PrideInn Paradise Beach ResortFriday, 20th April 2018
2ND EAST AFRICA CONGRESS OF
ACCOUNTANTS
Uphold . Public . Interest
EAC Common Market Protocol Opportunities and Challenges
1
… Quote…
"Trade liberalization is vital to the process of development.
Voluntary international exchange widens consumers’ range of
effective choices and lowers the risk of conflict."
James A. Dorn, July 2005
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Presentation Outline
• Background in the Context of the EAC integration
• Key Provisions of the EAC CMP
• Challenges to Implementation
• The Missed Steps - Lessons
• Conclusion
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Background – Context of EAC
The EAC Region comprises:
• Kenya,
• Tanzania,
• Uganda
• Rwanda
• Burundi and
• South Sudan
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Total Area : 2.467 million sq. km.
Population: 190.5 million vs Nigeria
195m; EU 743m, Africa 1.3t
GDP per Capita: US$ 919
EAC Integration Process
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• Are we moving too fast… what critical lessons from the EU?
CUSTOMS
UNION
COMMON
MARKET
MONETARY
UNIONPOLITICAL
FEDERATION
2005 – June 2010; July 2010 – 2012; 2012 – onwards; Ultimate
EAC CMP - Objective
By Articles 2 (2) & 5 of the EAC Treaty, Partner States undertook to establish among themselves a Common Market, as a transitional stage to and an integral part of the Community.
Article 76 (2) of the EAC Treaty, Partner States determined that establishment of the Common Market would be on the principles of progressivity.
By the aspirations of the CMP, has the EAC achieved the status of a single market for goods, services, labour andcapital, having common tax and common trade laws?
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the Partner States undertook to, inter alia, establish among themselves a Common Market, as a transitional stage to, and an int
EAC CMP – Key Objective
To integrate the factors of production
(labour, land, capital, &
entrepreneurship) and markets which
were in respective individual member
states into one single and vibrant
market.
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the Partner States undertook to, inter alia, establish among themselves a Common Market, as a transitional stage to, and an int
EAC CMP – Provides for
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the Partner States undertook to, inter alia, establish among themselves a Common Market, as a transitional stage to, and an int
Fundamental rights enshrined around:
– Free Movement of goods
– Free Movement of persons
– Free Movement of Labour
– Right of Establishment
– Right of Residence
– Free Movement of Services and
– Free Movement of Capital
The above rights are fundamental to
realizing the aspirations of the CMP
Principles of the Protocol
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Articles 6 and 7 of the EAC Treaty, provides for fundamental and
operational principles to secure the fundamental rights under the
CMP. Key of which are:
– National Treatment Principle – nationality is not a factor
– Most favoured nation principle - countries cannot
normally discriminate between their trading partners
Rights Incidental to Fundamental Rights
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• Free movement of persons.
• Rights of Residence.
• Access to and use of land and premises under the right of
establishment.
• Capital and Related Payments and Transfers
• Protection of Cross-Border Investments
CMP Guarantees
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The Protocol guarantees the following rights:
i) Equal opportunities
ii) Equality of treatment
iii) Freedom to exert ones’ faculties
Movement of Workers
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Entitles a worker to:
Apply and accept offers of employment.
Move freely for purposes of employment
Take up employment
Reside in a partner state.
Freedom of association
Social security
Right of Establishment
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Entitles a national of a partner state to:
• Take up and pursue economic activities
• Set up and manage economic undertakings.
• Join a social security scheme
• Set up agencies, branches or subsidiaries.
• Intra corporate transfers within branches and
subsidiaries
• Labour mobility
Real Statistics
Have the principles of integration borne fruits for EAC Partner States
in terms of achieving the aspirations of integration?
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EAC Statistics
• The East African Community Secretariat,
in a draft trade and investment report, says
that the total value of intra-EAC trade fell
by 14.6 per cent to $4.4 billion in 2016,
from $5.1 billion in 2015.
• EAC trade has continued to be dominated
by agricultural commodities: Coffee, tea,
tobacco, cotton, rice, maize and wheat
flour….with little focus on manufacturing.
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Opportunities from CMP
• A market of 190 million people with an expanding middle class;
• Huge mineral discoveries – oil in Uganda, Kenya, South Sudan, Natural gas in Tanzania;
• Relative peace and political stability in the region with the exception of South Sudan and intermittently Kenya and Uganda.
• Long coast line which should be tapped into as a gateway to the global markets.
• Region recorded the highest economic growth incomparable terms.
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EAC Common Market -
Challenges
• EAC institutions designed on an inter-governmental model.• Excessive nationalism – inability to cede sovereignty and
protectionism tendencies• Supply constraints – Uneven economic landscape
• Harmonisation of Laws and Disparity in national laws;
• Overlapping Membership in other Regional Blocs: EAC,
COMESA, SADC, etc.
• Little focus on value addition
• Political mistrust
• Unhealthy competition within the region
• Political instability – in South Sudan, Kenya and Uganda.
“"Much of the underdeveloped world grows and produces agricultural
products. Because many of these underdeveloped nations have very little
political clout with the rest of the world, and because farmers in wealthy
nations have lots of political power, the goods from these poorer nations are
tariffed and quota’d right out of the richer nations’ markets."
Keith Brown
Thank You!!
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