Optimism as EAC Common
Market pact signed
Adam Ihucha
The leaders of the five East African Community (EAC) partner states yesterday signed a protocol for the establishment of a common market, with the hope that it will boost commerce between their five countries when it comes into effect in July 2010.
The states are Tanzania, Burundi, Kenya, Rwanda and Uganda and all are confident that the pact will pave the way for the free movement of goods, services, people and capital within the bloc, thus making the region easier to market to overseas investors.
The deal was sealed here with the signatures of host President Jakaya Kikwete and presidents Pierre Nkurunziza of Burundi, Mwai Kibaki of Kenya, Paul Kagame of Rwanda, and Yoweri Museveni of Uganda.
“We have approved the protocol of common market as an integral part of the EAC treaty,” said the newly endorsed chairman of the EAC Heads of States Summit, President Kikwete, during the landmark occasion. He took over from Kagame, whose tenure elapsed yesterday.
The EAC becomes the first trading bloc to set up a common market eyeing enhanced regional trade, investment and other undertakings in an Africa rich in largely unexploited natural resources.
Up for grabs would be an expanded region of 1.9 million square km that controls a combined Gross Domestic Product (GDP) of nearly USD50 billion and a vibrant market of 130 million people.
“The EAC has been making efforts towards establishing a Free Trade Area (FTA) with other trading blocs. EAC is pegging on a tripartite Economic Partnership Agreement (EPA) talks between itself, the Comesa (Common Market of Eastern and Southern Africa) and the SADC (Southern African Development Community),” said Kagame at the signing ceremony.
He said that the path was now clear for the establishment of the EAC-Comesa-SADC Free Trade Area, with 26 countries and a combined market of half a billion population.
Many believe that the birth of the EAC common market will facilitate free movement of capital, labour, goods and services, allowing optimal utilisation of the abundant natural, human and financial resources available in the five partner states.
This is widely expected to more aggressively promote EA as a single investment area of importance to foreign and EA investors.
The movement of people has already been eased with the introduction of an East African passport and the abolition of charges on the temporary importation of private vehicles.
The partner states are also harmonising their standards, investment incentives and codes alongside capital markets policies and trading practices in the three stock exchanges in the region.
It is also anticipated that the EAC, until now a customs union, will under the common market find it easier to promote itself as a single investment, trade and travel destination.
Analysts predict that the EAC trading bloc will enrich its competitiveness, penetrate global markets and foster intra-regional trade faster.
The outgoing Chairperson for the EAC Council of Ministers, Monique Mukaruliza, said the scheduled conclusion of the negotiations of Common market was one of the most successful processes the EAC could be proud of.
However, even after yesterday’s signing of the common market protocol, there is still work to do on matters relating to travel documents, land ownership and the right of residence.
Burundi, Kenya, Rwanda and Uganda have agreed on the three issues but Tanzania has refused to buy suggestions that citizens of other EAC states be allowed to own land or be entitled to permanent residence after living in an EAC country for five years.
Tanzania has always objected to a draft that included a provision on land ownership, saying it would conflict with its legal system.
It also demands that non-Tanzanian East Africans travelling in the country continue to use passports, while for the other EAC partner states national identity cards will do.
“A phased implementation has been agreed for some issues and national laws will continue to apply with respect to land ownership and permanent residence,” Tanzania’s East African Cooperation minister Diodorus Kamala said.
The issue of free movement of labour across territorial borders in the region has also been raised, with Tanzania arguing that Kenya has more qualified manpower and stands to easily dominate the local market.
Uganda, meanwhile, has for long been open to foreign workers in the banking, advertising, oil industry, insurance, capital markets, breweries and media sectors.
The region has also known sporadic differences over jobs held by foreigners, particularly in cases when investors freely bring along foreign staff of their own.
Under the 1997 Investment Act, foreign investors in Tanzania are allowed to bring in no more than five senior managerial level expatriates but some states are more liberal.
East African Business Council executive director Charles Mbogori explained that many civil servants across the EA region fear to lose jobs to foreigners, “but I think the common market is still a most important milestone”.
Dr Flora Musonda, Director of Trade at the EAC, says the protocol will help even ordinary citizens in the EA common market zone “to explore opportunities in their respective countries and beyond”.
The regional bloc boasts a combined population of over 120 million, a land area of 1.8 million sq km and a combined GDP of USD 49 billion.
According to the agreed framework of the 1999 EAC Treaty (for Tanzania, Kenya and Uganda), the entry point of EAC integration was the establishment of the customs union. Despite long delays mainly due to intermittent backpedalling by bureaucrats, this got off the ground in January 2005.
That key stage would then usher in the common market, the roadmap shows, with a monetary union following by 2012 and, finally, the birth of a super-state in the name of a political federation.
Negotiations on EAC Common market ran from April 1, 2006 to September 2009, climaxing with yesterday’s signing of the common market protocol. The protocol is expected to be ratified thereafter ready for the common market to be launched in July 2010.
The EAC was first set up in 1967, but it collapsed a decade later chiefly because of disagreements between its three original partners – Tanzania, Kenya and Uganda.
The new-phase EAC came into effect in 2000, with Burundi and Rwanda becoming full members in 2007.
Trade among EAC member states has jumped 49 percent since the customs union started being implemented, the EAC Secretariat says.
Earlier in the year, the EAC heads of state agreed that yesterday’s deal would not take precedence over any national laws.
THE GUARDIAN (TANZANIA)
The states are Tanzania, Burundi, Kenya, Rwanda and Uganda and all are confident that the pact will pave the way for the free movement of goods, services, people and capital within the bloc, thus making the region easier to market to overseas investors.
The deal was sealed here with the signatures of host President Jakaya Kikwete and presidents Pierre Nkurunziza of Burundi, Mwai Kibaki of Kenya, Paul Kagame of Rwanda, and Yoweri Museveni of Uganda.
“We have approved the protocol of common market as an integral part of the EAC treaty,” said the newly endorsed chairman of the EAC Heads of States Summit, President Kikwete, during the landmark occasion. He took over from Kagame, whose tenure elapsed yesterday.
The EAC becomes the first trading bloc to set up a common market eyeing enhanced regional trade, investment and other undertakings in an Africa rich in largely unexploited natural resources.
Up for grabs would be an expanded region of 1.9 million square km that controls a combined Gross Domestic Product (GDP) of nearly USD50 billion and a vibrant market of 130 million people.
“The EAC has been making efforts towards establishing a Free Trade Area (FTA) with other trading blocs. EAC is pegging on a tripartite Economic Partnership Agreement (EPA) talks between itself, the Comesa (Common Market of Eastern and Southern Africa) and the SADC (Southern African Development Community),” said Kagame at the signing ceremony.
He said that the path was now clear for the establishment of the EAC-Comesa-SADC Free Trade Area, with 26 countries and a combined market of half a billion population.
Many believe that the birth of the EAC common market will facilitate free movement of capital, labour, goods and services, allowing optimal utilisation of the abundant natural, human and financial resources available in the five partner states.
This is widely expected to more aggressively promote EA as a single investment area of importance to foreign and EA investors.
The movement of people has already been eased with the introduction of an East African passport and the abolition of charges on the temporary importation of private vehicles.
The partner states are also harmonising their standards, investment incentives and codes alongside capital markets policies and trading practices in the three stock exchanges in the region.
It is also anticipated that the EAC, until now a customs union, will under the common market find it easier to promote itself as a single investment, trade and travel destination.
Analysts predict that the EAC trading bloc will enrich its competitiveness, penetrate global markets and foster intra-regional trade faster.
The outgoing Chairperson for the EAC Council of Ministers, Monique Mukaruliza, said the scheduled conclusion of the negotiations of Common market was one of the most successful processes the EAC could be proud of.
However, even after yesterday’s signing of the common market protocol, there is still work to do on matters relating to travel documents, land ownership and the right of residence.
Burundi, Kenya, Rwanda and Uganda have agreed on the three issues but Tanzania has refused to buy suggestions that citizens of other EAC states be allowed to own land or be entitled to permanent residence after living in an EAC country for five years.
Tanzania has always objected to a draft that included a provision on land ownership, saying it would conflict with its legal system.
It also demands that non-Tanzanian East Africans travelling in the country continue to use passports, while for the other EAC partner states national identity cards will do.
“A phased implementation has been agreed for some issues and national laws will continue to apply with respect to land ownership and permanent residence,” Tanzania’s East African Cooperation minister Diodorus Kamala said.
The issue of free movement of labour across territorial borders in the region has also been raised, with Tanzania arguing that Kenya has more qualified manpower and stands to easily dominate the local market.
Uganda, meanwhile, has for long been open to foreign workers in the banking, advertising, oil industry, insurance, capital markets, breweries and media sectors.
The region has also known sporadic differences over jobs held by foreigners, particularly in cases when investors freely bring along foreign staff of their own.
Under the 1997 Investment Act, foreign investors in Tanzania are allowed to bring in no more than five senior managerial level expatriates but some states are more liberal.
East African Business Council executive director Charles Mbogori explained that many civil servants across the EA region fear to lose jobs to foreigners, “but I think the common market is still a most important milestone”.
Dr Flora Musonda, Director of Trade at the EAC, says the protocol will help even ordinary citizens in the EA common market zone “to explore opportunities in their respective countries and beyond”.
The regional bloc boasts a combined population of over 120 million, a land area of 1.8 million sq km and a combined GDP of USD 49 billion.
According to the agreed framework of the 1999 EAC Treaty (for Tanzania, Kenya and Uganda), the entry point of EAC integration was the establishment of the customs union. Despite long delays mainly due to intermittent backpedalling by bureaucrats, this got off the ground in January 2005.
That key stage would then usher in the common market, the roadmap shows, with a monetary union following by 2012 and, finally, the birth of a super-state in the name of a political federation.
Negotiations on EAC Common market ran from April 1, 2006 to September 2009, climaxing with yesterday’s signing of the common market protocol. The protocol is expected to be ratified thereafter ready for the common market to be launched in July 2010.
The EAC was first set up in 1967, but it collapsed a decade later chiefly because of disagreements between its three original partners – Tanzania, Kenya and Uganda.
The new-phase EAC came into effect in 2000, with Burundi and Rwanda becoming full members in 2007.
Trade among EAC member states has jumped 49 percent since the customs union started being implemented, the EAC Secretariat says.
Earlier in the year, the EAC heads of state agreed that yesterday’s deal would not take precedence over any national laws.
THE GUARDIAN (TANZANIA)
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