While the State of East Africa 2012 report revealed that intra-EAC trade had ‘doubled over the past five years’, the Government of Rwanda is concerned the lack of progress on the elimination of non-tariff barriers (NTBs) is increasing its costs of trade and undermining its international competitiveness.
EAC Ministers have committed themselves to the removal of NTBs by December 2012, but Rwandan ministers are arguing that legally enforceable time frames for their removal need to be established, saying that ‘the absence of a legally binding mechanism creates gaps when it comes to actual implementation of the agreed actions to address trade barriers.’ Road blocks and weighbridges are a particular source of concern, since these NTBs consistently impact on the cost of trading.
The scale of the problem is widely acknowledged, with the EAC Secretary General telling business leaders in April 2012 that the EAC still faced challenges in facilitating cross-border trade and ‘creating a level playing field for all players’. The Kenyan Private Sector Alliance (KEPSA) chairperson said that his members were ‘not happy at the pace at which the EAC is handling the re-emergence of NTBs’, and KEPSA was therefore preparing a proposal outlining ‘steps which member states can take to fast track implementation of a fully fledged customs union and removal of non tariff barriers’.
Draft legislation is scheduled to be tabled before EAC ministers by June 2012. Work is also in progress on administrative reforms to facilitate trade, including the adoption of ‘a destination model of clearance of goods where assessment and collection of revenue is to be done at the first point of entry’. Revenues would then be remitted to the final destination state. However this will require ‘a robust information communication technology revenue management system’, with ultimately a regional customs authority and revenue-sharing formula.
Parliamentary discussions in May revealed concerns in Tanzania over moves to accelerate the pace of EAC economic and trade integration , with the Speaker of Tanzania’s parliament arguing that the country was ‘just not ready’ in many areas for any accelerated implementation of EAC commitments.
EAC Secretary General Richard Sezibera however remained unequivocal. Speaking at a meeting Arusha in May, he said ‘It is illegal to ban food imports and exports within the partner states of the East African Community’. However, progress is reportedly being made: since the Tanzanian export ban on cereals in 2011, regional governments had worked on the issue and ‘all agreed that no more bans on trading in food items’ should be introduced.
The removal of NTBs will have wide-ranging implications for trade in agricultural products in the region. Ending export or import bans, for example, is likely to encourage long-term trade relations and may lead to increased use of modern production and marketing arrangements such as contract farming and futures markets. Free movement of food commodities in the region from surplus to deficit areas will enhance regional food security, as it will lower and stabilise prices for consumers while at the same time providing higher prices and greater market outlets for producers. It will therefore improve agricultural resource allocation as more efficient producers increase production and the less efficient move to other activities. The removal of NTBS is also likely to generate more interest in agricultural investments from regional investors.
For land-locked countries in particular, elimination of NTBs is critical, because these countries have narrower, largely agricultural, production and revenue bases. Efficient agricultural production and exports are therefore the economic lifeline of these land-locked economies, and removing NTBs will both reduce input costs and facilitate exports.
However, in order to realise the benefits of removing NTBs, there is a need for capacity building of all stakeholders, from producers to cross-border traders, processors, customs officials and policy makers in government. There is also a need to strengthen institutions to ensure that all actors understand the new policy environment, and that it is implemented in a transparent and accountable manner. The removal of NTBs is therefore a necessary but not sufficient condition for the promotion of growth in agricultural production and exports.