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Briefing on Fully Fledged Customs Union

The Customs Union focuses mainly on merchandise trade. Ideally it has two main pillars; establishment of a Free Trade Area among the member countries and a single Customs territory. During the transitional period of five years from 1st January 2005 to 31st December 2009, the transitional phase involved putting in place mechanisms to operationalise the two pillars.

Therefore, the end of the  transitional period in December last year was one of the most important landmarks of EAC integration process. The successful elimination of internal tariffs among Partner States was a show of commitment by the people of East Africa to the objectives of the community. The end of the transitional period marks the entry into force of a fully fledged Customs Union, and  coming into being of the entry point into the EAC regional integration process. This is what strengthened the commitment of the Partner States to launch the implementation of the Common Market in the second half of this year.

Ideally, under the fully fledged Customs Union, goods manufactured in one partner State shall move to another Partner State without suffering any import duties. Goods imported into the Customs Union shall, once modalities for collection and accounting for Customs Revenue are worked out, move freely from one Partner State to another once they enter the Customs Union. However, like any other new undertaking, this may not be working perfectly right now. However, we are now engaged in  carrying  out activities aimed at thrashing  out some of the sticking challenges, as stipulated in the Roadmap adopted by the Council during its meeting in November 2009.  Nevertheless, we should appreciate that ensuring smooth trade in goods in not a one off event, but a continuous process.

The new phase has a number of implications on the business landscape of the region for both the private and public sector.  At the outset, goods will circulate more freely in the Customs Union than ever before. Indeed, with the implementation of the Common Market protocol, it is expected that there will be free movement of persons and capital.  The effect of this freedom shall be increased cross border investment in all the sectors of the EA economy. Ultimately, the new business climate will increase profitability, incomes and general welfare of the people of East Africa. Thus the new stage will have a positive impact on allocation of resources in the region, exploitation of scale of economies, profit margins, distribution of income, market size, efficiency of production and balance of trade in intra regional trade.

Further implementation of the Customs Union calls for commitment and hard work by the Secretariat, business community and governments of Partner States. The Secretariat shall continue to empower the private sector through dissemination of information, interpretation of  legal instruments and where possible make strategic interventions. It will also continue to initiate trade and customs Policies geared towards achieving the objectives of the community. The Secretariat shall continue assisting Partner States to adopt best practices in handling activities related to regional integration, and  those aimed at opening up more trading and investment frontiers such as the operationalization of  Export Promotion Schemes. For example, we are  developing an EAC Manual on operationalization of Export Processing Zones (EPZs). The Secretariat is also working on a regional Work Plan to enable Partner States take advantage of export markets under AGOA, now that EAC has signed a Trade and Investment Framework Agreement (TIFA) with USA. The EAC-USA TIFA Council is to be launched sometimes in February this year. To support small scale traders, the Secretariat is implementing a simplified trade regime at border entry points. We are also commissioning a study to identify eight products commonly traded in EAC,  with a view to identifying obstacles they face and eliminate them.

Partner States administrations are  also expected to selfishly guard their commitments to the Customs Union and to refrain from activities that are protectionist, such as imposing taxes and levies of equivalent effect to tariffs.  Similarly they should also refrain from granting duty exemptions outside the current customs regime. Failure to do this will jeopardize the impact of the Common External Tariff. Governments are also urged to continue removing and refrain from erecting  new non tariff barriers to trade. In respect to movement of goods, Partner States should endeavor to adopt best practices such as risk based post clearance audit and pre audit release of goods so as to minimize dwell times at borders and ports. Tangible gains from regional integration are directly and indirectly related to the velocity of movement of goods across Partner States. The freer and faster the movement, the more the gains. Lastly, the Customs Union can only operate in a peaceful and secure environment.  Governments of Partner States should therefore urge institutions both private and public to embrace and practice good governance.  In order to encourage trade, Governments are urged to liberalize public procurement procedures to support intra regional trade.


To the greatest extent possible, Governments should endeavor to purchase goods manufactured within the Customs Union.

Although intra regional trade has grown over the years, there is still a lot of room for further growth. For instance, intra-regional trade  to total volume of trade in EAC is merely 13% . This is very low compared to Europe at 60% and Asia at 40%. The key to unlocking this potential lies with the private sector.  The sector shall do this by:

  • - taking advantage of new market opportunities  created by the Customs Union
  • - reviewing their strategies and structure to take a regional approach
  • - adopting best practices so as to compete effectively against imported goods
  • - pursuing expansion of markets rather than lobbying for territorial protection
  • - Embracing and owning the Customs Union.

By: Peter, KIGUTA

Director General,

EAC Customs & Trade