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‘Poor coherence among regional partner states is hurting trade’
Mr Africa Kiiza, a trade economist with experience in trade policy. PHOTO/courtesy
What you need to know:
There has been a lot of tension among East African member states which has disrupted regional trade. Prosper’s magazine Ismail Musa Ladu interviewed Mr Africa Kiiza, a trade economist with experience in trade policy, trade development and treaty negotiations, on how the partner states can resolve trade tensions hurting their economies. Excerpts below.
How would you describe Uganda’s trade relationship with other East African Community member states bearing in mind the integration efforts over the years?
Every objective trade policy commentator would call Uganda a “pacifist” whose aim is to boost intra-EAC trade. Whereas a number of EAC partner states have blocked Uganda’s goods, the latter has not retaliated even when legislators and private sector actors have called for retaliation. Whereas Uganda’s response can be frowned upon, the long-term intent should be commended as it is a precursor to the realisation of the African Economic Community, as envisaged in the 1991 Abuja Treaty.
Are the East African countries exploiting trade opportunities at their disposal in a manner that is beneficial to them?
According to the EAC Secretariat, in 2018, Rwanda’s total trade with EAC partner states increased by 13.4 per cent to $638.8m from $563.2m in 2017. Kenya’s trade with the EAC increased by 4.7 per cent to $1.95b from $1.86b in 2017, this was mostly attributed to an increase in business with Rwanda, Tanzania and Uganda. Uganda’s trade with EAC increased by 21.2 per cent to $2.05b from $1.69b while Tanzania increased by 14.6 per cent to $811.3m, from $707.7m.
With Covid-19 disrupting supply chains, this is likely to reduce. However, according to the African Integration Report (2020), free movement of goods remains a major challenge for the EAC when we refer to the low level of intra-regional trade (22%, EAC 2018).
Surprisingly, this level of intra-regional trade is one of the highest on the continent. Furthermore, Intra- EAC is still constrained by Non-Tariff Barriers (NTBs) which as of December 2020 stood at 17 outstanding NTBs. Coupled with the ongoing trade tensions among Partner States, it can be said that trade opportunities that accrue to EAC integration aren’t being fully exploited.
EAC member states have failed to harmonise a position over Economic Partnership Agreements (EPAs), resulting into some countries signing the agreement as others look on helplessly. What does that say about the region’s ability to stick to their plan?
The EPAs present a litmus test for the EAC partner states – whether their priority is to promote regional integration or whether this should be subordinated to integration with the EU. Logically, internal integration should take precedence over external integration given that the EAC market is of paramount importance for all partner states. It constitutes the largest market for the EAC partner states, offers better prospects for industrialisation and development of regional value chains. However, there is still no agreement by partner states on how and when this should be evoked. So, there is no cohesion among partner states in consolidating regional cooperation.
The same can be seen from Kenya’s negotiation of Free Trade Areas with UK and Free Trade Area without inclusion of other partner states even when these FTAs will disrupt the implementation of the Customs Union Protocol. This reveals a bigger problem of failure by partner tates to surrender some autonomy to the EAC Secretariat, a major factor in building a regional integration bloc.
Going by the recent blockade of Uganda’s maize to Kenya, do you think the reason given (presence of aflatoxins detected on the grains) was justified?
Whenever Uganda has increased its production and competitiveness, there has been a ‘a knee jerk reaction by Kenya either questioning Uganda’s capacity to produce or raise the issue of conformity to the required standards. This notwithstanding, SEATINI-Uganda, one of the institutions watching over these developments has noted with concern that Uganda’s products have had several challenges in respect to adherence to Sanitary and Phytosanitary (SPS) measures to markets.
Uganda’s trade with other partners has been characterised with bans and rejections of our products by other countries. For example, due to poor product standards, Uganda’s fish was banned by the European Union (EU) in 2002 and in 2015 and 2019, Uganda undertook a self-imposed ban on chilli exports to EU. Furthermore, on 8th July 2019 and 30th December 2019, Germany notified Uganda about the rejection, detaining and destruction of sesame exports due to contamination with salmonella.
Why does a trade war quickly degenerate into a frenzy? Where is the problem?
The problem lies in the current model of dispute settlement which bases on willingness of member states to dialogue. The East African Court of Justice which currently handles trade related disputes is also bloated with other socio-political cases, that limited time is allocated to trade issues. Therefore, there is need to review the EAC Treaty to create a trade dispute settlement body at the EAC level. There should be consultations involving the concerned states and the relevant organs of the EAC to arrive at an amicable solution in the spirit of regional integration. Partner states should be cautious of the actions taken and their impact on the people.
Democratic Republic of Congo (DRC) will in the next summit be declared the newest EAC partner state. Is the region ready for DRC entry into the EAC?
Whereas there are vast opportunities that DRC’s membership provides to the region, experiences from South Sudan indicate the challenges of rushing the expansion of EAC integration without fully addressing the longstanding impediments to EAC integration. It would be critical that a situational analysis and audit of readiness of DRC to join the EAC as per the parameters provided thereunder the Accession clause of the EAC Treaty. Also, lessons from the accession of South Sudan to the EAC should guide the EAC partner states in taking an informed decision on how and when to allow DRC’s membership. Besides, DRC is a member of Comesa. Thus, her market can be accessed by partner states without hastily joining the EAC first!
Africa Continental Free Trade Area (AfCTA) is here. With all that is going on (standards issues, protectionism, poor infrastructure etc) is Uganda and the region ready to benefit from the continental market?
There is a silver lining in Covid-19 for Africa to prepare itself in pursuing a “Made-In-Africa” industrial revolution under the AfCFTA. This ignores the longstanding challenges facing EAC in its struggle for structural transformation and industrialisation as identified in the programme for Boosting Intra-Africa Trade (BIAT) have been increased by the Covid-19 pandemic.
It seems there is confusion between the long-term potentials of AfCFTA with both the actual measures needed for those potentials to be realised and with the immediate actions required at the national and continental level to address Covid-19 in an equitable manner. The hasty launch of the AfCFTA without addressing these critical challenges will not fulfil the intended objectives of structural transformation of EAC economies.
On the contrary, it will create a bigger African market for further domination by foreign products and investors over African products, and bigger producers over smaller ones.
