EAC – A Customs Union without a Common Voice

On paper, the East African Community (EAC) is a common market. In a fully-fledged common market, there would be free movement of labour.

Notwithstanding efforts by some EAC countries to streamline work permit applications, many barriers to labour mobility in the EAC still exist.

Not only that, but the EAC seems to not even function as a real customs union, which is a stage of integration lower than a common market. The EAC is having difficulty finding a common voice when negotiating with non-EAC members.

In a customs union, member countries not only remove trade barriers among themselves; they also maintain common trade barriers for goods imported from non-members.

As such, members of a customs union usually first negotiate among themselves to establish a common position before they negotiate with non-members.

For example, in the World Trade Organisation (WTO), the EAC members are expected to negotiate as a bloc, even though each country is individually a member of the WTO.

Whether it is due to divergent national interest or a lack of true commitment to integration, the EAC has shown that its coalition as a customs union is not tight.

In October of 2014, the EAC and the EU concluded what appeared to be successful negotiations on the Economic Partnership Agreement (EPA).

According to an official who participated in those negotiations, all that was left was “legal scrubbing and translating the document in the official languages of participating members.”

However, in July of 2016 Tanzania decided that it would not sign the EPA, asserting that the EPA would hurt domestic industries.

Uganda joined Tanzania’s position, but Uganda seems easily swayed one way or the other, depending on the politics of the day. In the early 2010s when the leaders of Kenya, Rwanda, and Uganda came to be known, euphemistically, as the “coalition of the willing,” Uganda was a keen supporter of the EAC-EU EPA. So far, Kenya and Rwanda are the only EAC countries that have ratified the EPA. However, given that the EAC is a customs union, it is not clear what that means.

In 2016, when South Sudan became the sixth member of the EAC, the leaders of the EAC also agreed to begin a process for the eventual ban of imports of used clothes, commonly known as mitumba in East Africa. In an op-ed piece that I published at the time, I cautioned that “the EAC must not be so naïve as to think countries that export mitumba would not retaliate.”

Indeed, the US issued a stern warning that a ban on imports would lead to suspension of the Agoa benefits to the EAC countries. As a result of that warning, the unity of EAC leaders regarding a ban on imports of mitumba fell apart. Rwanda was left standing alone and with no leverage.

The US suspended Agoa benefits to Rwanda. Whether Rwanda stood its ground as a matter of principle or because what it benefits from Agoa is almost nothing compared to what Kenya benefits, for example, is not the point. The point is that the EAC couldn’t regroup and speak with one voice, one way of the other, and that undermines the integrity of the customs union.

In March of 2018, the AU launched the African Continental Free Trade Area (CFTA) in Kigali, Rwanda.

Ratification by at least 22 countries is required for it to come into force. Kenya and Rwanda have already ratified the treaty. It is unlikely that there were consultations with other members of the EAC beforehand.

Now, of course, it will take years before the CFTA becomes fully operational. But it is not clear what it would mean if the CFTA were to come into force when some EAC members were in and others were out.

Belonging to a customs union does not mean that national interests will or should be ignored. However, members of a customs union must always strive to hold common positions in trade with non-members.

Moreover, one of the potential benefits of a customs union is political and economic leverage in multilateral negotiations, a benefit that is lost when members cannot speak with one voice.