Abstract
Regional trade arrangements have gained high level of popularity among various groups of stakeholders including scholars, business communities and government officials as being an important engine for liberalization of trade and growth. East Africa is not exceptional to this global belief, which as a response to this decided to form an East African Community Customs Union with the aim of liberalizing trade and increasing intra-regional trade.
This study analyzes the implementation of EAC-CU since its inception in 2005 and its impact on the intra-regional trade. The analysis based on three phases which are the time when there was no customs union, the time when there was customs union but not fully fledged and the time when there was customs union and was fully fledged.
The analysis of intra-regional trade reveals that, since the establishment of the EAC-CU, East African countries have recorded an increase in intra-regional imports, intra-regional exports and intra-regional total trade. However the study further reveals that the region trade more with the rest of the world than how it trade with itself by importing more from the rest of the world (petroleum products, machinery and equipments, intermediate goods for use in further production and finished goods) and exports more to the rest of the world (cotton, tea, coffee, cashew nuts, tobacco, gold, fish products and horticulture products).
The study concludes that as the region imports more from the rest of the world, and then it is an opportunity for the EAC companies to improve their production efficiency and start producing some of the products which are currently imported as they are assured of the market. As big percent of the raw materials and intermediate inputs used in the EAC factories are imported from the rest of the world, the study also see this as an opportunity for the region to come up with a regional value chain strategy through identifying raw materials and intermediate goods which can be produced in the region and linking suppliers and buyers of those raw materials and intermediate inputs.
The study recommends some measures with the aim of further liberalizing trade and realizing the best in intra-regional trade. Some of these measures include the investment in infrastructure (roads, railways, ports, airways, electricity, water and telecommunication), improvement of technical education through building more and high quality trade schools, improvement of the regional financial market, integration of domestic production chains, awareness creation, development and implementation of regional technology transfer strategy, development and implementation of import substitution strategy, further elimination of NTBs and improvement of security in the region.
