The IMF has posted a review of East African integration after 10 years. The review, published in December 2012, is drawn from the proceedings from a high-level conference earlier in 2012 and suggests, among other conclusions, that ‘given its potential for expanding exports and reducing poverty, agriculture would likely offer the greatest payoff from targeted support.’ (1, page 53). It argues that the export base needs to be diversified and that this may require ‘targeted “catalytic” interventions in natural niche sectors where EAC economies could build up or strengthen their comparative advantage, overcome late-comer handicaps and establish a market presence’. According to the review, these public interventions need to be closely targeted, as the EAC economies lack the resources to provide broad-based support. In addition, ‘regional coordination – with a common focus, for example, on a few “trade corridors” – could help mobilize ﬁnancing and increase returns.’
While identifying a clear role for the public sector, the report calls for the private sector to be ‘closely involved in the design of such interventions, helping identify concrete needs and efficient delivery modes’. It also maintains that further progress is needed in government policies affecting the private sector. In terms of ease of doing business in 2010/11, the EAC as a whole was ranked 115th out of 183, while Rwanda was ranked 45th globally, Kenya 109th, Uganda 123rd, Tanzania 127th, and Burundi 169th (1, page 106).
The East African has also reported on the publication of a new report by the East African Community Secretariat, which identifies non-tariff barriers (NTBs) to intra-regional trade as one of the remaining impediments to regional integration. While NTBs should have been removed by December 2012, only some 36 identified barriers have been addressed, while some 35 remain unresolved and ‘some countries have even introduced fresh ones – about 10’. Businesses continue to incur costs from ‘mainly weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts, and lack of harmonised import and export standards, procedures and documentation’. The EAC Secretariat argues that the continuation of NTBs arises from ‘the absence of a legally binding framework’, adding that a draft law prescribing penalties for countries failing to eliminate prescribed trade barriers ‘was submitted to the regional parliament in November 2012’.
The EAC Secretariat observes that ‘all the countries expressed frustration with the barriers’. Furthermore, in Tanzania, the Arusha branch of the Chamber of Commerce Industry and Agriculture (TCCIA) is reported in the national press as saying that ‘agricultural, manufacturing and tourism sectors so far have not been able to take advantage of the implementation of one of the main instruments of [Custom Union] – the East Africa Common Market Protocol (EACMP)’. TCCIA-Arusha identifies ‘policy failure’ as one of the root causes of the lack of progress.
The finding that new NTBs to intra-regional trade have been introduced, rather than fully abolished, as planned at the end of 2012, is a matter of concern. However, it is important to disaggregate the non-tariff measures that come to constitute non-tariff barriers. In the area of SPS measures, underlying capacity constraints are a major impediment to the creation of a functioning single market in the EAC.
Concerns about trans-boundary diseases are real and impact greatly on regional trade, yet few of the countries in the EAC have the capacity (laboratory, technical, and operational funding) to ensure that products produced in the region meet international or even regional standards. This situation is further compounded by a lack of awareness among producers of the importance of complying with regionally acceptable SPS and food quality standards. This is a particular problem for trade in livestock and livestock products.
This being noted, it is important that governments do not give in to lobbying from industry bodies to retain barriers to imports simply because of an underlying lack of competitiveness. This needs to be addressed through regionally supported programmes to address the structural causes of a lack of competitiveness (e.g., high inputs costs, infrastructural constraints and policy shortcomings).
Clearly, as the IMF report acknowledges, there is an important role for the public sector in helping producers to develop more competitive patterns of production to serve regional markets. However, this needs to be based on partnerships with the private sector bodies, which need to take the lead in developing new areas of competitive production for regional markets.
It is against this background that a mechanism for transparent and accountable use of non-tariff measures is required. It would need to be accompanied by the establishment of mechanisms to strengthen compliance with regionally agreed policies, reaching beyond EAC regional structures to encompass both national enforcement mechanisms and self-regulation.