The East African Community (EAC) is an intergovernmental organisation composed of five countries in the African Great Lakes region in eastern Africa; Burundi, Kenya, Rwanda, Tanzania, and Uganda. Jakaya Kikwete, the president of Tanzania, is the EAC's chairman. The organisation was founded originally in 1967, collapsed in 1977, and was revived on 7 July 2000. The East African Community is an international organization whose final aim is to develop a complete integration of its members into an East African Federation. The EAC is an integral part of the African Economic Community. The EAC is a potential precursor to the establishment of the East African Federation, a proposed federation of its members into a single sovereign state. In 2010, the EAC launched its own common market for goods, labour, and capital within the region, with the goal of creating a common currency and eventually a full political federation. The geographical region encompassed by the EAC covers an area of 1,820,664 sq-km with a combined population of about 149,959,317(2013 est.)

The drive for the transformation of the East African region, particularly Kenya, Tanzania and Uganda, into a functioning entity with rights and duties in International Relations is not new. It dates back to the time when the three East African colonies were still objects of International Law. However, the aspirations for regional cooperation in East Africa acquired individual sovereignty and legitimacy in the post colonial state in the 1960s driven largely by the Pan-Africanist East African leaders, Jomo Kenyatta (Kenya), Julius K. Nyerere (Tanzania) and Milton A. Obote (Uganda). More specifically, the three East African leaders were, initially at least, interested in ushering in political federation as a springboard for regional integration. This desire was reinforced with their 1963 Nairobi Declaration in which the leaders committed themselves to establishing an East African political federation in 1964 reiterating, among other things, that, “we believe a political federation of East Africa is desirable by our people. There is throughout East Africa a great urge for unity and an appreciation of the significance of federation”.
Realising that political federation objective was not achievable, the East African political and ruling elites under the leadership of, Kenyatta, Nyerere and Obote reconceptualised their strategy by opting for economic-driven neo-functionalist-cum-functionalist regional integration process. In 1967, the leaders signed the East African Co-operation treaty, which established the East African Community. The envisaged impact of economic co-operation on the EAC integration process with inherent spillover effect did not withstand the intra-and inter-national complexities and differences, culminating into the disintegration of the regional organization in 1977.
However, the disintegration of the EAC I, did not bury the aspirations of the East African ruling elites from re-establishing a viable regional organization for harnessing areas of co-operation. These aspirations were tangibly incorporated in the East African Community Mediation Agreement (hereinafter, the Mediation Agreement) concluded in 1984 by the three countries for purposes of the division of the EAC I assets and liabilities. Article 14 (2) of the Mediation Agreement, for example, provides that “the States agree to explore and identify further areas for future co-operation and to work out concrete arrangements for such co-operation” (Kenya 1988).
The East African Presidents met in Nairobi, Kenya, in November 1991 and set up a committee of Foreign Affairs Ministers with the mandate to explore the modalities for promoting further cooperation in the region. The negotiations by the Ministers culminated into the establishment of a Permanent Tripartite Commission (hereinafter, the Commission) for East African Cooperation in November 1993 and a Permanent Secretariat for the Commission in November 1996. The Secretariat for the Commission set in motion regional reconstruction and more specifically, the operational structures and functions of the East African Cooperation. The core mandate of the Commission was to lay the foundation for econo-political and socio-cultural development for the benefit of the people of the region. In order to achieve these objectives, the Commission developed specific strategic plans for action and implementation.
The Commission prepared the first East African Cooperation Development Strategy (EAC-DS) covering the period 1997-2000. The core objective was to, inter alia; upgrade the Mediation Agreement into a treaty, a mandate which was successfully accomplished. The treaty establishing the EAC II (hereinafter, EAC) was signed by Presidents Moi (Kenya), Museveni (Uganda), and Benjamin Mkapa (Tanzania) on 30th November 1999, which thereafter came into force on 7thy July 2000. The ratification of the treaty by Burundi and Rwanda has, in many respects, broadened the socio-economic and political scope of the EAC.
The EAC aims at widening and deepening co-operation among the Partner States in, among others, political, economic and social fields for their mutual benefit. To this extent the EAC countries established a Customs Union in 2005.

A customs union is a political structure entered into between two or more countries to establish a free trade market for member countries and create a common trade policy regarding nonmember countries including establishment of common trade barriers. 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 provides that a
Customs Union shall be the first stage in the process of economic integration. Therefore, real economic integration in the region will commence with the coming into being of the Customs Union. The Treaty provides that the Customs Union shall be followed by a Common Market, then a Monetary Union and subsequently a Political Federation.
According to Article 75 of The EAC Treaty, the Partner States agreed to establish a
Customs Union details of which would be contained in a Protocol to be concluded and signed within a space of four years. This shall, inter alia, include the following:
(a) The application of the principle of asymmetry;
(b) The elimination of internal tariffs and other charges of equivalent effect;
(c) The elimination of non-tariff barriers;
(d) Establishment of a common external tariff;
(e) Rules of origin;
(f) Dumping;
(g) Subsidies and countervailing duties;
(h) Security and other restrictions to trade;
(i) Competition;
(j) Duty drawback, refund and remission of duties and taxes;
(k) Customs co-operation;
(l) Re-exportation of goods; and
(m) Simplification and harmonisation of trade documentation and procedures. Therefore the key aspects of the customs union include:Common External Tariff; duty-free trade between the member states; and common customs procedures.
The objectives of the customs union are spelt out in Article 3 of the protocol. These are to; Further liberalize intra-regional trade in goods on the basis of mutually beneficial trade arrangements among partner states promote efficient production in the community Enhance domestic, cross-border and foreign investment in the community and Promote economic development and industrial diversification in the community
These objectives are in line with those of many other regional integration schemes that seek to promote development through trade. They imply that the main thrust of the customs union is to realise a viable intergrated East Africa which will stimulate production, investment and trade. This should then accelerate the socio-economic transformation of the EAC. It is within this context that internal tariffs and non-tariff barriers that could hinder trade between the partner states have to be eliminated, in order to facilitate formation of one large single market and investment area. Similarly, policies relating to trade between the partner states and other countries, such as the external tariffs, have to be harmonized. Therefore, within a customs union, partner states have to behave as a single customs territory and trading bloc.

The aim of creating a customs union is to enable partner states to enjoy economies of scale, with a view to supporting the process of economic development. Unlike in developed countries, economic integration is not just for purpose of trade per se, but as a vehicle for bringing about faster economic development. Nevertheless, a customs union on its own will not bring about faster economic development. Therefore, it has to be supported by other measures such as development of infrastructure, to link production areas to markets. In addition, measures to support development of human resources across the region are similarly important.

Establishment of the customs union has carried along various benefits to the partner states;

On average, the size of EAC countries is around 30 million people in population with a GDP of around US $10 billion. Such economies on their own are too small to attract any major meaningful investment in today’s globalised economy, where mass production is vital to reduce unit costs . The creation of one economic region through the Customs Union, EAC created a single market of over 90 million people and a combined GDP of around US$30 billion. This large economic region has become meaningful if it is more than a simple aggregation of neighbouring countries.

The EAC Customs Union has leveled the playing field for the region’s producers by imposing uniform competition policy and law, customs procedures and external tariffs on goods imported from non-partner countries, which has assisted the region to advance its economic development and poverty reduction agenda. Further to this, the customs union has promoted cross-border investment and attracted investment into the region, as the enlarged market with minimal customs clearance formalities, has been more attractive to the investors than the previously small individual national markets. In addition, the Customs Union has offered a more predictable economic environment for both investors and traders across the region, as regionally administered CET and trade policy is more stable.

Private sector operators based in the region with cross-border business operations have been able to exploit the comparative and competitive advantages offered by regional business locations, without having to factor in the differences in tariff protection rates, and added business transaction costs arising from customs clearance formalities. The regionally based enterprises have also gotten better protection, as enforcement of the CET will be at a regional level.

Customs Union plays an important role in Uganda’s overall external trade. Trade in manufactured goods is relatively more important than trade in agricultural commodities. This is attributed to a significant share of Uganda’s manufactured imports coming in from other countries in the region, most notably Kenya. With regard to trade in agricultural products, Uganda has had a surplus market within the region. In fact, Uganda is a net exporter of agricultural products and electricity to Kenya, Tanzania and Rwanda, but it also imports large quantities of manufactured Products, mainly from Kenya.

The table below shows Uganda’s Export performance (US$ Million) before and after the establishment of the customs union

BEFORE AFTER | Country of Destination | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | Exports (Domestic and re-exports) | Burundi Kenya Rwanda Tanzania Total ROW | 6.3 61.5 12.9 5.8 86.4 381.2 | 10.1 78.4 20.8 5.8 115.1 419.0 | 18.1 76.9 24.7 12.2 131.9 553.2 | 20.8 72.4 36.1 15.5 144.8 668.1 | 20.6 88.0 30.5 13.8 152.8 809.4 | 42.8 118.2 83.3 30.6 274.8 1,061.9 |
Source: Uganda Bureau of Statistics

As Table above shows, Kenya remains Uganda’s biggest market in the region followed by Rwanda in the same period
. The above notwithstanding, exports to the region grew significantly in the years before (2003 – 2004) and especially after the launch of the Customs Union in 2005. Exports to the region grew.

The strides taken by the EAC to have a Customs Union Protocol in force made it attractive to other countries such as Rwanda and Burundi to accede the Treaty in 2006. The latter two countries became fully fledged members of the EAC in July 2007, and started to implement the Customs Union in 2009. The Republic of Southern Sudan has applied to join the EAC and the process of evaluating her admission is ongoing. Currently the EAC is recognized globally and representatives from various countries and international organisations have submitted their credentials to the Secretary General of the East African Community. There are other countries envying to join the regional bloc, as the Summit of EAC Heads of State and Government have said in their 2011 Communique.(http://ecdpm.org)

The East African Legislative Assembly (EALA) has passed several community laws and the Council of Ministers has established various Sectoral Councils to oversee policy issues in the regional integration progress. There is mutual recognition of standard marks across the region where the bureaus of standards have developed an EAC catalogue of Standards. In pursuit of facilitating trade the EAC customs Union has embarked on a mission to establish One Stop Border Posts that have already been articulated within the auspices of the Community Law. and the EAC Council of Ministers has recently approved the ‘EAC Customs Valuation Manual, a document which provides guidelines on how to implement and uniformly interpret EAC Customs valuation provisions within the Community and therefore helps overcome challenges in this respect.(http://ecdpm.org)

Traders now have a wider source of goods therefore, bargaining power in dealing with suppliers resulting in cost savings for their customers. Because the CU removed border controls and trade barriers, importing goods has become faster since traders do not have to go through so many customs procedures in different countries. This has reduced transaction costs and results in timely deliveries. Consumers have also gotten a wider choice of goods and they have also benefited from the advantages of increased productivity which has led to lower prices.

Uganda, Rwanda and Burundi have gotten access to the sea, and in actual terms are no longer landlocked, given that their goods are cleared at first port of entry and have free circulation rights when moving to such, countries as all customs formalities have been discharged at the port of entry.

Despite these progress made throughout the years, some challenges remain noteworthy when it comes to the implementation of the EAC Customs Union.

Implementing the CET has been challenging to the Partner States. Customs valuation procedures have been varying, resulting in different computed values for taxation. Since 2005, Uganda has produced a list of industrial products that are exempted from the CET. A similar list of industrial inputs is in place for Rwanda and Burundi. Moreover, the United Republic of Tanzania, as a member of both the Southern African Development Community (SADC) and the EAC, has taken integration commitments in both regional contexts, thereby having to implement two CET, one being for EAC and the other for SADC. Likewise, the remaining four –members of the EAC are also members of the Common Market for Eastern and Southern Africa (COMESA), thus facing similar challenges as the one encountered by Tanzania in terms of multiple commitments taken in the contexts of various integration agenda.

Member countries have given up some degree of sovereignty (the power to control their own actions) upon entering this customs union. For example, Uganda has to given up some control over fiscal policy especially taxing and also unilateral decisions on tariffs, duties and sales taxes.

While the custom unions can protect domestic industries, they will not always protect domestic member industries, because now industries from the member states can compete against them uninhibited by normal trade barriers such as tariffs. In Uganda, big stores from Kenya such as NAKUMAT have entered into the Ugandan market and doing well against the Ugandan Stores.

In view of the current global trend where trade negotiations are increasingly being carried out under regional blocs, formation of a customs union in East Africa was not a matter of choice but a necessity. It would be difficult for partner states to negotiate a Free Trade Area (FTA) with other regional blocs unless they have liberalized trade among themselves. Due to the multiple memberships of the partner states in other regional organizations, the EAC Customs union can enter into a FTA with other trading blocs, or in the extreme circumstance, merge with them to make a larger trading bloc. The process of regional integration as stipulated in the Treaty for the Establishment of the East Africa Community aims at creating opportunities for the East African people. This has been made easier for the East African people to realize such opportunities through the formation of a Customs Union. Therefore, formation of the EAC Customs Union was a necessary step towards translating provisions of the Treaty into economic opportunities for the East African people.