Free trade area: Looking beyond the EAC
Experts believe that the creation of a bigger free trade zone beyond the East African Community through opening borders and addressing policies that impede trade is the gateway to boosting regional economies.
This involves elimination of non- tariff barriers, harmonization of tax regimes, implementation of a single customs union and creation of one-stop border posts along regional blocs to expedite trade.
“A bigger free trade area will attract more investment and make the blocs competitive,” said Mark Priestley, the Trade Mark East Africa country director for Rwanda.
In essence, the linking of the EAC to other regional blocs on the continent will create a more expanded market for products within the regions, thus enhancing business opportunities.
“Harmonizing trade policies across the three blocs would enhance business and investment and create jobs,” noted Peter Kiguta, EAC director general for customs and trade.
Indeed, experts believe that for a bloc such as the EAC to achieve free movement of goods as well as persons, other blocs must harmonize their trade policies.
Angelo Musinguzi, a consultant on the single customs territory tax issues at the Private Sector Federation, says that similar trade regimes facilitate ease of doing business and cut down costs within the blocs, thus boosting competitiveness.
Indeed, the recent efforts to strengthen both the customs union and common market protocols have yielded success, with a call to extend these efforts to other blocs.
“I believe that removal of barriers to business and also instituting dispute resolution mechanisms are crucial in improving the business environment across the regional blocs,” Musinguzi noted.
But traders still believe that policy makers miss the issues, mainly the elimination of both non-tariff and technical barriers within the blocs.
“What we would wish to see is the total elimination non-tariff barriers within all corridors in the regional blocs, and this will come when governments are willing implement policies at the same time,” Theodore Murenzi, executive secretary of Rwanda Long Distance Truckers Association said.
Moreover, experts believe that harmonization of these policies, such as rules of origin, tax regimes, and single customs territory, would help attract more investment in the economic blocs.
“It is very encouraging to see the tripartite free trade area negotiations that started in 2011 are finally getting to something,” said Léon Gashumba from Burundi.
There is optimism that the recent meeting of experts from the three regional blocs of East African Community (EAC), Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (Comesa) in Mauritius will pave the way for a bigger trade zone.
“For as long as the borders are open and taxes and duties are removed along the borders in these regional blocs, then you expect business to grow faster,” Davis Mukiza, a business consultant, said.
Despite these efforts, there is still the challenge of the regions’ private sectors’ ability to seize the opportunities arising from bigger free trade zone.
“The opportunities are created, but the question is, are we able to put to use with our products originating within the region?” Mukiza asked.
Gerald Mukubu, chief advocacy officer at Private Sector Federation of Rwanda says that private sector will be able to tap into the opportunities because it is profit driven. “As long as there is favorable business environment, the private sector is always ready,” he said.
Moreover, there have been recent efforts by governments within the blocs to attract more investments in manufacturing, services, infrastructure, and tourism to help produce for the expected larger market.
Under these agreements, goods originating from one country going to another within the blocs will have free access to market, a waiver on duties, and will be shielded from competition from goods originating outside the blocs.