East African Community is made up of five East African countries – Kenya, Uganda, Tanzania, Rwanda and Burundi – with a combined population of more than 130 million.Its headquarters is in Arusha, Tanzania.
The Treaty for the Establishment of the East African Community was signed on November 30, 1999 and came into force on july 7, 2000 after ratification by the original three partner States — Kenya, Uganda and Tanzania. Rwanda and Burundi signed the EAC Treaty on June 18, 2007 and became full members from July 1, 2007.
The EAC aims at widening and deepening cooperation among partner States in political, economic and social fields for their mutual benefit. For this, the EAC established a Customs Union in 2005 and a Common Market in 2010.A monetary union is expected in 2012 and ultimately a political federation of the East African States.
The realisation of a large regional economic bloc of 1.82 million sq kilometres and a combined Gross Domestic Product of$60 billion (Sh4.8 trillion) bears great strategic and geo-political significance and prospects of a renewed and reinvigorated East African Community.
EAC is Kenya’s most important foreign policy vehicle and biggest trading and investment bloc. A common East African passport is in use to facilitate free movement of people in the region. With this regional framework, Kenya supports and encourages all efforts focusing on the full implementation of relevant treaty provisions that will lead a federation as quickly as possible.
EAC countries are major export destinations for Kenya. In 2008, Uganda was Kenya’s number one export destination. Tanzania and Rwanda were fourth and 10th worldwide respectively. In the same year, Kenya’s exports to the EAC accounted for 51.6 per cent of total exports to Africa.
The largest importer to Kenya is Tanzania, accounting for 58 per cent of all imports from the EAC. Overall, the value of exports from Kenya grew by 31 per cent between 2004 and 2008, while imports from Tanzania and Uganda grew by 300 per cent. Between 2005 and 2008, the EAC intra-trade rose by 49 per cent, with the value of trade increasing from $1.847 billion (Sh I 47.7 billion) to $2.715 billion (Sh217.2 billion).
Indeed, ensuring the success of the EAC is Kenya’s most important regional objective. Kenya has endorsed Article 123 of the EAC Treaty, which envisages a common foreign and security policy lor partner states.
The integration of EAC aims at closer and deeper integration among partner states through coordinated policies, projects and programmes in political, economic, social and cultural fields. It is envisaged that the DR Congo and Southern Sudan will join the EAC soon.
The EAC Treaty identifies 17 areas of cooperation, including trade, aviation, agriculture, fisheries, animal husbandry and environmental protection. The major steps towards full integration are a Customs union, a common market, a monetary union and, ultimately, political federation.
The increase in intra-EAC trade is attributed to the liberalisation of tariffs. A free tariff regime on most internal trade was adopted along side a progressive tariff reduction programme on some products from Kenya imported to Tanzania and Uganda.
East African citizens will reap the fruits ofintegration from the implementation of the Common Market Protocol in which free movement of goods, people, labour, services and capital, as well as right of residence and establishment, are guaranteed. Tariff barriers were dismantled in January 2010.
This transition did not have any negative impact on the partner economies. To the contrary, there is evidence of steady and substantial growth of revenue since 2005.
Another reality that the EAC Customs union presents is the adoption of a harmonised Customs tariffs and legal regime. A common external tariff of harmonised Customs duty rates applies uniformly in trade with
The East African Customs Act and Regulations have created stability and predictability in the business environment in the region. No partner State can unilaterally amend the tariff or law to suit its interest. Any changes are jointly made by partner states and takes into account the interests of the region.
East African Community (EAC) Achievements
The Achievements of the East African Community (EAC) includes:
- Harmonisation of municipal laws and judicial training syllabi
- A strong foundation laid for partnership development with the rest of the continent and the world.
- Cooperation and coordination of activities with AU, COMESA, IGAD and SADC
- Cooperation agreements with the African Development Bank, Agence France de Development, European Union, GTZ, International Labour ()rganisation and Swedish international Development Agency
- Removal of non-tariff barriers on crossborder trade
- Harmonisation of standards and specifications of goods and services
- 207 standards harmonised -91 East African Standards have been adopted and the WTO notified
- Establishment of the East African Association of lnvestment Promotion Agencies
- Harmonisation ofinvestment incentives and codes ofthe Partner States.
- Publication ofthe Investors Guide to fast Africa
- Adoption ofa standardised single entry document.
- Launch ofthe East African Community Customs Union in Kenya, Tanzania and Uganda in January 2005 and in Burundi and Rwanda in luly 2009.
- Harmonisation of monetary and fiscal policies
- Harmonisation of banking rules and regulations.
- Harmonisation of VAT rates, which range between 16 and 20 per cent.
- Harmonisation of pre-shipment requirements threshold at $5,000 (Sh/100,000).
- Institrrtionalisation of`Finance Ministers pre- and post-budget consultations, sharing of information on budgets, tax proposals, trade and economic performance, and the reading Budget Statements on the same day
- Implementation ofTripartite Agreement on Avoidance of l)ouble Taxation
- Harmonisation of policies and trading regulations in the three stock exchanges
- Establishment ofthe Capital Markets Development Committee to oversee cross listing of stocks.
East African Community EAC Quality standards
Quality standards applicable on products traded in the East African region have been attained through harmonisation. So far, 1,100 regional standards have been harmonised, replacing national standards. When Rwanda and Burundi joined the EAC in 2007, the adoption of the tariff and legal regime and subsequent implementation of a Customs Union in 2009 bolstered the market of more than 130 million people.
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Rwanda has migrated to the EAC financial year, while Burundi adjusts hers in the 2010/ 201 1 financial year. This means that Burundi will join Kenya, Uganda, Tanzania and Rwanda in reading national budgets on the same day.
Organs of the East African Community EAC
East African Community EAC Summit, comprising heads of government of partner States, gives general direction towards the realisation of the objectives.
The Council of Ministers is the main decision-making institution. lt is made up of ministers from partner States in charge of regional cooperation.
The Coordinating Committee consists of permanent secretaries and reports to the Council. It is responsible for regional cooperation and coordinates the activities of the sectoral committees.
Sectoral Committees conceptualise programmes and monitor their implementation. The Council establishes the committees on recommendation of the respective coordinating committee.
The East African Court oflustice ensures that EAC law is interpreted and implemented in line with the Treaty.
The East African Legislative Assembly provides a forum for debate. It has a watchdog function and also plays a part in the legislative process.
The Secretariat is the executive organ of EAC. As the guardian of the Treaty, it ensures that regulations and directives adopted by the Council are implemented.
East African Community (EAC) – Common Market
With the Common Market, the East African Community -EAC will witness not only free movement of goods enabled by the Customs Union, but also free movement of people, labour, services and capital.
The Customs Union has made successful strides. Partner states agreed that implementation be progressive to ensure elimination of internal tariffs within five years.
It was against this background that a gradual phase out of duties on selected goods from Kenya to Tanzania and Uganda was adopted. The EAC trade regime had designated 58 goods as sensitive products and set tariffs ranging from 35 to 100 per cent. The top rate of 100 per cent applied to most sugar. High rates also applied to rice (75 per cent), wheat (60 per cent), milk products (60 per cent) and maize (50 per cent).
This measure is intended to protect local production on the assumption that the region had adequate capacity to meet the demand for selected commodities.
But this ended on December 31 2009. From 2010, goods have been traded duty-free within the partner states. Significant progress has been made in the implementation of the Customs Union protocol, resulting in huge increases in the volume of intra EAC trade since 2005.
East African Community (EAC) and International Negotiations
The East African Community (EAC) has evolved as a united bloc in multilateral and international negotiations. For instance, the EAC is negotiating an Economic Partnership Agreement with the with the European Union.
It is also in process of establishing a tripartite free trade area with COMESA and the Southern Africa Development Community (SADC).
Furthermore, the EAC signed a Trade and Investment framework Agreement with the United States in 2008. The agreement provides a platform for EAC engagement with the US as a bloc.
The unified approach strengthens the EAC position in negotiating as a single entity rather than each partner State going it alone.