East African Customs Union Still on Hold
Tanzania, Kenya and Uganda combined have 90 million people, a market big enough to matter. So the idea that there should be a customs union among the three makes sense. The leaders of the three nations were to sign that deal back in November but was postponed due to illness on the part of Tanzanian President Benjamin Mkapa. A second attempt at signing was sidelined last week, but the reason this time seems to be cold feet in Uganda's business community. They should get over it.
In any customs union, there are winners and losers, and some of the Ugandan business leaders are not keen on taking on the Kenyan competition. Some of them should be hesitant, because they will lose out. However, that is not a reason to prevent it from happening. What needs to occur is the creation of a transitional period, followed by the phasing in of the tariff reductions. This has been done already, though, and any firm incapable of making it now, has wasted its time and probably doesn't deserve any more.
Back in 1999, the three nations signed the East African Community Treaty which pledged to create a customs union within four years. Allowing for delays in ratification, there still might be time in that four year window, but it isn't much. The point is, everyone knew it was coming, and four years seems like adequate time to put one's ducks in a row. As for phasing things in, Ugandan and Tanzanian firms face no import taxes, while Kenyan companies will pay 10%, being lowered to 0% over the course of the next five years. Uganda's business community has a lot of cheek to suggest they aren't ready and need more time -- they've been spotted a 10% advantage.
The important thing to remember is the poverty of the people in the three nations will be alleviated to a degree by enacting this customs union. The poor have already waited four years (in addition to decades before the 1999 treaty), and one can easily argue that that was too long -- prosperity delayed is prosperity denied. It is time to move.
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