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Tim Clarke Ambassador EC Delegation in Tanzania
EAC, Arusha, 30th October 2009
The European Union. A ‘model’ for the EAC?
The EU’s founding fathers would have been proud! .The European Union is a living example of how conflict. poverty and destruction can be transformed into peace and prosperity • A continent divided and in shambles has been transformed into the world’s: – – – – Biggest economy Biggest importer and exporter of goods and services Biggest force for peace and security Biggest provider of development cooperation and humanitarian aid • This is no mean achievement.
This success has been possible through a process of political integration built on three pillars Unified vision • Common principles • Shared values • Mutual interest Security and foreign policy Justice and home affairs Economic integration .
15. 27… – Referenda: France. 9. Ireland – Implications of Lisbon Treaty have been overcome thanks to… • • • • Visionaries Courage and conviction Constant review and reassessment strategies Institutionalization and consolidation Support from civil society and democratic forces • . 11. and integration has proceeded in fits and starts Periodical set backs – Increase in membership: 6.The journey has not been a smooth one. Netherlands. 25.
Customs Union 2000. Customs Union 1957. Single Market 1968. Euro 1993. Common market 2005. East African Community 10 years 1999. Single currency? 2010.In comparison with the EU the EAC has made important progress towards economic integration in a short span of time 20XX. European Economic Community 37 years 6 . Political federation? 2012.
The Customs Union in the European Union .
XXIV GATT: .Border controls between members eliminated .The common customs tariff as a cornerstone of a common commercial policy .Free movement of goods and identical rules of origin (no tariff or non-tariff barriers) Beyond the GATT .A single customs territory .The free movement of goods as a basis for a single market .An external common customs tariff .The EU Customs Union A Customs Union in line with Art.
The customs union has been a critical step in the process towards increased economic and political integration Single currency Common market Customs union Free trade area .
importing goods became faster and cheaper 10 . Promotes fair competition by reducing disparities in production costs for manufacturers in the various countries with regard to taxes on imported raw materials and intermediate goods from third countries. Offers equal protection through the CET to all manufacturers against third country imports and minimises the possibility of transhipment or trade deflection Traders • Traders get wider source of goods therefore bargaining power in dealing with suppliers resulting in cost savings for their customers Importers • By removing border controls and trade barriers.And has contributed to economic growth and prosperity (1) Producers • • • Through a larger single market encourages mass production of goods and services and specialization thereby lowering the cost of production by taking advantage of economies of scale.
The larger market promotes cross-border investment and foreign investment 11 .And has contributed to economic growth and prosperity (2) Consumers • Get a wider choice of goods and the lower prices resulting from increased productivity Land locked countries • Have free circulation rights when moving between countries of the CU. improving access to ports and transportation corridors CU Members • • Intra-regional trade is enhanced as there are no tariffs or quotas on goods originating from within the region.
But achieving the benefits of the customs union and of economic integration required a combination of instruments The EU customs union Objectives Foster economic efficiency and economic development Achieve economies of scale Political vision Instruments Institutions and administrative capacity Adaptation and harmonization of national laws Flexibility to identify and eliminate shortcoming .
23 – EC Treaty) Customs Union and Free Movement of Goods (Art. 133) Customs Cooperation (Art. 23) Common/Single Market (Art. 135) .Political vision resulted in the adoption of key treaties and documents Political vision The Rome Treaty of 1957… … defined the customs union as a pillar of the European Communities • A single customs territory • An external common customs tariff • An internal free movement of goods (no tariff or non-tariff barriers) • The common customs tariff as a cornerstone of a common commercial policy • The free movement of goods as a basis for a single market "The Community shall be based upon a Customs Union which shall cover all trade in goods…” (Art. 95) Common Commercial Policy (Art.
competition) . agriculture.Political vision A key set of principles was defined to support the custom union • Revenue collection and distribution from the payment of customs duties • Mechanism for enforcement of the common customs legislation with dispute settlement • Common policies (trade.
An agreed set of polices has led the definition and implementation of a legal framework Legal adaptation • • • • A classical ‘tariff policy’ A ‘fiscal policy’ A ‘security and safety policy’ A ‘trade facilitation policy’ .
Adaptation of the customs law to security and safety demands . tariff. value.A modernized Community Customs Code Era of Regulations directly applicable throughout the EC Era of procedural Directives to be transposed by MS 70s Basic factors (territory. origin.Translating the political vision into reality has required a gradual process of adaptation and harmonization of EU and national laws Legal adaptation 90s 80s Era of consolidation/codification in a Single Market context .Expansion of Community customs legislation to other domains . transit) 60s .
Common Customs Tariff and Duty Relief legislation .National rules on customs penalties .Community Customs Code and its Implementing Provisions .International customs agreements or customs provisions contained in international agreements The EU does NOT include: .Residual national rules for the implementation of the Community customs legislation .The EU legislation include key legislation and provisions but… Legal adaptation The EU customs legislation includes: .National rules on customs administrative organisation and operational actions .Individual customs decisions .
Institutions have been set and provided administrative capabilities to coordinate and enforce implementation of the customs union Institutions The European Commission – DG Taxation and Customs union (TAXUD) – DG Justice. Security (JLS) – OLAF – antifraud office • Implementation of the agreements is responsibility of the member states • The EC has been given the power and the resources to monitor and enforce commitments undertaken by member states The Council (of the European Union): .Customs Cooperation Working Party (CCWP) The European Parliament Court of Auditors. Statistics Office … 27 Member States .Customs Union Group (CUG) . Freedom.
some products did not work in other countries (e. excise taxes. corporate taxes.Approved most of the legislation proposed in the White Paper and other legislation promoting the liberalization of capital Physical barriers • Fiscal frontiers • VAT. Electrical plugs) Local content and rules of origin • Local laws required foreign firms to buy fixed percentages of their production supplies from domestic firms Internal customs stations slowed down communication and impose bureaucratic burdens Single European White Paper (1985) . Also. the actual implementation of the customs union was hindered by differing national regulations Flexibility Technical standards • Countries required different standards for the commercialization of some products.Despite political declarations.Proposal of legislation to eliminate the existing non-tariff barriers Single European Act (1986) .g. very different among countries Government procurement • Government units purchased their supplies from domestic companies as much as possible .
to eliminate the VAT or impose a minimum VAT of 15 percent • Government procurement – The SEA requires governments to open up their purchases from firms of other member countries Factors trade liberalization • Increased capital market integration • Liberalization of cross-border market entry policies. it can access all other countries’ markets. including mutual recognition of approvals by national regulatory agencies .The Single European Act took the necessary provisions to push member states to eliminate the existing Non trade barriers Flexibility Single European Act (1986) Goods trade liberalization • Technical standard – The SEA adopts the principle of Mutual Recognition: if a product is legal in one country. given no security or safety problems • Physical barriers – Simplification of export-import documentation and custom checkpoints procedures • Fiscal barriers – Harmonization of VAT and corporate taxation. Countries could choose. for each product.
Relevance for the EAC? .
EAC CU in 5 years – EU single currency (partial) after 42 years. EAC after 12 years(?) • Common desire to expand membership .The EAC an the EU share a common drive towards regional integration • Similar political vision • But EAC more ambitious than the EU in seeking a full political federation • Variable timeframe – EU CU achieved after 11 years.
• non-tariff barriers to trade among the Partner States shall be removed.The EAC Customs Union established in 2005 is moving towards a common market in 2010 Treaty for the Establishment of the East African Community aims at the formation of a single customs territory – – enjoy economies of scale support economic development EAC – Customs Union Protocol (March 2.4 Within the customs union • customs duties and other charges of equivalent effect imposed on imports shall be eliminated save as is provided for in this Protocol. and • a common external tariff in respect of all goods imported into the Partner States from foreign countries shall be established and maintained . 2004) Article 2.
practical obstacles towards actual mplementation remain Examples • Commitment to a unified customs revenue system not yet implemented • Lack of recognition of national standards amongst member states • No enforcement capacity .But as was the case in the EU.
The European Commission is supporting the process of regional integration wholeheartedly RIP 10th EDF: €644 million (EAC. IGAD. IOC) • Regional economic integration: €548 million • Regional political integration/cooperation: €64 million • Other programmes: €32 million NIP 10th EDF (EAC): approx.000 million Total EU assistance to the EAC: €2. €2.000 million / year . Comesa.
Conclusions • Congratulations to EAC for the accomplishments of the last ten years • The road towards economic and political integration is a bumpy way. and requires political vision. legal frameworks. institutions and execution capabilities • EU and its member states are willing partners to make these efforts succeed .
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