EAC to punish Member States enforcing non-tariff barriers

December 2, 2012 — Leave a comment
Uganda, Malaba border crossing

Uganda, Malaba border crossing

The New Vision (Uganda) reports on a draft law which will punish countries that fail to implement agreed upon mechanisms to eliminate trade barriers has been submitted at the regional Parliament.

Jose Maciel, the TradeMark East Africa director of trade facilitation, noted that while most of the non-tariff barriers (NTBs), including road blocks and corruption have slightly declined, the proposed law in the East African Legislative Assembly, if enacted, would create the possibility of sanctions against stubborn states that do not enforce the check points. “It is important to give teeth to the system. We need to make it possible to impose sanctions for countries that do not eliminate NTBs,” said Maciel.

He was speaking at a Kenya Ports Authority (KPA) organised meeting with EAC media in Mombasa. TradeMark is a trade facilitating agency operating in the five states of East Africa. Maciel said non-tariff barriers like road blocks, which are easy to eradicate, are some of the biggest impediments to East Africa’s competitiveness.

States are not the only defaulting party to agreed upon positions on eliminating NTBs. P.J. Shah, a Mombasa entrepreneur, for instance notes that while Mombasa began 24-hour operations about three years ago, other agencies like banks and shipping lines are not operating 24 hours. The poor infrastructure such as rail and water systems, whose potential is yet to be optimised, also increase trade costs. Other NTBs include weighbridges and corrupt state enforcement agencies.

Regional trade experts and facilitation agencies such as Trade Mark East Africa agree that NTBs are known, and numerous researches have been done about them and their impact on trade. Although some efforts have been made to eradicate or reduce the salient ones such as road blocks, overall NTBs remain a major trade impediment.

Two thirds of goods are shipped in containers. TradeMark estimates that 20% of annual shipments face NTBs. TradeMark is also targeting to work with regional governments to harmonise 20 standards in a year, amongst the other efforts at making EAC more competitive.

During the Mombasa meeting, it was agreed that because sometimes there seems to be no communication between the different government agencies such as the Kenya Revenue Authority (KRA) and KPA, hinterland states suffer.

There should be a single authority that oversees them all and ensures enforcement. There are about 24 road blocks between Mombasa and Uganda’s border and another 21 in Uganda, four in Burundi and two in Rwanda. There are also 12 weighbridges in Kenya, five in Uganda and two in Rwanda.

“A well run efficient port can help shape economic growth and performance of the economy,” said Antony Hughes, a TradeMark official.

Mombasa handles about 20 million tonnes of cargo, 85% destined for Uganda and other hinterland states. Transit states always suffer the biggest brunt of NTBs and poor flow of information regarding imminent disruptions at the border. This was witnessed during the recent cash bond imposed by KRA that caught Uganda traders unaware, leading to massive clog ups of cargo and huge loss of value.

Comment: It appears that regional bodies such as the EAC are to get extraordinary powers to enforce rules over sovereign states. Would be interesting to learn whether these member states voted for such action, or if it is rather the ideal and persuasion of ‘foreign’ interests.

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