Factors influencing implementation of customs union in East African countries

Abstract

In the theory of regional integration, economic benefits of integration are counterbalanced by politico-economic factors, social and cultural costs. Opening up national economies shifts costs and benefits. Nations may not be natural economic units but government policies often turn them into economic units all the same (Krugman & Obstfad, 1994: 175). The success of the customs union will determine the speed at which the EAC enters the second phase of integration: the common market (Muthaura, 2001). The East African Customs Union will have two complementary aspects: the free movements of goods between the member countries and the imposition of a Common External Tariff (CET) on imports from non-member countries (EAC Dialogue, 2001). On the average, the population size of EAC countries including Rwanda and Burundi is around 109 million people, with a GDP of around US $30 billion. Such economies on their own are too small to attract any major meaningful investment in today’s economy, where mass production is vital to reduce unit costs. This study conducted in the period between June and September, 2007 had the objective of determining the factors that influence implementation of customs union in East African countries. To achieve this objective, data was collected from the five East African countries through a semi-structured questionnaire sent to government officials in government offices and embassies and to traders in the five countries. Secondary data was also collected from the government offices. From this study, most of the organizations are involved in the integration process with Kenya having the highest number of organizations involved in the integration (87%). Tanzanian firms are the most pessimistic ones with 17% of the respondents citing that they were not involved in the integration process. One of the major factors that influence implementation of EA customs union is the language where it was found that English is most preferred for integration. One of the challenges facing the East African integration is the fact that the local citizens have the least awareness on issues revolving around integration. Not many of them are involved, hence the lack of interest. It can also be said that the long time the integration is taking has made some of the citizens lose track of issues and therefore the interest too.