Services Trade under the East African Community Common Market Protocol

Services Trade under the East African Community Common Market Protocol

Memorandum for the International Trade Center submitted by Isaac Baker, Carolina Arias Estévez and Karen Bosman

Executive Summary

The East African Community (EAC) is the regional intergovernmental organization of the Republics of Burundi, Kenya, Rwanda, the United Republic of Tanzania, and the Republic of Uganda. The EAC countries established a Customs Union in 2005 and a Common Market in 2010. The next phase of the integration will see the bloc enter into a Monetary Union, with the ultimate goal being that of a Political Federation.

The Protocol on the Establishment of the EAC Common Market provides for “Four Freedoms”, namely the free movement of goods, labor, services, and capital. This paper is primarily focused on the free movement of services, and touches on  the other freedoms only insofar as they overlap with the movement of services.

The goal of the study is to highlight potential obstacles in the Protocol that may hamper the successful liberalization of trade in services within the EAC, and to provide recommendations as well as examples of alternative approaches with respect to regulating the progressive liberalization of services within the common market.

A preliminary investigation into the language and structure of the Protocol finds that there are ambiguities that need to be addressed. First, we show that the Protocol’s language leaves room to be interpreted as a negative, rather than positive, list approach. Second, we explain why the lack of a market access provision in the Protocol creates uncertainty regarding the scope of the commitments found in the EAC services schedule.

A further investigation into the structure of the Protocol shows that three separate instruments guarantee the free movement of persons and services, and that there is significant overlap between these instruments. This creates confusion, which is amplified by the fact that the movement of mode 4 service suppliers is linked to the free movement of workers.

It is suggested that a more clear, concise and transparent way of regulating the movement of mode 4 service suppliers would be by inserting definitions for different categories of service suppliers. Suggestions and guidelines are provided in this regard, taking into account specific principles for mode 4 negotiations that have been adopted by WTO members.

Our final investigation reveals that the liberalization of services trade may be hampered by a number of discrepancies that exist in the Schedule of Commitments on the Progressive Liberalization of Services (Annex V). These discrepancies include missing Central Product Classification (CPC) numbers, incorrect assignment of CPC numbers, and inconsistencies in CPC descriptions. We also compare Annex V and the GATS commitments of Partner States, finding that, although further liberalization  has been achieved through regional integration, there are still a number of GATS commitments that are more ambitious than those at the regional level. We suggest, in this regard, that the level of regional liberalization at least match that of multilateral liberalization.


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