alexa EAC losing war on barriers to free trade — World Bank - Daily Nation

EAC losing war on barriers to free trade — World Bank

Monday June 25 2012

By MUTHOKI MUMO [email protected]

The East African Community (EAC) is losing the battle against non-tariff barriers due to weak enforcement mechanisms, the World Bank has said.

In its economic update on Kenya, the global lender urges the regional bloc to adopt tougher, enforceable measures against the barriers.

Non-tariff barriers (NTBs) are obstacles to trade other than border tariffs that have a negative effect on the movement of goods, services, and other factors of production.

They include corruption, lengthy licensing requirements, poor infrastructure, weighbridges, import and export bans, and roadblocks.

In pursuit of deeper economic integration, countries in the EAC identified NTBs in 2008 and came up with monitoring committees in each of the partner states to encourage their elimination.

It is now emerging that these committees are seemingly toothless.

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“The established reporting mechanisms and monitoring committees for NTBs have so far been ineffective,” reads part of the report.

The first report was compiled in 2008 and identified 33 such barriers. In 2010, 47 barriers were identified. Most of them, the World Bank says, have not been eliminated within the agreed time frame.

Fifty per cent of the NTBs identified in 2008 were eliminated while only 30 per cent of those identified in 2011 were scrapped. Ironically, the NTBs that were not eliminated were predominantly “soft” — concerned with rules and regulations rather than infrastructure.

The report further notes that nations are increasingly reluctant to give themselves shorter deadlines for the elimination of the barriers. “…This reflects possibly an increased political resistance to consider NTBs for more rapid removal,” says the World Bank.

Dr Wanyama Masinde, director of the Institute for Regional Integration and Development (IRID), attributed the ineffectiveness of the national committees to their composition.

“In some of the countries, you will find junior officers with very little clout managing the committees. They cannot realistically be expected to effect change,” he told Smart Company.

The World Bank urges the bloc to develop monitoring systems that carry the weight of sanctions for non-compliance.

This is borrowed from best practices as observed within the World Trade Organisation (WTO) and the European Union (EU), where legally-binding mechanisms have been established.

Currently, the elimination of NTBs by the partner states is essentially on a volunteer basis. This suggestion echoes a threat made by Rwanda last month to sue its fellow East African partner states for their numerous barriers.

According to a report in our sister publication The East African , the frustrated land-locked state wants EAC officials to enact a legally-binding framework for the elimination of non-tariff barriers. Neighbours who fail to comply would be penalised by the East African Court of Justice (EACJ).

The country is currently preparing a draft legislation to that effect which will be submitted to the Sectoral Council of Ministers in charge of trade and investment.

In his budget speech two weeks ago, Finance minister Njeru Githae promised to eliminate all weighbridges by December this year and to move them to ports of entry.

He proposed that roadblocks be either removed or reduced to a bare minimum. However, analysts still fear that without pressure on the government from a regional level, these proposals will come to naught.

“As long as the mechanism for eliminating NTBs is open-ended and voluntary, we will just keep on talking and never actually eliminate these barriers,” said Dr Masinde.

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