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PUBLISHED ON May 2nd, 2019

Opportunities for EAC in free trade area

As far as trading blocs go, the European Union (EU) has been a global case study of turning a free market into a common market. Faced with notable challenges in the integration process such as the consecutive crises in the Exchange Rate Mechanism in the early 90s, the EU defied all odds and continued to expand in depth and geography in a historic feat.

However, only two years ago, this ideal trading bloc took a hit with the Brexit vote, which triggered a global conversation on regional trading, agreements and integration towards creating shared prosperity for the countries involved.

In our own context, a snapshot of intra-East African Community (EAC) trade in the past few years will reveal tension-filled and sometimes hectic trade-relations, as well as an overall cloud of uncertainty on the future of the EAC.

Yet with our geographical advantages, natural resources and global reputation, the EAC holds huge potential to set the pace for the Africa Continental Free Trade Area (AfCFTA) and lead the continent into a new age trading with the world on an equal and mutually beneficial platform.

While there isn’t much comparison to be made with the EU, one indisputable thing is that their integration process was marred by political and social differences especially with bringing on board of Eastern European countries. This, many times, caused uproar in member States with populations demanding that their nations’needs come first’. Through the chaos, nonetheless, members designed new institutions with a view to open up markets and ideological alignments.

Our challenges in integration are also hampered by political and social differences, which manifest in seemingly endless Non-Tariff Barriers (NTBs) that threaten to weaken our overall contribution to global trade.

For instance, EAC global trade decreased in 2017 to a meagre 0.2 percent from 0.3 percent the previous year.

The trade deficit also increased by 63.1 percent to $17.4 billion. Our exports to the world also decreased, and of these, only 29.2 percent were destined for Comesa and other intra-regional markets.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.

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