REGIONAL

INTEGRATION
BY

FAITH MATHENGE
KENYA SCHOOL OF REVENUE ADMINISTRATION
PRESENTATION OUTLINE

1 • Learning Goal and Outcomes

2 • Introduction and Stages of Regional

Integration

3 • Regional Economic Communities in

Africa

4 • Challenges and Opportunities

 LEARNING GOAL
• At the end of this lesson, each participant
should be able to apply the concept of regional
integration in selection of applicable rules of
origin.
 LEARNING OUTCOMES
At the end of this lesson, each participant should be able
to:
1. Define the term regional integration;
2. Discuss the six common stages of regional integration;
3. Explain possible advantages and disadvantages to
regional integration;
4. Discuss the integration background and practical
aspects of integration for EAC, COMESA and SADC;
and
5. Discuss the role of legal documentation supporting the
EAC, EAC Customs Union and EAC Common Market.
 INTRODUCTION
• Regional integration may be defined as:
 a process in which States enter into a regional organization
in order to increase regional cooperation and diffuse
regional tensions.
 an association of States based upon location in a given
geographical area, for the safeguarding or promotion of the
participants, an association whose terms are fixed by a
treaty or other arrangements.
 a preferential (usually reciprocal) agreement among
countries that reduces barriers to economic and non-
economic transactions.
• Past efforts at regional integration have often focused on:
 removing barriers to free trade in the region;
 increasing the free movement of people, labor, goods, and
capital across national borders;
 adopting regional stances on policy issues.
STAGES IN REGIONAL
INTEGRATION
Preferential Trade Area (PTA)

Free Trade Area (FTA)

Customs Union

Common Market

Economic & Monetary Union

Complete Economic
Integration
 PREFERENTIAL TRADE
AGREEMENTS
• A country applies preferential tariffs to imports from a
specific group of countries while maintaining autonomy
over tariffs to third parties.
• A typical example is the Preferential Trade Area of
Eastern and Southern African countries, which preceded
Common Market for Eastern and Southern Africa
(COMESA) from 1980 to 1998.
 FREE TRADE AREA
• A Free Trade Area (FTA) is a designated group of countries
that have agreed to eliminate tariffs, quotas and
preferences on most (if not all) goods between them.
• Members of an FTA completely eliminate tariffs against
each other, maintaining individual protection regimes for
trade with non-members.
• A good example is Southern African Development
Community (SADC), the Northern American Free Trade
Agreements (NAFTA), and COMESA.

NB: Students should familiarize themselves on which

States are members of SADC and COMESA
 CUSTOMS UNION
• In addition to the conditions applying to the FTA, a
Customs Union imposes a common external tariff (CET) on
trade with countries outside the union.
• Examples: Southern African Customs Union (SACU)
• Participant countries set up common external trade policy,
but in some cases they use different import quotas.
• One of the aims is to facilitate the movement of goods
throughout the Union.
 COMMON MARKET
• Apart from movement of goods and services, a Common
Market entails free movement of factors of production, for
example labor and capital.
• A common market is a Customs Union with common
policies on product regulation, and freedom of movement
of all the three factors of production (land, capital and
labor) and of enterprise.
• The goal is that movement of capital, labour, goods, and
services between the members is as easy as within them.
• An example is the East African Community Common
Market.
 ECONOMIC & MONETARY
UNION (EMU)
• Economic integration to the point of common fiscal,
monetary (currency) and social-economic policies.
• The largest economic and monetary union at present is the
Eurozone.
• The Eurozone consists of the European Union member
states that have completed the third stage of the EMU by
adopting the Euro.
• Some non-EU members have also adopted the Euro, but
they are not part of this EMU.
• The EU integration is a supranational form of union, that
is not yet completed economic integration (‘federation’)
such as USA.
 COMPLETE ECONOMIC
INTEGRATION
• This is the final stage of economic integration.
• It constitutes a unified economic structure and regulation.
• After complete economic integration, the integrated units
have no or negligible control of economic policy,
including full monetary union and complete or near-
complete fiscal policy harmonization.
• Complete integration can involve ‘political union’ which
takes the form of a ‘Federation’, examples of which
include the United States of America and the Federal
Republic of Germany, where there is a unified economic
structure and regulation.
 SUMMARY- REGIONAL
INTEGRATION PROCESS
Integration Stages Integration Elements
Reduced No Common Free Harmoniza Common
Tariffs & Tariffs External movement tion of political
Quotas & Tariff of FOP & Economic institutions
Quotas Enterprise policies
PTA √
FTA √ √
Customs Union √ √ √
Common Market √ √ √ √
Economic & √ √ √ √ √
Monetary Union
Full Economic √ √ √ √ √ √
Integration
 REGIONAL INTEGRATION
IN AFRICA
• The Common Market for Eastern and Southern Africa
(COMESA), whose 21 members include all East
African countries except Tanzania and seven countries
of Southern Africa.
• The Economic Community of Central African States
(ECCAS), whose 11 members span Central Africa.
• The East African Community (EAC), made up of 7
Partner States: Kenya, Uganda, Rwanda, Burundi and
SADC member Tanzania, South Sudan and DRC.
 REGIONAL INTEGRATION
IN AFRICA
• The Economic Community of West African States
(ECOWAS), whose 15 members encompass all of West
Africa.
• The Inter-Governmental Authority on Development
(IGAD), comprising 7 countries in the Horn of Africa
and the northern part of East Africa.
• The Southern African Development Community
(SADC), whose 14 members cover all of Southern
Africa.
• African Continental Free Trade Area (AfCFTA) with 41
State Parties already ratified the agreement.
 ADVANTAGES OF REGIONAL
INTEGRATION
• Trade creation
• Increased economic growth
• Institutional development
• Human capital development
• Increased regional security
• Common development projects
• Increased bargaining power
• Governance
POSSIBLE DISADVANTAGES OF
INTEGRATION
• Trade Diversion

• Reduced government revenue from tariffs

• Minimized discretionary powers by a Partner States e.g.
on granting of exemptions
• Unclear effect on global welfare- Changes in trade
volume may lower world prices because of more demand
for goods originating from an integration area and less
demand for the same goods originating from outside it
because tariffs make them more expensive.
 EAC INTEGRATION
• The EAC established a Customs Union in 2005 and full-
fledged union with zero internal tariffs as from 2010.
• The EAC in fast tracking its economic integration process
has ratified since July 2010 a more far-reaching common
market protocol and in November 2013, they signed a
protocol on the monetary union.
• The integration agenda of the EAC is strongly political in
nature as its ultimate goal is to become a federation.
 Cont…EAC INTEGRATION
1900: Mombasa established as a Customs collection centre for Uganda
1905: Currency Board set up to issue currency for Kenya and Uganda
1917: Customs Union established between Kenya and Uganda – Tanganyika joined in 1927
1948: East African High Commission established
1961: Common Services Organization established (East African Posts and Telecommunications, East
African Railways & Harbors, East African Airways, East African Air Aviation Services, East African
Development Bank
1967: The treaty establishing the community Signed
1977: The then community collapsed
1984: Mediation agreement signed for division of assets and liabilities
1993-2000: East African Co-operation
2000: The treaty entered into force, following ratification by original 3 partner states – Kenya, Uganda,
Tanzania.
2001: Launching of the Second East African Community Development Strategy (2001-2005) by the East
African Heads of State
2007: The Republic of Rwanda and Republic of Burundi acceded
 OBJECTIVES OF THE EAC
• Promotion of a sustainable growth and equitable
development of the region, including rational utilization of
the region's natural resources and protection of the
environment;
• Strengthening and consolidation of the longstanding
political, economic, social, cultural and traditional ties and
associations between the peoples of the region in
promoting a people-centered mutual development;
• Enhancement and strengthening of participation of the
private sector and civil society;
 OBJECTIVES OF THE EAC
• Mainstreaming of gender in all its programmes and
enhancement of the role of women in development;
• Promotion of good governance, including adherence to the
principles of democracy, rule of law, accountability,
transparency, social justice, equal opportunities and gender
equality
• Promotion of peace, security and stability within the region.
 THE EAC CUSTOMS UNION
• The EAC countries established a Customs Union in 2005.
• In the theory of economic integration, a Customs Union is
supposed to be the third stage of integration after a
Preferential Trade Area and a Free Trade Area.
• However, the Treaty for the Establishment of the East
African Community provided that a Customs Union would
be the first stage in the process of economic integration for
the EAC.
 THE EAC CUSTOMS UNION
• A Customs Union brings about greater competition
among domestic firms.
• In the short run, the firms that stand to gain most are
those that are already competitive.
• It is with this consideration that the principle of
asymmetry was adopted in the phasing out of internal
tariffs, in order to provide firms located in Uganda and
Tanzania with an adjustment period of five years.
 SCHEDULE 1 OF THE EAC CET
Four Tariff Bands:

• 0% raw materials, plant & machinery & medicaments

• 10% intermediate materials

• 25% finished products

• 35% others finished goods e.g. whose importation is

discouraged to protect local industry
 SCHEDULE 2 – THE LIST OF
SENSITIVE GOODS
• The applicable rates on these goods shall be over and above
the CET rates.
• These rates accord protection to the goods deemed to be of
economic importance in East Africa.
• Sensitive products wherever they appear in schedule 1 will
be indexed for ease of reference.
 LEGAL FRAMEWORK OF THE
EAC CUSTOMS UNION
Section 252 & 253 OF THE EACCMA 2004:
• The provisions of the Partner States’ customs laws in
force at the commencement of the EACCMA 2004, in
relation to duty payable, shall continue to apply so far
as it is not inconsistent with the EACCMA.
• The EACCMA 2004 takes precedence over the partner
states’ customs laws
 DOCUMENTS PROVIDING
LEGAL FRAMEWORK TO EAC
CUSTOMS UNION
• The Treaty for Establishment of the East African Community
• Protocol on the Establishment of the East African
Community Customs Union
• The East African Community Customs Management Act
2004
• Annexes to the Protocol on the establishment of the East
African Community Customs Union: The EAC Common
External Tariff ; The Programme for Elimination of Internal
Tariff ; The Rules of Origin; and The Safeguard Measures
 EAC COMMON MARKET
• The Protocol on the Establishment of the East African
Community (EAC) Common Market entered into force on
1st July 2010, following ratification by all the five Partner
States: Burundi, Kenya, Rwanda, Tanzania and Uganda.
• The Protocol was signed by the Heads of States on 20th
November 2009, coinciding with the 10th Anniversary
celebrations of the revived Community.
• The establishment of the East African Community Common
Market is in line with the provisions of the EAC Treaty
which provides for “Four Freedoms”: Free movement of
goods; labor; services; and capital.
• These freedoms will significantly boost trade and
investments and make the region more productive and
prosperous.
 EAC COMMON MARKET
OBJECTIVES
• Accelerate economic growth and development through the
attainment of free movement of goods, labour, services,
capital, persons, and right of establishment and residence;
• Strengthen, coordinate and regulate the economic and
trade relations among Partner States in order to promote
their accelerated harmonious and balanced development;
• Sustain expansion and integration of economic activities,
the benefit of which shall be equitably distributed.
• Promote common understanding and cooperation among
the people of EA for their economic, social, cultural and
technological advancement.
 LEGAL FRAMEWORK OF THE
EAC COMMON MARKET
• Relevant annexes which are an integral part of the Protocol:
i. Free Movement of Persons
ii. Free Movement of Workers
iii.Right of Establishment
iv.Right of Residence
v. Schedule of Commitments on the Progressive
Liberalisation of Services
vi.Schedule on the Removal of Restrictions on the Free
Movement of Capital
 EAC COMMON MARKET
• EAC Common Market Protocol provides for 7 freedoms:
● Free Movement of Goods

● Free Movement of Persons

● Free Movement of Labor/ Workers

● Right of Establishment

● Right of Residence

● Free movement of Services

● Free Movement of Capital

 FREE MOVEMENT OF GOODS
• It allows intra-trade in goods locally produced within the
region.
• The free movement of goods between the Partner States as
provided in Article 6 shall be governed by the Customs Law
of the Community as specified in Article 39 of the Protocol
on the Establishment of the East African Community
Customs Union.
 FREE MOVEMENT OF
PERSONS
• The right to free movement of persons include:
i. the right to enter the territory of a Partner State
without a visa;
ii. the right to move freely within the territory of a
Partner State;
iii. the right to stay in the territory of a Partner State;
iv. the right to exit without restrictions;
v. and the right to full protection by the laws of a Partner
State.
 FREE MOVEMENT OF LABOR/
PERSONS
• The Common Market Protocol allows workers from any Partner
State to accept employment within any other EAC country.
• They cannot be discriminated against on the basis of their
nationality.
• A worker will have the right to social security benefits and can be
accompanied by a spouse and child.
• Employment in the public service is excluded unless permitted
by the Partner State.
 RIGHT OF RESIDENCE
• EAC citizens will be guaranteed the right to reside in any
Partner State, along with their spouse and child, for the
purpose of employment.

• The host Partner State has the obligation to issue residence

permit for specified periods.
• The enjoyment of the rights is subject to limitations
justified on grounds of public policy, public security or
public health.
• A Partner State imposing such limitation shall be obliged
to notify the other Partner States accordingly.
 SCHEDULE OF
COMMITTMENTS ON TRADE
IN SERVICES
• Service suppliers, providers and consumers from across the
region will be guaranteed equivalent treatment to local
providers.
• Partner States shall progressively open up some subsectors
within the following 7 broad sectors over the period 2010 -
2015:
• Business and Professional • Financial Services
Services • Tourism and Travel Related
• Communication Services Services
• Distribution Services • Transport Services
• Educational Services
 FREE MOVEMENT OF CAPITAL
• Under the Common Market Protocol, Partner States agreed
to remove all barriers and restrictions on the movement,
sale, investment and payments of capital.
• Partner States have also agreed to remove any
discrimination based on the nationality or on the place of
residence of the persons or on the place where the capital is
invested.
 CLASS DISCUSSION
• Discuss the challenges in implementation of the
Protocol on Establishment of the EAC Common
Market.
• Give recommendations for dealing with the above
identified challenges.
• Explain in detail the roles of the different organs of the
East Africa Community.

Resource for further reading on EAC:

https://www.tralac.org/resources/by-region/eac.html
COMMON MARKET FOR EAST &
SOUTHERN AFRICA
 COMMON MARKET FOR EAST
& SOUTHERN AFRICA
• The COMESA Trade Agreement brings together countries in
Eastern, Southern and North Africa in a Free Trade Area.
• COMESA has a membership of 21 member states.
• COMESA’s strategy is to pursue regional integration
through trade and investments i.e. creating a single market
for goods and services and a common investments area.
• The approach is open regionalism i.e. integrating regionally
without crowding out the global economy.

• It launched its Customs Union in 2009.

 COMESA INTEGRATION
AGENDA
• Preferential Trade Area (PTA) – 1982 – 1994

• Up until 1994, COMESA was known as the Preferential

Trade Area for Eastern and Southern Africa.
• Free Trade Area (FTA) – October 2000
• Customs Union – launched in 2009
• Common Market 2015
• Monetary Union – 2025

• Economic Community
 COMESA OBJECTIVES
• To generate self-sustaining economic growth through
collective action in all fields of economic activity
• To create a fully integrated and internally competitive
region where goods and services, capital, labour move
freely.
• To achieve common policies with intent to achieve
structural change and regional development.
 THE COMESA CUSTOMS
UNION
• The COMESA Treaty recognizes that member states are at
different levels of development and are faced with a varied
range of capacity, economic and developmental
limitations.
• The Treaty, therefore, allows for variable geometry among
member states. This means that all COMESA countries
have not joined the FTA (trading on PTA basis) before the
region embarks on a Customs Union.
• Some countries in the COMESA are not yet participating in
the FTA for genuine reasons among which are the national
security situation in the countries and the ongoing
administrative and institutional reforms which would
enhance capacity for the smooth implementation of the
FTA.
 THE COMESA CUSTOMS
UNION
• The Summit of the COMESA Authority of Heads of State and
Government took place on 7-8th June 2009 at Victoria Falls in
Zimbabwe to launch the COMESA Customs Union.
• The COMESA Authority endorsed the key principles and rules that will
be the basis for the operation of the Customs Union that the Ministers
had adopted:
i. The Council Regulations Governing the COMESA Customs Union –
They provide for establishment of the Customs Union, the internal
free trade area, relations with third countries including the
application of the CET, trade remedies, export promotion, and
dispute settlement.
ii. The Common Market Customs Management Regulations- They
provide for the imposition and collection of duties and taxes; the
control, management and administration of Customs; the
conclusion of Customs and Trade Agreements and other matters.
 SOUTHERN AFRICA
DEVELOPMENT COMMUNITY
• SADC has a membership of 15 countries: Angola, Botswana, DRC, Lesotho,
Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South
Africa, Swaziland, Tanzania, Zambia and Zimbambwe.
• It has from its inception committed itself to pursue policies aimed at
economic liberalization and economic development.
• In 1992 when SADC was transformed, the member countries committed
themselves to a concerted effort to achieve deeper regional integration as a
means of attaining economic growth and eventually reducing poverty.
• Emphasis on a common agenda:
i. Trade, Industry, Finance and Investments (TIFI);
ii. Infrastructure and Service;
iii. Food, Agriculture and Natural Resources,
iv. Social and Human Development and Special Programmes.
 Cont…SADC
• SADC’ s road to a Monetary union is outlined in the
Regional Indicative Strategic Development Plan which is a
broad strategic plan for implementing programmes for
achieving key milestones that will ensure the realization of
a Monetary Union in SADC.
• These key milestones include as a first step the attainment
of a SADC Free Trade Area (FTA) by 2008.
• This milestone was reached when the Heads of States and
Government in SADC launched the FTA in August 2008.
• The next milestone is the launch of Customs Union by
2010, and a common market by 2015 which will be followed
by the establishment of a SADC central bank by 2016 and
eventually a SADC currency by 2018.
 SADC’s LEGAL
DOCUMENTATION
• Treaty establishing the organisation (SADC treaty);
• 27 legally binding protocols
• Development and cooperation plans such as the Regional
Indicative Strategic Development Plan (RISDP) and the
Strategic Indicative Plan of the Organ (SIPO);
• Declarations such as those on HIV and AIDS and food
security.
 CHALLENGES FACING SADC
MEMBER COUNTRIES
• SADC countries face many social, development, economic, trade,
education, health, diplomatic, defence, security and political challenges.
• Some of these challenges cannot be tackled effectively by individual
members. E.g. Cattle diseases and organised-crime gangs know no
boundaries; war in one country can suck in its neighbours and damage
their economies.
• The sustainable development that trade could bring is threatened by the
existence of different product standards and tariff regimes, weak customs
infrastructure and bad roads.
• Member states also participate in other regional economic cooperation
schemes and regional political and security cooperation schemes that may
compete with SADC's aims. E.g. South Africa and Botswana both belong to
the Southern Africa Customs Union, Zambia is a part of the Common
Market for Eastern and Southern Africa, and Tanzania is a member of the
East African Community.
AFRICAN CONTINENTAL FREE
TRADE AREA (AFCFTA)
 AFRICAN CONTINENTAL FREE
TRADE AREA (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 Union.
 CHALLENGES OF AFRICAN
REGIONAL INTEGRATION
STRUCTURAL TRADE POLICY

• Use of regional integration • Very little change in trade

to safeguard individual volumes before and after.
statehood. • Benefits are not clear.
• Hierarchical decision • The hegemon has market
making – political not access and dominance.
technical.
• Several membership in
• No sanctions for non- different regional
compliance (not rule integration.
based).
SPAGHETTI BOWL
CHALLENGE
THANK YOU FOR
LISTENING
Email: faith.mathenge@kra.go.ke