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Effects of the EAC Common Market Protocol on Businesses

What is a common market?
A Common Market is a merger/union of two or more territories/ nations to form one common territory in which there is free movement of goods, labour, services and capital, and the right of establishment and residence.  The basic elements of a common market are:

  • A smoothly functioning customs union including complete elimination of all tariff and non tariff barriers plus a common external tariff
  • Free movement of persons, labour, services and right of establishment and residence
  • Free movement of capital within the Community
  • Enhanced macro-economic policy harmonisation and coordination particularly with regards to fiscal regimes and monetary policy
  • Setting up, strengthening and empowering the necessary institutions/organs to support the common market operations (in the case of the EAC these include the East African Court of Justice and the East African Legislative Assembly)

Objectives of the EAC Common Market

The overall objective of the EAC Common Market is to widen and deepen cooperation among the Partner States in the economic and social fields for the benefit of the Partner States and their citizens.

The specific objectives of the Common Market are:

Accelerate economic growth and development of the Partner States through the attainment of the free movement of goods, persons and labour, the rights of establishment and residence and the free movement of services and capital;

  • Strengthen, coordinate and regulate the economic and trade relations among the Partner States in order to promote accelerated, harmonious and balanced development within the Community;
  • Sustain the expansion and integration of economic activities within the Community, the benefit of which shall be equitably distributed among the Partner States;
  • Promote common understanding and cooperation among the nationals of the Partner States for their economic and social development; and
  • Enhance research and technological advancement to accelerate economic and social development

Scope of Co-operation
The scope of co-operation under the Common Market is provided in Article 5 of the Protocol and applies to any activity undertaken in cooperation by the Partner States to achieve the free movement of goods, persons, labour, services and capital and to ensure the enjoyment of the rights of establishment and residence of their nationals within the Community. In furtherance of this goal, Partner States agreed to eliminate tariff, non-tariff and technical barriers to trade; harmonise and mutually recognise standards and implement a common trade policy for the Community; and ease cross-border movement of persons and adopt an integrated border management system.
In addition, this protocol will further incorporate cooperation by the partner States in the following twelve areas:

(i) protection of cross border investments
(ii) economic and financial sector policy coordination
(iii) competition and consumer welfare
(iv) commercial policy
(v) coordination of transport policies
(vi) harmonisation of social policies
(vii) environmental management
(viii) statistics
(ix) research and technological development
(x) intellectual property rights
(xi) industrial development; and
(xii) agriculture and food security

The protocol is further expected to facilitate trade through the harmonising of customs duties on goods and creating a more predictable tariff structure for external trade partners

Benefits of the Protocol / the Common Market

        • Trade opportunities / larger markets.
        • Improved competitiveness and higher returns on investment. 
        • Free Movement of Persons
        • Free Movement of Labour/Workers
        • Cross-border capital movements will also spur the growth of industrialisation driven by an expanding and more productive agricultural sector
        • Service suppliers, providers and consumers from across the region will be guaranteed equivalent treatment to local providers.
 
 
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