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High Hopes For East African Trade Bloc


Beginning January 1, legislation that sets up common tariff rates for Kenya, Uganda, and Tanzania comes into force. Political leaders, economists, and others have high hopes that the East African Customs Union will bring prosperity to the people of the three countries.

Ugandan presidential spokesman Francis Onapito Ekomoloit explains.

"The Customs Union ultimately, definitely is going to encourage wider movement of goods and labor across the three borders. This is really part of that wider scheme: economic empowerment of the region having a common agenda and economic front in order to further the ultimate political union," he says.

Earlier this month, the East African Legislative Assembly passed into law the East African Customs Union Management Bill, to come into force on the first day of the new year.

The law is based on a protocol the presidents of Kenya, Uganda, and Tanzania signed in March.

Under the protocol, the three countries have agreed not to charge a tariff on imports of raw materials such as cotton, but will levy a 10-percent tariff on imports of semi-processed goods such as yarn and a 25-percent tariff on finished products like cloth.

Because Kenya's manufacturing sector is more developed than those of its neighbors, Uganda and Tanzania will also be able to charge an additional tax on Kenyan products for several years.

In an interview, a program officer at the Nairobi-based Institute of Economic Affairs, John Ochola, told VOA the new customs union is expected to boost trade and economic growth by removing trade distortions such as different tariff rates and other conflicting and bureaucratic customs policies.

He said the area would effectively become a trading bloc with a total market of some 90 million consumers.

Kenyan economist and commentator Robert Shaw says he gives his qualified support for the customs union as a way of increasing trade among the three countries.

But, he says, for the customs union to work, Kenya has to take additional measures to prevent it from benefiting from the arrangement at the expense of the others.

"There is a huge disproportion in the trade. Kenya exports much, much more than both of them. We have huge surpluses in trade. We're importing very little from these countries and we're exporting a lot. So what Kenyan needs to be doing is looking at ways to foster more trade from Tanzania and from Uganda, and actively look at things like whether we can import more of our energy from Uganda and in time from Tanzania," he says.

Mr. Shaw says some Kenyan manufacturers have said they feel like they are being penalized by the additional tax on Kenyan exports, while others have said a 25-percent tariff on finished products is too high.

Mr. Shaw calls on the governments to have the political goodwill to work out any problems that may arise, and to ensure that they will be fully prepared to launch the customs union January 1st.

Uganda presidential spokesman Mr. Ekomoloit says the commitment level among the governments is high.

"All the three presidents are unanimous - they say they want this thing started January One. The East African parliament is of the same view. Even Kenya, where there are doubts, those doubts have not been stated by the government, they are just implied. I have no reason to believe that there's anybody who is deliberately having cold feet," he says.

Mr. Ekomoloit says he and his colleagues are looking forward to the Custom Union's implementation in January.

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