Tracking EAC compliance in the movement of capital, services and goods

Achieving regional integration is not easy, but has a significant pay-off. The objective of establishing the Common Market is the realization of accelerated economic growth and development. Enhancing the movement of services and capital, eliminating barriers to movement of goods and bolstering the rights of establishment and residence will bring the region closer to achieving its dream.

Eliminating internal barriers to trade and investment can also help EAC businesses achieve economies of scale and bolster their competitiveness, helping the region move closer towards a single investment destination. The Common Market can expand opportunities for the private sector and uplift the living standards of its citizens in a way that no Partner State can do on its own.

Two years ago, in 2014, the first East African Common Market Scorecard was launched. This initiative signaled Partner States’ commitment to achieving regional integration and to doing so in a transparent way. This second publication of the Scorecard is evidence that this commitment holds strong.

The East African Common Market Scorecard initiative contributes to the implementation of the Common Market by allowing Partner States to track their progress in fulfilling their commitments to liberalization under the Common Market Protocol. The Scorecard examines selected commitments made by Partner States, outlines progress in removing East African legislative and regulatory restrictions to complying with the Protocol, and recommends reform measures. In doing so, it allows Partner States to identify key areas for improvement and, along with the EAC Secretariat and development partners, chart a path to eliminate remaining barriers to a fuller regional market.

Since 2014, Partner States have eliminated some key restrictions to further trade and investment and have become more efficient at doing so. Much remains to be done, however, before the gains of integration can be realized.

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Introduction

The East Africa Community (EAC) is already the most integrated regional bloc in Africa. While intra-African trade as a percentage of total trade is well below that of other developing regions, the EAC exports nearly 20 percent of its goods to the EAC market. Since establishing the EAC Customs Union in 2005, EAC Partner States have worked to harness their joint economic potential by eliminating barriers to intra-EAC trade and investment through implementation of the EAC Common Market Protocol (CMP) on the establishment of the common market, which came into force on July 2010.

Partner States – Burundi, Kenya, Rwanda, Tanzania, and Uganda – have adopted the Common Market Scorecard (CMS) as a monitoring tool for the implementation of the Common Market Protocol. The CMS is a tool that measures legal compliance with commitments with the Common Market Protocol. The CMS aims to further EAC integration with a view to increasing its economic potential and realizing much-needed improvements in the investment climate. Since the publication of the first CMS in 2014, the EAC expanded its membership, welcoming South Sudan as a sixth member in 2016.

A 2016 article on African integration in the Economist bemoans the implementation record of most trade deals in the region, but sets the EAC as an exception, in part due to the fact that “EAC members keep good data, and a public Scorecard holds them accountable for non-tariff barriers.“ Launched in 2014, the CMS sets out a framework for Partner States to track their progress towards integration and for the EAC to assess regional implementation gaps.

This second Common Market Scorecard (CMS 2016) measures progress made since the publication of the CMS 2014 regarding the legal instruments and measures of the Common Market Protocol. In so doing, it aims to facilitate policy dialogue by tracking reforms, sharing success stories, and enabling research and analysis on the links between reforms in measured areas and desired outcomes. The CMS 2016 will bring to light, in respect of the CMS 2014 recommendations, reforms undertaken by each Partner State as well as any new restrictions or nonconforming measures.

This Scorecard’s objective is to help Partner States comply with their obligations and enable the EAC to attract more investment, expand trade, and take full advantage of its integration potential. The CMS 2016 will be used to take informed implementation and/or policy actions in the areas that requires further progress. However, the next generation of the Scorecard will need to not only track the legal compliance of implementation of the Common Market Protocol but to measuring timely implementation of measures, completion of commitments within target deadlines and outcomes.

The EAC Partner States’ commitment to enhance their regional integration by tracking their individual and collective progress sends a signal of serious commitment to their regional integration initiative. Monitoring regional integration can contribute to the development of regional trade and investment and promotion of economic growth. It also raises compelling questions about regional integration that could be constructive for other regional integration initiatives. As EAC Partner States, along with counterparts from the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), begin to implement the Tripartite Free Trade Area (FTA) and to further negotiations of a 54-nation Continental Free Trade Area (CFTA) linking economies across Africa, the EAC’s experience can provide good lessons in best practice as well as lessons learned.