Title: Why The Rush To Arusha? South Sudan and the East African Community Parek Maduot
Author: Parek Maduot
Date: 09-29-2014, 03:58 PM
The issue of the pending application by our newly independent state to join the East African Community (EAC) has gathered significant attention recently as a result of recent news reports about its consideration by the EAC Council and the Summit of the ######### of State of the member countries. It is odd that we are having this vigorous debate from both proponents and dissenters now, and not prior to the tabling of the accession application by our government in November of 2011.
I believe this application should have been subjected to prior and deliberate debate and scrutiny by all stakeholders before it was granted the green light. Nonetheless, I still think that the discussions and vigorous opinions that are now being earnestly conjured up can still serve an important purpose. We should all try to soberly and objectively assess the merits, timing and overall utility of our membership in the EAC without resorting to either wildly rosy projections about the benefits or apocalyptic warnings about the perils.
It is important at the outset to note that the EAC came into being as a result of a treaty among its founding member states, informed as they were by their common aspiration to gradually integrate their economic, political, cultural and social spheres for their mutual benefits. This aspiration was thus given form through this treaty that serves to govern their respective rights and obligations, and through specific protocols that they promulgated to affect this gradual integration. The founding member states, Republic of Uganda, the Republic of Kenya and the United Republic of Tanzania, promulgated the revived EAC Treaty on November 30, 1999 and it came into force after ratification by all members on July 7, 2000. The Republic of Rwanda and the Republic of Burundi became full members of the EAC after undergoing separate application processes on July 1, 2007.
In broad terms, the EAC members aimed to deepen their cooperation and achieve greater economic integration, and took concrete steps by establishing a Customs Union in 2005 and a Common Market in 2010. The next steps enshrined in the Treaty are the establishment of a Monetary Union, with processes commenced in 2011, and the ultimate climactic objective of a full political federation among all member states of the EAC. The Customs Union and Common Market of the EAC were both established through separate binding protocols that every subsequent entrant into the Community will have to adopt and adhere to.
In the context of South Sudan’s pending application, the assumption would be that it has resolved to join this Treaty as it stands now and with all the attendant obligations therein. In the economic realm, the existing Common Market Protocol obligates member states to recognize the free movement of goods, persons, labor, services and capital among each other, and to protect the right of citizens of partner states to residence and establishment of economic activities unencumbered by any restrictions or discrimination on the basis of national citizenship by the host country. The currently promulgated EAC Customs Union obligates member states to abolish customs on imports from fellow member states, and removes any other non-tariff related barriers to trade between the member states. Moreover, it binds the member states to a common tariff regime for goods imported from foreign countries, in addition to other measures designed to harmonize their trade activities. The next step in the sequential processes of the Treaty is the establishment of the Monetary Union, which as the name implies would presumably usher in a common EAC currency and a single monetary policy regime for all member states. As noted above, the EAC Treaty envisions an eventual political federation for the member states in the future with the requisite common executive and legislative organs, but it is clear that it is an objective way further in the horizon.
The Republic of South Sudan lodged this application in the immediate euphoria after independence, and at a point when the government was scrambling to put in place all the emblems and prerequisites of an independent sovereign state. Joining multilateral organizations and acceding to treaties and covenants was clearly high in the agenda of the nascent state, but it is clear that the EAC treaty did not warrant the same haste and urgency. It was not an essential element to our quest to join the community of nations, and it was particularly deserving of serious study because of the implications involved in the binding articles I briefly summarized above.
Our current profile as an economy can be illustrated as largely dependent on revenue from one export commodity (oil), almost entirely served by imported goods from neighboring countries, beset by rampant unemployment among its highly unskilled labor, significantly hampered by non-existent roads and scant power generation. These are just the few difficulties facing us that I could fit in one long sentence, but the list can certainly be much higher. Now, this is not the profile of an economy that should scrap custom duties on its biggest import sources, agree to higher prohibitive tariffs on goods from other sources that could be cheaper than these same dominant neighbors, or grant unrestricted work and residency rights to its far more populous neighbors with all their skilled workers and business people.
The history of regional trade bodies like the EAC is rife with many stories of heartbreak and regret, because policy makers rush into them without appreciating the limited utility of all the rosy pronouncements about cooperation and mutual benefit when the real competition begins. There will be inevitable losses incurred by some of the members when these obligations are demanded of each other, and South Sudan would supplant the weakest and most fragile of the economies currently making up the EAC if it becomes a full member. It will incur significant reductions in revenue from non-oil sources generated at the border posts, it will severely retard any serious growth in its agricultural sector because of ardent competition from Kenyan and Ugandan goods rendered cheaper by zero tariffs, It will face a demoralized local labor force unable to compete with legions of workers from its southern borders, and it should expect a backlash from disgruntled Ethiopia, Congo and Sudan as a result of the higher common tariffs on non-EAC imports, even if there trade volumes with us are dwarfed by those from the EAC countries.
Paul Collier, the Oxford Professor briefly tackled the problems associated with regional groupings like the EAC in his book, the Bottom Billion. He noted that many of these schemes have not dramatically changed the lives of citizens from the poor member states even as they became more popular, generally because of the small size of the resultant economy after integrating all these small markets. Further more, he notes that poor-country clubs generally lead to divergence, instead of the hoped for convergence among member states. Insidiously however, this divergence generally benefits the country closest to the global average, which of course in a poor-country club would be the richest country. Conversely, the poorest country among the members would lose in this scheme and in fact end up propping up the more prosperous sister countries at the expense of its own development. In the current context, South Sudan would be this poorest of the EAC countries, notwithstanding all the talk about our oil wealth, and Kenya would be the richest and closest to the global average, with Uganda and Rwanda hovering in the middle.
Having enumerated all these problems I see with the EAC membership application, I must note that increasing trade and removing barriers to greater integration with our neighbors remain imperative. A good example is the Lamu Port-Southern Sudan-Ethiopia Transport (LAPSET) project between South Sudan, Kenya and Ethiopia that would certainly bring enduring benefits to all three countries. However, we need to maintain the requisite flexibility and agility as we develop our economy that would not be possible with accession and commitment to the ironclad provisions of the EAC treaty. We can develop bilateral agreements with all these neighboring countries without imperiling the development of our own local industries and labor base, and without depriving our markets from cheaper or better goods from other countries. It is therefore obvious that the optimal time for joining the EAC is years if not decades away, and it seems much more prudent to put our fragile house in order first.
Much more importantly, our government must recognize that this is a momentous step with far reaching repercussions for us and future generations, and it should not be treated as a simple public relations campaign to charm our neighbors. At the time of this writing, Tanzania, a founding member and host of the EAC Secretariat in Arusha, has been stirring up a big argument complaining about fairness within the EAC and insinuations that other members were conspiring to push it out of the Community. This shows that membership in a trade grouping is no walk in the park, and you better come prepared for serious elbowing and scraping even as everyone facetiously sings hymns of brotherly love.
Parek Maduot is a South Sudanese living in Juba. He can be reached via email – mailto:[email protected]@hotmail.com