Unmaking of a customs union: Regional (dis)integration in the East African community

Working paper Firms and Trade

The Common External Tariff (CET) of the East African Community (EAC) customs union has long been considered the cornerstone of one of the more successful examples of regional integration in Sub-Saharan Africa. In this project we assess the integrity of the CET using a novel dataset of country- and firm-level deviations from the common tariff regime created by digitizing information published in the gazettes of the EAC secretariat between 2009 and 2019. Using these data, we present five findings on the state of the EAC customs union and the tariff policy of its members: (i) Increased usage of country-level deviations from the common tariff schedule has rendered the Common External Tariff of the customs union less and less “common”; (ii) Kenya, Tanzania and Uganda predominantly use unilateral deviations to increase external protection while Rwanda makes use of the same mechanism mostly to decrease tariffs; (iii) Kenya, Tanzania and Uganda increase tariffs for the same broad classes of products, but target different industries; (iv) Unilateral tariff reductions at the country level are mostly used to facilitate access to inputs rather than to improve consumer welfare; (v) Data on firm-level exemptions through the EAC Duty Remission Scheme suggest that private sector development in the EAC would benefit from lower tariffs on intermediate inputs. Taken together, our findings emphasize the importance of a comprehensive review of the Common External Tariff and yield a number of relevant questions for further research on tariffs and exemptions schemes in the EAC.