INTERNATIONAL TRADE REGIMES

International trade regime is a system of tariff and non tariff barriers ,import and export schemes
aimed at the growth of trade and a countries economy.1

The International trade regime can aslso be said to refer to that network of bilateral, regional
and multilateral international agreements, sometimes with corresponding institutions, ha
administer international rules related to trade.2

What are bilateral and multi lateral trade agreements? Understanding them is key to being able to
analyze how Africa as a whole benefits from them.

Multilateral agreements are treaties of commerce between 3 or more nations. Among the pros
include: reduced tariffs, easier import and export of products, access to each others markets and
increasing each others economic growth. The cons include; being that they are complex in their
nature, they receive backlash mainly due to the fact that people do not understand them. This is
evidenced by protests that accompany multi lateral meetings. Another disadvantage is that due to
reduced trade barriers, small businesses cannot compete with giant multi nationals and lay-offs
become the order of the day.

Bilateral agreements are treaties of commerce between two nations at a time, giving them
favoured trading status with each other. They are much more easier to negotiate, quicker to reap
benefits, and enforce especially if arbitration is set out as the dispute resolution mechanism.

In analyzing it’s relevance to Africa, it’s important to understand the origin of international
Trade regime. It began in the 19th century. In those early days it was limited in scope and focused
on mainly tariffs reduction. This era is referred to by scholars as the ‘tariff truce era’3. Upon
recognition by countries that they could protect domestic industries through other methods
besides tariffs, it grew to a broader notion of;

 Non- discrimination
 boarder measures such as tariffs and quotas
 domestic laws that discriminated against foreign goods
and more recently in the last decade

 international harmonization of laws

 property rights, Intellectual property rights and labor standards
 Environmental protection policies

Africa in the GATT and WTO.

1 http://www.businessdictionary.com/definition/trade-regime.html
2 Simon Lester, The Role of International Trade in Global Governance
3 Impacts and Challenges of Multilateral and Bilateral Trade Agreements on Africa, Economic Research Working
Paper No 79 (October 2005)

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The World Trade Organization (WTO) and its predecessor the General Agreement on Trade and
Tariffs (GATT) are the multi-lateral core of the regime. African countries form 39 of the 134
countries that are members of WTO.

The three main objectives of the WTO are;

 To help trade flow as freely as possible

 To achieve further liberalization negotiation
 To set up an impartial means of settling disputes on trade

The basic principles governing the system ie non-discrimination, reciprocity, liberization

transcend through the multi lateral agreements entered into by the member states. The idea
behind these principles is the creation of an open, global market place where goods and services,
can be traded to the highest bidder.

In discussing it’s relevance to Africa it’s important to discuss the Uruguay round of GATT and
WTO on trade. This round of negotiations covered among others, the subjects of tariffs where
liberalisation measures were put e.g in some cases like the 1997 Agreement zero tariffs were
placed on information technology products, partially benefiting African countries.

Customs Union under the WTO

A customs union is a form of PTA.The General Agreement on Tariffs and Trade, part of the
World Trade Organization framework defines a customs union in the following way:4

(a) A customs union shall be understood to mean the substitution of a single customs territory
for two or more customs territories, so that

(i) duties and other restrictive regulations of commerce (except, where necessary, those
permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated with respect to
substantially all the trade between the constituent territories of the union or at least with respect
to substantially all the trade in products originating in such territories, and,

(ii) subject to the provisions of paragraph 9, substantially the same duties and other regulations
of commerce are applied by each of the members of the union to the trade of territories not
included in the union;

4 Article XXIV General Agreement of Tariffs and Trade (GATT)

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 n essence, a customs union is where tariffs are removed between members of the union, and the
tariffs charged on imports coming from outside the union are harmonised across members of the
union.

From this definition, trade blocs - a type of intergovernmental agreement, often part of a regional
intergovernmental organization - are formed.

The point of establishing these customs union is to increase economic efficiency- increasing
output and reducing costs, closer political and economic ties, as well as economic integration

Customs unions established in Africa in clude;

Common Market for Easternn and Southern Africa (COMESA)

East Africa Community (EAC)

Economic and Monetary Community for Central Africa

Customs and Monetary Unions

A customs and monetary union is a type of trade bloc which is composed of a customs union and
a currency union.

The participant countries share commonality of; external trade policy and a single currency.
They are established through a trade pact-a wide-ranging taxes, tariff and trade treaty. Example
of such a trade bloc is the Southern African Development Community (SADC).

The African Continental Free Trade Area (AfCFTA) or (CFTA);

The CFTA is a free trade agreement among African countries, most of which are members of

the World Trade Organization (WTO). The CFTA must be consistent with the rules of WTO
relating toFTAs.

The main elements of these agreements that control preferential trade amongst members are as
follows;

 Article XXIV of GATT 1994.

 Addendum to Article XXIV and its updates.
 The Understanding on the Implementation of Article XXIV of GATT 1994.
 Article V and V bis of GATS.
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  Decision on Differential and more favourable treatment reciprocity and fuller
participation of developing countries (The Enabling Clause, Decision of 28 November
1979).
Under the ambit of WTO, the CFTA objectives are:5

• Create a single continental market for goods and services, with free movement of business
persons and investments, and thus pave the way for accelerating the establishment of the
Continental Customs Union and the African customs union.

• Expand intra African trade through better harmonization and coordination of trade
liberalization and facilitation regimes and instruments across RECs and across Africa in general.

• Resolve the challenges of multiple and overlapping memberships and expedite the regional and
continental integration processes.

• Enhance competitiveness at the industry and enterprise level through exploiting opportunities
for scale production, continental market access and better reallocation of resources.

The CFTA offers a strategy to open new markets for African producers, which is particularly
relevant in light of preference erosion in traditional markets. If negotiated and implemented
successfully, such a continent-wide integration project can promote economic diversification
away from commodities; unlock firm productivity through greater scale economies,
agglomeration effects, and increased competition; and embed trade-related reforms in areas such
as services, regulations, and trade facilitation to make African businesses more competitive in
regional and global value chains.

Position of African Countries

African countries believed that free trade can offer them opportunities they need to enter into the
world market. The liberal and open trade policies of the WTO are key to that. However, it is
important to note the effect that the trade rules negotiated at the WTO have on national
legislation. For example in the 1997 South African case where multi national pharmaceuticals
opposed a law passed by SA government that would facilitate access to cheap medicine for all
through generic drugs(drugs whose formula had already been made public and equivalent to
more expensive trade-mark medicines), thereby putting manufactures at a disadvantage because
they could not offer economic incentives to doctors to promote/prescribe their medicine. They
brought South Africa was taken before the Dispute Panel of the WTO.This goes to show the
unbalanced implementation of the Uruguay Rounds and the effect this had on small firms and
farmers.

The Doha Rounds saw Africa play a major role by going above and beyond to submit almost
two-thirds of all the specific submissions to the Committee on Trade and Development (CTD)

5 Africa Union website https://au.int/en/ti/cfta/about

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and over one-third of the proposals on systemic cross-cutting issues in the period to July
2002 .6African countries also played a prominent role at the Cancún Ministerial, as well as in
thecommittee-rich WTO negotiating process.

Relevance in relation to Special Differential Treatment

The WTO Agreements contain provisions which give developing countries special rights. These
are called “special and differential treatment” provisions. The Ministers in Doha, at the 4th WTO
Ministerial Conference mandated the Committee on Trade and Development to examine these
special and differential treatment provisions. The Bali Ministerial Conference in December 2013
established a mechanism to review and analyse the implementation of special and differential
treatment provisions.
These special provisions include, for example, longer time periods for implementing
Agreements and commitments or measures to increase trading opportunities for developing
countries. These provisions are referred to as “special and differential treatment” (S&D)
provisions. The special provisions include:
 longer time periods for implementing Agreements and commitments,
 measures to increase trading opportunities for developing countries,
 provisions requiring all WTO members to safeguard the trade interests of developing
countries,
 support to help developing countries build the capacity to carry out WTO work, handle
disputes, and implement technical standards, and
 provisions related to least-developed country (LDC) Members.
SDT’s derive their legal basis from

 The Agreement Establishing the World Trade Organization (also known as “the WTO
Agreement”) in its heading cites sustainable economic development as one of the
objectives of the WTO. It also specifies that international trade should benefit the
economic development of developing and least-developed countries.
 Part IV of the GATT on the concept of non-reciprocal preferential treatment for
developing countries — when developed countries grant trade concessions to
developing countries they should not expect the developing countries to make
matching offers in return. However, developing countries claim that Part IV has been
without practical value as it does not contain any obligations for developed countries.
 The Enabling Clause officially called the “Decision on Differential and More Favourable
Treatment, Reciprocity and Fuller Participation of Developing Countries”, adopted under
GATT in 1979 enabling developed members to give differential and more favourable
treatment to developing countries.

6 Impacts and Challenges of Multilateral and Bilateral Trade Agreements on Africa, Economic Research
Working Paper No 79 (October 2005)

5
  Article IV of the GATS aimed at increasing the participation of developing countries
in world trade. It refers, among other things, to strengthening the domestic services
competitiveness of developing countries through access to technology and improving
their access to information networks. Article XII allows developing countries and
countries in transition to restrict trade in services for reasons of balance-of-payment
difficulties.
 Article 66 of the TRIPS Agreement providing least-developed countries with a longer
time-frame to implement all the provisions of the TRIPS Agreement and encourages
technology transfer. Article 67 refers to the provisions of technical assistance.
 Going beyond legal provisions stated explicitly in WTO agreements, actions in favour of
developing countries, individually or as a group, may also be taken under “waivers” from
the main WTO rules. These waivers are granted by the General Council.
The Anti-Dumping Agreement is a good example of provisions for differential and more
favorable treatment for developing countries. It provides that special regard must be given by the
developed country Members to the special situation of developing country Members when
considering the application of anti-dumping measures. The Agreement also stipulates that
constructive remedies provided for by the Agreement must be explored before applying anti-
dumping duties duties where they would affect the essential interests of developing country
Members.

Relevance in relation to Generalized System of Preferences (GSP)

Here, developed countries offer non-reciprocal preferential treatment (such as zero or low duties
on imports) to products originating in developing countries. Preference-giving countries
unilaterally determine which countries and which products are included in their schemes.

Relevance in relation to the Dispute Settlement Mechanism (DSM)

The dispute Body of the WTO act under the complaint of a country member against the practice
of trade legislation of another country. The dispute settlement system has been used to challenge
national, social, public health, and environmental laws.

 Africa and the European Union- ECONOMIC PARTNERSHIP AGREEMENTS

Economic Partnership Agreements are a scheme to create a free trade area (FTA) between the
European Union and the African, Caribbean and Pacific Group of States (ACP). A free rade

6
area is a region in which a group of countries has signed a free rade agreemen and maintain little
or no barriers to trade in the form of tariffs or quotas between each other. They are a response to
continuing criticism that the non-reciprocal and discriminating preferential trade agreements
offered by the EU are incompatible with WTO rules. The EPAs date back to the signing of the
Cotonou Agreement, The EPAs with the different regions are at different states of play. In 2016,
EPAs with three African Regional Economic Communities (East African Community, Economic
Community of West African States and Southern African Development Community) were to be
signed but faced challenges.7

The main elements of the Cotonou Agreement are;

 Reciprocity- EPAs' key feature is their reciprocity and their non-discriminatory nature.
They involve the phased out removal of all trade preferences which have been established
between the EU and the ACP countries since 1975 as well as the progressive removal of
trade barriers between the partners.
 Special treatment-The LDCs constitute a special group among the developing countries
and have usually been treated separately. The new regional grouping established due to
the EPA scheme causes the problem of how to reconcile this approach with the previous
special treatment of the group of least developed countries (LDCs) among the ACP
countries.

 Good governance- "good governance" has been included as an "essential element" of the
Cotonou Agreement, the violation of which may lead to the partial or complete
suspension of development cooperation between the EU and the country in violation. It
was furthermore agreed that serious cases of corruption, including acts of bribery, could
trigger a consultation process and possibly lead to a suspension of aid.
 Equality of partners in ownership of development strategies.

Changing Patterns of trade across African countries.

Change is under way in relation to the goods that are exported, imported and consumed locally.
Kenya for example is experiencing a shift in the pattern of its exports and imports, with some of
her key traditional markets slowing down on the goods they are sourcing from the country,
finding new partners in Asia. Interestingly, though they have opened their markets to us, our
balance of payments tips considering in their favour. 8 Similar trends can be seen across Africa
where in the guise of trade liberalisation African markets are being squeezed.
7 Helmut Asche. "In the balance". D+C, Development and Cooperation. Retrieved 16 December 2016.
8 Standard Digital,https://www.trademarkea.com/news/kenyas-changing-trade-patterns-and-the-fall-of-
europe/

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COMMONWEALTH

The commonwealth is an association of 54 countries and territories that were mostly former
British colonial protectorates and colonies. The commonwealth is not a formal trading bloc
rather an alliance of developed ,developing and less developed countries. Its main agenda is to
deliver on matters agreed upon by the heads of states of the members states. It achieves this
through its main administrative arm the Secretariat by providing technical assistance as well as
advise to members of the association .

Despite not being a trading bloc, members of the Commonwealth have benefited from its
collaborative measures in matters of intra-trade between its members. A number of International
trade regimes have been applied to the common wealth’s trading policies.This especially so in
regard to developing economies in Africa in particular those in Sub Sahara region.

RELEVANCE

(a)free trade regime /free trade zone

The Commonwealth has always championed free trade in a transparent, inclusive, fair and open
rules-based multilateral trading system as the foundation for economic growth and sustainable
development. The Commonwealth has emphasised this commitment through an extensive
programme of trade policy support and technical assistance, consensus-building and global
advocacy9 Trade multilateralism refers to trade agreements which involve three or more
nation.These agreements make trading easier by reducing tariffs and making import and export
easier. In regard to free trade as international trade regime ,the multilateral trade agreements
within the commonwealth have facilitated member states with weaker economies access to duty
free markets and service prefrences..

The commonwealth has endeavoured to bolster trade relations between its members .It has done
so by being a beacon of discouraging protectionist measures by its members. Measures such as
import quotas and tarrifs for imported goods discourage free trade.It has also encouraged trade
regionally among its members . This same measure have been carried on to the regional
economic blocks which have implemented policy that seeks to open up amrkets and stem
protectionism .

(b) Most favoured Nation Regime

9 Commonwealth Trade Review 2018

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One of the benefits of having multilateral agreements is that signatories to the agreements are
bound to treat each other equally in matters trade. This brings in the Most Favoured Nation
principle which requires that countries to employ the same treatment to all members .

In line with the anti protectionist endavours implemented by the Commonwealth has seen its
members do better at implementing measures that don’t hinder trade . Commonwealth countries,
on average, tend to implement fewer harmful non-tariff measures towards each other and
towards the rest of the world, having applied almost 5 per cent fewer harmful trade-restrictive
measures10This means there fewer non-discriminative measures undertaken by commonwealth
countries than all other countries when it comes to trade.

The trickle down effect of this has been witnessed in regional trade blocks on the African
continent .Kenya for example is both a member of the Commonwealth and a founding member
of East African Community ,the latter organization being a regional economic bloc.The East
African Community has implemented a customs union ,which is meant to remove non-tariff
barriers to trade. This makes the EAC one of the most progressive economic blocs in the world
second to the European union.

PATTERNS

Considering 16 of the 54 countries in the Commonwealth are from Africa ,there are undeniable
patterns to trade stemming from their interactions on the international stage. Regional economic
blocks have followed suit and implemented similar trade regimes .Blocks such as East African
Community(EAC) ,West African Economic and Monetary Union(UMEOA), Economic and
Monetary Community of Central Africa (CEMAC) and Southern African Customs
Union(SACU) have all implemented Free trade Areas and Custom Unions .Other regional
blocks are either pat the proposal stage or in progress on implementation. However the blocs that
have the highest level of compliance ,some of their members are common wealth members.

The influence of multilateral trade regime has seen regional blocks implement policy that
influences certain aspects of trade governance. Some regional blocks have taken streamlining
and standardizing their regulations on trade. That has meant that less developed countries within
the blocs are able to develop their economies at their own pace since there are friendly policies in
place.

AFRICAN ECONOMIC COMMUNITY

10 Commonwealth Trade Review 2018: Strengthening the Commonwealth Advantage Trade, Technology,
Governance

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The African Economic Community (AEC) is an organization of African Union states
establishing grounds for mutual economic development among the majority of African states11it
was established by the Treaty Establishing the African Economic Community under OAU now
the African Union. The aim of the AEC is to promote economic, social and cultural development
as well as African economic integration in order to increase self-sufficiency and endogenous
development and to create a framework for development, mobilisation of human resources and
material. The AEC further aims to promote co-operation and development in all aspects of
human activity with a view to raising the standard of life of Africa's people, maintaining
economic stability and establishing a close and peaceful relationship between member states12

RELEVANCE

International trade regimes played an integral part in the outline of the treaty for the
establishment of the African Economic Community. Among the key objectives of the treaty was
to establish custom unions,free trade areas , single markets.This was to be achieved through the
establishment of Regional Economic Communities (REC’s) that would implement this goals per
region in a progressive manner.

(a)free trade regime

Article 4 13 of the treaty outlines the abolition among member states of custom duties on imports
and exports and also non tariff barriers . This provision is aimed at establishing free trade regime
which thrives when there little or no tariff’s ,this increases the volume of trade in the area.
Article 3114 encourages the elimination of non tariff barriers in order to facilitate trade within the
communities.Article 3315 encourages intra-community trade within the REC’s through
discouraging discrimination .

This treaty has been the backbone of the establishement of regional economic blocks,their
treaties on trade mirror the ideals of this treaty such as free trade areas and custom unions .

The free trade regime has led to the establishment of the Agreement Establishing the African
Continental Free Trade Agreement (AfCFTA) .The main objectives of the AfCFTA are to
create a single continental market for goods and services, with free movement of business
persons and investments, and thus pave the way for accelerating the establishment of the
Customs Union16. This agreement is meant accelerate the growth of trade within the continent by
widening market access .

11 www.wikipidia.com
12 www.au.int
13 Treaty for the Establishment of African Economic Community
14 Idib
15 ibid
16 ibid

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(b) Most favoured Nation Principle

Article 3717of the treaty speaks to the most favoured nation treatment which is a fundamental
international trade regime. It reiterates that members shall accord each other in relation to trade
within the community the same treatment .It specifically states; in no case shall tariff
consessions granted to third party states pursuant to the agreement with a member state be more
favourable than those applicable pursuant to this treaty. This provision is replicated in the
regional blocks individual . Aprime example is that in the treaty of the EAC the principles spirit
is carried through the wordings of the objectives, fundermental principleas and operational
objectives of the community.

****The most favoured nation clause played an important role in the EAC-EU EPA
negotiations this clause was a major source of contention between EAC member states and
European Union members. The European Union assertion that EAC members grant favourable
treatment to developed European countries . under Article 16(2) of the EC-EAC EPA, EAC
countries are obliged to accord to EC any more favorable treatment resulting from an economic
integration agreement with any “major trading economy”. Conversely, under Article 16(1), the
EC is obliged to accord to the EAC countries any more favorable treatment contained in an
economic integration agreement between the EC and third parties, with respect to the trade
regime for goods.****

(c) preferential regime

Article 78 18 grants special provisions in respect of certain countries with exceptional situations
that would prevent them from implementing the objectives of the treaty.Article 79 also seeks to
provide special provsions for least developed countries giving them special assistance or certain
exceptions from specific part of the treaties. This has been reflected in the REC’s such as East
African Community treaty Article 89(e ) which grants special treatment to land locked partner
states in the implementation of that prticular section.

The East Africa Community (EAC)

The East Africa Community is a regional organization made up of states of six Partner States
namely :Kenya,Uganda,Tanzania,Rwanda ,Burundi and South Sudan. 19The EAC was
established by The Treaty of Establishment of the East African Community with the aim of

17
18 ibid
19 https://www.eac.int/

11
establishing a Customs Union,Common Market,a Monetary Union and a Political Federation as
stated in Article 2 .20

Article 5 of the Treaty provides that the general aim of the community is to develop plans and
programmes for the social,economic and political growth of the economy. 21

The trade regimes within the East Africa Community are;Customs Union,Common Market and a
Monetary union.

A. The East Africa Community Customs Union

The Customs Union represents the first stage of regional intergration process as provided for by
the treaty.The Protocol for the Establishment of a Customs Union was signed in March 2004 by
the Heads of State of Kenya,Uganda and Tanzania.

Article 2 (4) of the Protocol for the Establishment of a Customs Union provides that within the
Customs Union:

a. Customs duties and other charges of equivalent effect imposed on imports shall be
eliminated save as is provided for in this protocol
b. Non- tariff barriers to trade among the Partner States shall be removed and
c. A common external tariff in respect of all goods imported into the Partner States from
foreign countries shall be established and maintained.

The main aim of creating a single customs territory is to enable Partner States to enjoy
economies of scale in order to support economic development.22

Benefits of a Customs Union

1. It has led to the growth of cross –border investment and has attracted investment into the
region through the regional Common External Tariff (CET) and trade policies that are
stable.
2. It has leveled the playing field for the region’s producers by imposing uniform
competition policies and laws on custom duties imposed on good from third party
countries which has led to the growth of the Partner States eocomies.
3. With the establishment of a customs union with a common external tariff away from the
national tariffs has led to welfare advantages to the consumers once the CET on finished
goods is reduced.
4. Having a common external tariff also fosters good relations among the partner states
which are now able to enter into trade activities with the rest of the world as an economic
block.

20 Art.6 Treaty for the Establishment of the East Africa Community

21 Art 5 Treaty for the Establishment of the East Africa Community
22 Art 2 Protocol for the Establishment of a Customs union

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 5. Customs Unions facilitates trade liberalization which can be defined as the removal of
tariffs or obstacles to free trade. Partner states agreed that goods from and to Uganda and
Tanzania into Kenya would be free and goods from Kenya into Tanzania and Uganda to
be grouped into two categories ;category A goods immediately eligible for duty free
treatment and category B goods form Kenya into Uganda and Tanzania with tariffs to be
removed over a period of 5 years23

National Treatment.

With the trade liberalization came National Treatment which can be defined as the
obligation by a state to treat imported goods the same way as domestic products that is there
should be no discrimination as provided for in Article 15 of the Protocol .

Article 15(2) further provides that a Partner State shall not impose directly or indirectly any
form of internal taxation on the products of the other partner states in excess of that that is
imposed.24

Challenges of a Customs union.

1. It interferes with a country’s soverignity.States have to come together in order to

harmonize their external tariffs hence the concept of sovereignty is tampered with.
2. In the case of the East Africa Community coming up with a customs union was not a
matter of choice but rather a matter of necessity and it would have been difficult for the
partner states to establish a free trade area with other blocs unless they had liberalized
trade among themselves.This is based on the fact that the partner states of EAC also
belong to other trading blocs.
3. Customs union is a complex system in deciding on what tariff rate to be used
25

B. The East Africa Community Common Market.

The East Africa Community Common Market became operational in 1 st July 2010 and the
negotiations of its establishment began in April 2008 and the Heads of State signed the protocol
on the Establishment of the East Africa Community Common Market ,The Common Market is
the second stage of integration after the Customs Union as provided for by Article 5(2) of the
EAC treaty .26

A Common Market is an arrangement where partner states of an economic bloc operate as a

single market for goods,services ,labor and capital and having common trade policies and
laws.The two aspects that are in favour of the common market are:
23 https://corporatefinanceinstitute.com/resources/knowledge/economics/customs-union/
24 Art 15 EAC Customs Union Protocol
25 https://corporatefinanceinstitute.com/resources/knowledge/economics/customs-union/
26 https://eac.int/integration-pillars/common-market

13
 a. Freedom of trade and movement tends to bring each kind of production undertaken in
the area will be endeavored in the sector that best suits it and
b. It tends to ensure that where there is an advantage in large scale production of a
commodity ,it will be produced on large scale in a few places ,for the whole area instead
of being produced on an uneconomically small scale in a large number of places.

The Common Market focuses majorly on four freedoms .;

a. Free movement of goods

It entails the removal of tariff and non -tariff barriers to ease the movement of goods

b. Free movement of labor

It relates to the unhindered movement of workers within the territories .It includes the
principle of non discrimination in labor laws and policies on the grounds of nationality.

Article 10 of the Common Market Protocol provides for the free movement of workers and
their accompanying spouse or family member.

c. Free movement of capital

Provided for under Part G of the Common Market Protocol and entails the removal of
restrictions on the movement of capital supplied by nationals of Partner States and the
removal of discrimination based on nationality

d. Free movement of services

Provided for under Part F of the Common Market Protocol and it refers to the movement of
services within the Community and it identifies seven sectors of the service industry
namely:communication services,financial services,distribution services,transport services etc.
27

C. The East African Community Monetary union

A Monetary Union is the third stage of integration as laid out in Article 5(2) of the Treaty of
Establishment of the East Africa Community. The East Africa Monetary union Protocol
etsbalishes the Monetary union and came into force in February 2015.It lays down the
groundwork for a monetary union within ten years and allows the EAC Partner States to
progressively converge their currencies in a single currency in the Community.

In relation to trade it is aimed at rationalizing investments and also harmonizing trade

policies with a view to promote the Community as a single currency area.2829
27 Common Market Protocol
28 http://www.businessdictionary.com/definition/trade-regime.html
29 https://eac.int/monetary-union

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COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA (COMESA)

Established in 1994, COMESA currently comprises twenty one member states: Angola, Burundi,
Comoros, Democratic Republic of Congo (DRC), Djibouti, Egypt, Eritrea, Ethiopia, Kenya,
Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda,
Zambia and Zimbabwe. Many of this member states also belong to other regional organizations
such as the SADC, the Eastern African Community (EAC), the Indian Ocean Commission (IOC)
and the Inter-Governmental Authority on Development (IGAD). This at times brings up conflict
between the communities.30

Heads of state form the principal authority for COMESA’s policy direction. The Council of
Ministers, which receives recommendations from the Intergovernmental Committee, decides on
operational issues and is responsible for the COMESA Secretariat. The task of the Secretariat is
to provide advisory services and technical support to member states in the implementation of the
COMESA Treaty.

COMESA’s main focus is on strengthening regional integration through promotion of cross-

border trade and investment. It has programmes on trade and transport facilitation, trade in
services, free movement of persons and investment. Other features include gender policy,
conflict prevention and a COMESA Court of Justice.

In October 2000, nine COMESA member states moved towards a free trade area. At present,
COMESA operates a free trade area (FTA) among sixteen of its member States, Burundi, the
Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles,
the Sudan, Uganda, Zambia and Zimbabwe. The Democratic Republic of Congo joined the
COMESA FTA in December 2015 and is currently finalizing its tariff phase-down. The
COMESA has rules of origin which are used to determine whether goods produced in the
COMESA region are eligible for preferential treatment within the FTA. 31This are:

a) The goods should be wholly produced;

b) The CIF value of any non-originating material should not exceed 60% of the ex- work
price of the goods;
c) Goods must attain the value added of at least 35% of the ex-factory cost of the goods;
d) Goods should fulfill the CTH rule; and
e) Good must have importance to the economic development of the member states and
should contain not less than 25% of value added.

30 https://web.archive.org/web/20070616220159/http://www.worldtradelaw.net/fta/agreements/comesafta.pdf
31 http://www.comesa.int/

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the exporter is free to base his claim to COMESA duty-free or preferential tariff treatment on any
one of the criteria, according to which of them has been complied within the production process.
With the exception of small consignments, goods being exported under COMESA FTA or
preferential tariff reduction treatment have to be accompanied by the COMESA Certificate of
Origin, which is issued by the designated competent authority in a Member State.

COMESA has a Customs Union which was launched on 7 June 2009 by Heads of State and
Government of the COMESA Authority. The Authority endorsed the key principles and rules
that form the basis for the operation of the Customs Union. A transitional period of three years
was provided, during which time the Member States would align their national customs laws
with the regionally agreed Customs Union instruments.32

Steady progress has been made in elimination of non-tariff barriers (NTBs) such as in
liberalization of import licensing, removal of foreign exchange restrictions, removal of taxes on
foreign exchange, removal of import and export quotas, removal of road blocks, easing of
Customs formalities, among others.

COMESA has adopted a phased monetary co-operation programme which aims at establishing a
common monetary area. Greater monetary stability facilitates economic integration efforts and
provide for sustained economic development. The ultimate objective of the programme is to
establish a monetary union, and thus enable the Common Market to attain the status of an
Economic Community.

The COMESA has a Protocol on the Free Movement of Persons, Labour, Services, the Right of
Establishment and Residence which was adopted in 2001 by the COMESA Authority of Heads
and States and is in the process of being signed and ratified. The Free Movement Protocol was
developed with the vision towards the operationalization of the COMESA Common Market and
its objective is to remove all restrictions to the free movement of persons, labour, and services
and provide for the right of establishment and right of residence.33

There also exists an Investment Agreement for the COMESA Investment Area, adopted by the
head of states in 2007. The Investment Agreement provides for Most Favoured Nation and
National Treatment as well as a dispute settlement mechanism and protection of investors and
their investments against exploitation and nationalization and other measures with similar effect.

COMESA has been greatly influenced by other international trade organs, and has even
implemented some of the principles. For WTO questions, COMESA has established a Working
Group on WTO issues, which operates as a sub-committee of the COMESA Trade and Customs

32 http://www.comesaria.org/site/en/comesa.55.html
33 African Regional Trade Agreements as Legal Regimes (Cambridge International Trade and Economic Law) [James
Thuo Gathii]

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Committee. The core functions of this Working Group are to provide technical back-up and
analysis of WTO issues and to suggest appropriate recommendations

ECONOMIC COMMUNITY OF WEST AFRICAN STATES. ( ECOWAS)

ECOWAS is a regional organisation with 15 member states. It's mandate is mainly to promote
economic integration among it's member states so as to raise the living standards of the people
and promote economic development. It mainly aims at creating a single, large trading block
through it's economic cooperation.

It has four main institutions: The commission, the community court of justice, the community
parliament and ECOWAS bank for investment and development (EBID)

In 1990, ECOWAS established a free trade area and in January 2015, it adopted a common
external tariff. Article 3 of the Treaty of ECOWAS also provides for the removal of trade
barriers.

Free Trade Area

ECOWAS has a number of legal agreements, such as the ECOWAS Protocol on the Free
Movement of Persons and Goods (1978) and the ECOWAS Trade Liberalisation Scheme (ETLS
- 1979), which is the main operational tool for promoting West Africa as a free trade area. It
mainly dealt with agricultural, artisanal handicrafts and unprocessed products until 1990 when it
extended to industrial products.

The ECOWAS protocol on free movement on people and goods granted the citizens of the
member states the right to enter and reside in another member state as long as they possess the
relevant travel documents. This was as per the commitments of the member states in the four
supplementary protocols adopted between 1985 and 1990. ECOWAS is the first African region
to establish a free trade Area. This initiative has however been met with challenges due to
security concerns whereby criminals have grabbed this opportunity to conduct their criminal
activities such as trafficking drugs and Illegal arms. Such security concerns have thus hindered
its operations in promoting regional trade and economic development.

Common External Tariff

In January 2015, ECOWAS adopted a common external tariff so as to facilitate the movement of
goods in the region. The implementation of this is that the same customs duties will apply to all
goods entering ECOWAS region irrespective of which country in that region they are entering or
originating from. In October 2013, a list containing some special protection measures was
released whereby one of the special protection measures is that the import Adjustment Tax (IAT)
was introduced and it enables members to apply an extra tax on imports from non ECOWAS
members beyond CET's 0% - 35%. This measure helps protect important sectors of the economy
in the region.
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Monetary Union.

The West Africa Monetary Zone (WAMZ) was formed in 2000 by a group of 6 ECOWAS
countries with a view of introducing a common currency called 'eco' with a goal of merging the
existing CFA Franc and ego and eventually having a single, stable currency for all the West and
Central African countries

18