The East African Community Legislative Assembly recently passed a binding legislation to eliminate non-tariff barriers to trade among East African Community partner states.

Known as the East African Community Elimination of Non-Tariff Barriers Act, 2015, the law is likely to contribute to increased intra-EAC trade once ratified nationally by each of the five states — Kenya, Burundi, Rwanda, Tanzania and Uganda. NTBs are partly to blame for the still limited intra-EAC trade, estimated at 13 per cent in 2013.

NTBs often limit market access, changing the quantities of goods traded, or increasing the prices of goods. They come in various forms such as restrictive sanitary and environmental protection measures, import or export restrictions, price controls, arbitrary application of rules of origin and other trade-restrictive measures.

Although there are no quantitative studies on the impact of NTBs in the region, the most recent Business Climate Index Survey in 2011 by the East African Business Council showed that businesses feel that NTBs have continued unabated in the EAC. Perhaps even worse, the general public seems to lack awareness of NTBs and their negative impact on their economic circumstances.

The importance of the Act cannot be overstated. It provides the business community the opportunity to report NTBs and see to their final resolution through the formal channels of the EAC Secretariat, with a clearly defined elimination framework.

Before that, businesses could report NTBs to their respective national monitoring committee (NMC), who would in turn report them during the regional forums of NMCs, usually held on a quarterly basis, sometimes after longer intervals.

The reported NTBs would then be inserted into the Time-Bound Matrix on the Elimination of NTBs. The matrix is a tool that was developed in 2007 to track reported NTBs and their elimination.

However, one of its weaknesses is that resolution was strictly dependent on the political will of the concerned parties to eliminate reported NTBs, with no consequence for non-elimination, and no retribution for the aggrieved parties.

Additionally, although the matrix was meant to be “time-bound,” deadlines were regularly extended if no action was taken on reported NTBs.

The most longstanding NTB in the matrix is Uganda’s restriction of beef imports from Kenya, in place since 1996. Most recently, a Ugandan company reported the restriction of supply of electric cables by a Kenyan parastatal, whose tendering procedures restricted bidding to Kenyan companies only.

This is despite Article 13 of the Protocol establishing the EAC Customs Union, where partner states bound themselves to remove all existing NTBs and refrain from introducing new ones. Currently, aggrieved parties may also report NTBs online through the tripartite-wide reporting system commonly owned and used by the EAC, the Common Market for Eastern and Southern Africa (Comesa), and the South African Development Community.

The recently passed NTBs Act, therefore, gives aggrieved parties the opportunity to pursue elimination of NTBs to conclusion, including compensation for affected parties for the financial loss suffered. It gives the EAC Council of Ministers the power to implement it.

Once ratified, it takes precedence over partner state laws. While the process under the new Act is a long one in that an NTB has to go through the NMCs and the EAC Secretariat all the way to the Council of Ministers, it does bring finality in resolving reported NTBs.

The next steps involve assent by the respective EAC heads of state, and ratification by the national parliaments of each state. Implementation is critical in any system governed by consensus, and the political will to enforce regulations aimed at easing trade barriers is gaining pace.

In fact, the EAC Summit held in Nairobi in February 2014 issued a July 30 deadline for assent to all Bills passed by EALA. It is hoped that ratification and implementation of the Act will greatly reduce the cost of doing business.

Source: The East African

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