Struggling With formal And Informal Trade Barriers

Formal and informal trade barriers remain major obstacles to economic growth and social development in the East African Community (EAC). In the World Economic Freedom Report 2013, EAC countries — Burundi, Kenya, Rwanda, Tanzania, and Uganda — ranked in the bottom 60 in the freedom-to-trade index among the 152 countries surveyed.i Although tariffs on major commodities have declined significantly under the East Africa Common Market Protocol (EACMP), which aims at the “free movement of people, goods, services and capital”, economic models consistently show that trade between East African economies falls far short of its potential.ii That potential is being thwarted by a variety of impediments to free trade among the region’s economies. Further trade liberalization in East Africa requires not only reducing duties but also getting rid of trade barriers of all kinds. Moreover, intraregional trade will not flourish without eliminating licensing fees, complex custom procedures, and delays at borders, even if these are not explicitly intended to impede trade. Thus a well-integrated transport infrastructure and improved logistical performance are critical for the EAC’s further trade integration and economic development. We believe that government initiatives, including the EACMP, have not effectively addressed nontariff barriers that continue to cost millions of dollars in waste to businesses and consumers every year. In this paper we examine the challenges that trucking businesses, the most important inland facilitators of trade, face when operating along two major EAC corridors. Further analysis will address concrete steps to assist the EAC in decreasing transportation obstacles in order to permit more inland trade.

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