- The trade war between Kenya and Uganda should be a wake-up call for the East African Community (EAC) whose main mandates include improving and smoothing trade relations between member states.
- It is now common for countries to make unilateral trade decisions, conclude side deals and fight each other, completely usurping the role of the EAC secretariat and denying any interest in belonging to a common market.
The trade war between Kenya and Uganda should be a wake-up call for the East African Community (EAC) whose main mandates include strengthening and smoothing trade relations between member states.
It is now common for countries to make unilateral trade decisions, conclude side deals and fight each other, completely usurping the role of the EAC secretariat and denying membership in a common market.
The latest tiff pits Kenya against Uganda, the former seeking to review the taxes imposed on its exports by Kampala. Uganda imposes an 18% value added tax (VAT), 6% withholding tax and a 1% rail tax on poultry products imported from Kenya.
Nairobi says the taxes are discriminatory and violate EAC Customs Union protocol.
Officials from the two countries have since met and have agreed that Uganda will resolve the conflict by amending the relevant laws with effect from July 1, 2021.
The developments show that the institutions created by the EAC are not functioning as they should. The secretariat, in particular, has been left out of important political developments within the community. The secretariat is the executive body of the community. Its mandate is to ensure that regulations and directives adopted by the Council of Ministers are properly implemented and to provide the Council of Ministers with policy recommendations.
There seem to be great difficulties in overpowering Member States which regularly go against the spirit of the common market in pursuing their selfish interests. When the common market was created, it was envisaged that member states would agree on a uniform set of tariffs to improve trade and investment in the bloc.
Countries that felt the need to protect certain sectors have leeway to impose higher taxes on imports, but only these are jointly approved.
It is time for the structures and institutions of the EAC to take center stage in the conduct of trade in the region with the full political support of heads of state.
The chaos created by unilateral decisions and side agreements must end if member states are committed to the EAC.