East African Community ( EAC ) Customs Union.

East African Community (EAC) Customs Union

The East African Community (EAC) is comprised of 5 countries: Burundi, Kenya, Rwanda, Tanzania, and Uganda.  The EAC is an intergovernmental organization which was established in 1967 and then reestablished in 2000.  The goals of the organization is to create one single customs territory in order for its partners to enjoy an economy of scale and a Common valuation method for goods traded for tax purposes. The EAC also wants to include some laws and policies in the countries under the regional area, facilitate customs clearance for importers and exporters; grow their market with cheaper input, and a systematic control on the exchange rate.

The EAC is a major partner of the African Economic Community (AEC).  The population of the EAC countries averages 30 million people and a GDP of about 10 billion.  On their own, the countries that are part of the of the EAC  are too small to be of great importance to major investors, but being part of the EAC, put them in a unique situation to attract investors which in return can take advantage of cheaper labor and vast resources.

The organization has enjoyed many successes, but there are some conflicts that still exist between the nations.  In fact, because of the level of non-transparency between the governments, and conflicting interest amongst the nations, the organization does not have an independent authority that can settle their disputes.  I believe that regional trades can boost a country’s growth.  For example, let’s take Kenya which is part of the EAC; since their participation in the regional trades, they have increased their exports from 650 million in 2002 to about 1 billion in 2005 and close to 1.5 billion in 2011.  Their main exports are tobacco, coffee, apparel, and tea.  Their principal problem has been to deal with the rise in imports along with taxes.

 

The question now is what does the future hold for the EAC?  Since 2005 the per capita income in the EAC nations have been increasing 3.7% on a yearly basis when compared to other African nations which only increased 3.1%.  Inflation has been kept under control with just 4%  in the last 8 years compared to 8% in other African nations. In 2012, the International Monetary Fund or IMF rated the EAC nations as one of the best places to do business and there is evidence that the growth experience by the EAC nations are enjoyed by the majority of the population.  

In conclusion, the EAC is really doing a phenomenal job in being an integral part of the African Economic Community. Regional trades can benefit developing countries because it simplify the customs procedures, increase the pool of customers, and attract foreign investments. The EAC countries are a young regional trade organization. They have room to grow. They can go only go up from there; I wish them the best of luck in their future endeavors.

References

·        Carbaugh, Robert J. Global Economics. Mason, OH: South-Western, 2010. Print.

"East African Community 2012 - Doing Business - World Bank Group." East African Community 2012-Doing Business - World Bank Group. N.p., n.d. Web. 21 Oct. 2012. <http://www.doingbusiness.org/reports/regional-reports/east-african-community