The East African Market: For Better or for Worse

Abstract

In a true Common Market, member countries not only abolish all tariffs among themselves and set up a joint Customs administration, but they also harmonise and follow uniform fiscal and monetary policies. If their policies are divergent it would be possible for some member countries to undermine others e.g. by imposing indirect duties or controls on some other members' products via an indirect taxation or subsidisation of certain of her own industries. Furthermore, a unified transpo t system and freedom of movements of factors of production within the CM, are other factors that promote a pure Common Market. All these are usually accomplished by some agreed set stages-e.g. as is being done by the European Economic Community (EEC.). In every case, these considerations imply that member governments must necessarily give up some of their sovereign powers in favour of the CM area as a whole if they intend to set up such an area. At the moment, the so called East African Common Market (EACM) is not really a Common Market at all. It is only a limited measure towards it; because the arrangements since the war, has included a number of artificial restrictions on the freedom of interterritorial trade. Incidentally, it is in part these impediments which have been responsible for the effect of denying Uganda (and to a lesser extent, Tanganyika) some of the benefits of a more thorough CM. Agreement on interterritorial trade and marketing policy plus a uniform fiscal policy would enable some of these disadvantages to be overcome. Anyway, what has been the important economic effect of this set up? Has East Africa really gained anything from it? It has been argued (e.g. by the Economic and Fiscal Commission on the working of the EACM 1961 that the CM has enabled East Africa to become a substantially unified market in the sense that a considerable proportion of all home produced goods are traded between the East African territories. Secondly, that it has been an important factor in the establishment of manufacturing industries in EA. in that the size of the EA market is important in relation to the minimum efficient scale of many