Reviewing the efficacy of the East African Community in regulating bilateral trade: a case study of Uganda and Rwanda

Abstract

There is evidence to show that international trade including regional trade is important in stimulating and developing economies of many countries (Lwin, 2009). As a result, many regional block nations have increasingly adopted regional economic integration initiatives like Free Trade Agreements (FTAs) to boost intra-regional trade. Free Trade Agreements are forms of trade pacts between countries which eliminate tariffs, quotas and other barriers on some or all traded goods between state parties. The aim is to increase bilateral trade between state parties by relaxing or removing institutional and economic barriers to trade. Trade agreements are instruments that have been widely implemented to enhance trade between countries like the North American FTA (NAFTA) between the USA, Canada and Mexico. Integration in the East African Community (EAC) was re-established in 1999 with the signing of the EAC Protocol. Over the years, the EAC party states have established economic links through an FTA (2001), a Customs Union (2005), and a Common Market (2010) with Burundi, Kenya, Rwanda, Tanzania and Uganda. Given the progress with intra-regional trade, the objective of the EAC countries is the establishment of the East African Monetary Union which will adopt a single currency projected by 2024. As trade is expected to flourish, it is important to examine factors that determine bi-lateral trade flows (Lwin, 2009), especially between Uganda and Rwanda which have motivated this study.