destination.” It discussed how the region can attract more valuable investments, and elimination of NTBs was a key item.

As part of a process to eliminate NTBs, the East African Business Council last week also recommended to the heads of state that all visa fees for EAC citizens be scrapped, partners states adopt a regional transit bond similar to the one used by Comesa and that the region harmonise and simplify trade documentation and procedures in order to facilitate easier movement of goods within the Community.

“We have decided that we now need a political voice since without the backing of the Summit there seems to be no progress in reducing or elimination of NTBs,” said Agatha Nderitu, executive director of the Business Council.

The EABC study findings show that NTBs evolve around business registration and licensing, Customs procedures, police roadblocks, road axle regulations and control, and standards and certification requirements. On average, Kenyan businesses were more affected than their counterparts in Tanzania and Uganda.

NTBs, poor infrastructure and inadequate and expensive power have lately driven firms out of East Africa to more favourable markets.

For instance, transport costs as a share of value of exports are estimated to be as high as 48 per cent for EAC countries compared with 9 per cent in developed countries and 17 per cent in Zambia. EAC production costs are 5-10 times higher than those of the region’s competitors.