East Africa says trade rising on customs union

Gradual elimination of tariffs between partner states of the East African Community (EAC) trade bloc has boosted trade volumes in the region, especially exports by Uganda and Tanzania, the EAC's Customs Director said on Tuesday.

The five member bloc launched a customs union for three of its largest economies - Kenya, Uganda and Tanzania - in 2005. Rwanda and Burundi are expected to join the union in July 2009.

"We have realised a tremendous increment in trade, particularly intra-EAC trade," the EAC official, Kenneth Bagamuhunda, told Reuters in an interview.

"Countries who hitherto have not had good exports in the region are now picking up."

He said Ugandan exports into Kenya increased 600 percent to $98-million in 2007 from $14-million in 2004. Tanzania's sales to her neighbours quadrupled to $100-million last year from $25-million in 2004.

Kenya is the region's largest economy and dominant player but her exports grew the slowest to $556-million worth of goods, only 39 percent over the $400-million it exported in 2004.

EAC's customs union is being implemented gradually with zero tariffs on goods traded between Tanzania and Uganda. Their exports to Kenya are also zero-rated.

However, selected goods from Kenya attract reducing tariffs for five years with the goal of a common market in place in 2010.

Bagamuhunda said goods traded ranged from finished steel and tyre products to processed vegetable oils, maize, cigarettes and fruit juices.

Bagamuhunda said non-tariff barriers like poor infrastructure and power outages were still hampering trade.

"We have a rail system which is not functioning properly thus deterring movement of goods, the road system is still dilapidated in some areas thus slowing movement of goods," he said.

He said counterfeit goods from the Far East threatened local industries and unnecessary checks across border crossing points were also hindering trade.

Another issue which the bloc is dealing with is the fact that partner states were members of other regional blocs which had differing trade rules.

Uganda and Kenya belong to the Common Market for Eastern and Southern Africa (COMESA) while Tanzania is a member of the South African Development Community (SADC).

"We will have a tripartite meeting of EAC, COMESA and SADC in Kampala mid-October to discuss co-operation, trade arrangements, harmonization and the infrastructure," he said.

EAC has a combined population of 120 million and a combined gross domestic product of $30 billion. It covers 1.8 million square kilometres.