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PROTOCOL ON THE ESTABLISHMENT OF THE EAST AFRICAN COMMUNITY COMMON MARKET

PROTOCOL ON THE ESTABLISHMENT OF THE EAST AFRICAN COMMUNITY COMMON MARKET. Outline. Background and Mandate What is a Common Market Benefits of a Common Market Protocol on the Establishment of the EAC Common Market Outstanding Work Operational Challenges and Ongoing Interventions.

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PROTOCOL ON THE ESTABLISHMENT OF THE EAST AFRICAN COMMUNITY COMMON MARKET

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  1. PROTOCOL ON THE ESTABLISHMENT OF THE EAST AFRICAN COMMUNITY COMMON MARKET

  2. Outline Background and Mandate What is a Common Market Benefits of a Common Market Protocol on the Establishment of the EAC Common Market Outstanding Work Operational Challenges and Ongoing Interventions

  3. Background and Mandate Article 5(2), 76 and 104 of The Treaty on the Establishment of the East African Community. Having established the EAC Customs Union in January 2005, the next stage was the establishment of the EAC Common Market. Mandate to embark on the second stage was derived from the 11th Meeting of the Council of Ministers and subsequently confirmed by the Summit. Council Decision to Negotiate Articles 76 and 104 under one Protocol.

  4. What is a Common Market Higher level of regional economic integration of two or more countries that encompasses the free movement of goods, services, labour and capital plus the right of establishment and residence. Involves greater harmonisation of macro economic policies including tax regimes to minimise distortions in the market.

  5. Benefits of a Common Market Effective, efficient, and sustainable market enlargement is the principal purpose of regional integration as it is the single “crucible of benefits” for the entire population in the common area. It results into increased competition, increased specialisation, larger economies of scale and increased efficiency in resource allocation. The primary benefit is a fostering and enhancement of a faster economicgrowthrate, from which a host of (i) economic (ii) social and (iii) political benefits then flow.

  6. Principles of the EAC Common Market • Guided by the fundamental and operational principles of the Community under Articles 6 and 7 of the Treaty. • Partner States undertake to: • Observe the principle of non-discrimination of nationals of other Partner States on grounds of nationality. • Accord treatment to nationals of other Partner States, not less favourable than the treatment accorded to third parties • Ensure transparency in matters concerning the other Partner States. • Share information for the implementation of the Protocol.

  7. Objectives of the EAC Common Market • The specific objectives are: • accelerate economic growth and development of the Partner States through the attainment of the free movement of goods, persons and labour, the rights of establishment and residence and the free movement of services and capital; • strengthen, coordinate and regulate the economic and trade relations among the Partner States in order to promote accelerated, harmonious and balanced development within the Community; • sustain the expansion and integration of economic activities within the Community, the benefit of which shall be equitably distributed among the Partner States; • promote common understanding and cooperation among the nationals of the Partner States for their economic and social development; and • enhance research and technological advancement to accelerate economic and social development.

  8. Scope of Cooperation in the EAC Common Market The provisions of the Protocol shall apply to any activity undertaken in cooperation by the Partner States to achieve the free movement of goods, persons, labour, services and capital and to ensure the enjoyment of the rights of establishment and residence of their nationals within the Community. Partner States further agreed to cooperate in a number of other areas including education, cross border investments, economic and financial policies, competition and consumer welfare, trade relations, transport policies, social policies, environment and natural resources management, statistics, research and technological development, intellectual property rights, industrial development and agriculture and food security.

  9. Free Movement of Goods • Provided for under Article 6 of the Protocol • Article 6(1) - The free movement of goods between the Partner States shall be governed by the Customs Law of the Community as specified in Article 39 of the Protocol on the Establishment of the East African Community Customs Union.

  10. Free Movement of Persons and Labour • Free Movement of Persons • Article 7(1) - The Partner States hereby guarantee the free movement of persons who are citizens of the other Partner States, within their territories. • Key principle of non discrimination. • The above right is subject to limitations on grounds of public policy, public security or public health. • Implementation is in accordance with Annex I of the Protocol – a pass issued free of charge and entitles one to stay for up to six months. Student pass shall be issued free of charge and renewed annually over the duration of the study.

  11. Free Movement of Persons and Labour • Travel Documents • Article 9 - Partner States which have agreed to use machine - readable and electronic national identity cards as travel documents may do so and shall work out the necessary modalities. Presentation to EAC Retreat

  12. Free Movement of Persons and Labour • Free Movement of Workers • Article 10 (1) - The Partner States hereby guarantee the free movement of workers, who are citizens of the other Partner States, within their territories. • Key principle of non discrimination. • A worker shall have the right to be accompanied by a spouse and children who shall be entitled to be employed. • Employment in the public service is excluded unless permitted by the Partner State. • The above right is subject to limitations on grounds of public policy, public security or public health. • Implementation is in accordance with Annex II of the Protocol.

  13. Free Movement of Persons and Labour • Schedule for the Free Movement of Workers • Using the ILO classification, Partner States committed themselves to open up for the following categories of workers • Burundi – Professionals – by 1st July 2010. • Kenya – Managers, Professionals, Technicians and Associate Professionals, and Craft and Related Trades Workers – by 1st July 2010. • Rwanda – Professionals, and Technicians and Associate Professionals –by 1st July 2010. • Tanzania – Professionals, and Technicians and Associate Professionals – ranging from by 1st July 2010 to 2015. • Uganda – Managers, Professionals, and Craft and Related Trades Workers – by 1st July 2010. • Negotiations to continue on Clerical Support; Service and Sales; Skilled Agricultural, Forestry and Fishery; Plant and Machine Operators; and Assemblers and Elementary Occupations. i

  14. Rights of Establishment and Residence • Right of Establishment • Article 13 (1) - The Partner States hereby guarantee the right of establishment of nationals of the other Partner States within their territories. • Key principle of non discrimination for workers, self employed persons and fims. • Article 13 (4) - The rights applicable to a spouse, child and dependant of a worker under Article 10 of this Protocol shall apply to the spouse, child and dependant of a self employed person. • The above right is subject to limitations on grounds of public policy, public security or public health. • Implementation is in accordance with Annex III of the Protocol - a pass is issued free of charge and entitles one to stay for up to six months. Work permit to be issued for an initial period of 2 years in accordance with harmonised fees as approved by Council. Denial of a work permit shall have to be communicated in writing.

  15. Rights of Establishment and Residence • Right of Residence • Article 14 (1) - The Partner States hereby guarantee the right of residence to the citizens of the other Partner States who have been admitted in their territories in accordance with Articles 10 and 13 of this Protocol. • Article 14 (2) - The right of residence guaranteed under paragraph 1, shall apply to the spouse, child and a dependant of a worker or self-employed person entitled to rights provided in Articles 10 and 13 of this Protocol. • Article 14 (7) - The Partner States hereby agree that matters relating to permanent residence shall be governed by the national policies and laws of the Partner States. • Implementation is in accordance with Annex IV of the Protocol - Denial of a residence permit shall have to be communicated in writing.

  16. Rights of Establishment and Residence • Access to and Use of Land and Premises • Article 15 (1) - The Partner States hereby agree that access to and use of land and premises shall be governed by the national policies and laws of the Partner States. • Article 15 (2) - The rights provided under Articles 13 and 14 in as far as they relate to access to and use of land and premises shall be subject to this Article.

  17. Free Movement of Services • Free Movement of Services • Article 16 (1) - The Partner States hereby guarantee the free movement of services supplied by nationals of Partner States and the free movement of service suppliers who are nationals of the Partner States within the Community. • The free movement of services shall cover: • The supply of services from the territory of a Partner State into the territory of another Partner State (Mode I – e.g where a service is supplied electronically); • The supply of services in the territory of a Partner State to service consumers from another Partner State (Mode II – e.g tourism and education); • The supply of services by a service supplier of a Partner State, through the commercial presence of the service supplier in the territory of another Partner State (Mode III – e.g KCB, Nakumatt and Uchumi in Uganda); and • The supply of services by the presence of a natural person, who is a citizen of a Partner State, in the territory of another Partner State (Mode IV – e.g professional services like lawyers, doctors accountants, engineers etc).

  18. Free Movement of Services • Free Movement of Services • Key principle of non discrimination – nationals from other Partner States to be treated under the same conditions as are applicable to the nationals of that Partner State. • Article 17 – National Treatment - Each Partner State shall accord to services and service suppliers of other Partner States, treatment not less favourable than that accorded to similar services and service suppliers of the Partner State. • Article 18 – MFN Treatment - Each Partner State shall upon the coming into force of this Protocol, accord unconditionally, to services and service suppliers of the other Partner States, treatment no less favourable than that it accords to like services and service suppliers of other Partner States or any third party or a customs territory. • Implementation is in accordance with Annex V of the Protocol

  19. Free Movement of Services • Schedule of Commitments on the Liberalisation of Services • Partner States have committed themselves to progressively open up some subsectors within the following 7 broad sectors over the period 2010 - 2015: • Business and Professional Services • Communication Services • Distribution Services • Educational Services • Financial Services • Tourism and Travel Related Services • Transport Services • Partner States will make commitments on the remaining 5 sectors (Health Related and Social Services, Construction and Related Engineering Services, Environment Services, Recreational, Cultural and Sporting Related Services, and other services not included elsewhere) plus deeper commitments on the above indicated 7 service sectors in line with Article 23 (2) of the Protocol.

  20. Free Movement of Capital • Elimination of Restrictions on the Free Movement of Capital • Article 24 (1) - Except as provided in this Part, the Partner States shall upon the coming into force of this Protocol: • remove restrictions between the Partner States, on the movement of capital belonging to persons resident in the Community; • remove any discrimination based on the nationality or on the place of residence of the persons or on the place where the capital is invested; • remove any existing restrictions and shall not introduce any new restrictions on the movement of capital and payments connected with such movement and on current payments and transfers, or apply more restrictive regulations; and • remove restrictions relating to current payments connected with the movement of goods, persons, services or capital between Partner States in accordance with the provisions of this Protocol. • Implementation is in accordance with Annex VI of the Protocol • Kenya, Rwanda and Uganda have already opened up their capital accounts. • Burundi and Tanzania will open up within the period 2010 - 2015

  21. Other Areas of Cooperation in the Common Market • Protection of Cross Border Investments • Article 29 (1) - The Partner States undertake to protect cross border investments and returns of investors of other Partner States within their territories. Part XXII Articles 86, 87 and 88 of the Draft Protocol. • Among others, the Partner States shall ensure: • non- discrimination of the investors of the other Partner States, by according, to these investors treatment no less favourable than that accorded in like circumstances to the nationals of that Partner State or to third parties; • that in case of expropriation, any measures taken are for a public purpose, non-discriminatory, and in accordance with due process of law, accompanied by prompt payment of reasonable and effective compensation.

  22. Other Areas of Cooperation in the Common Market • Economic and Monetary Policy Coordination • Article 30 (1) - For the proper functioning of the Common Market, the Partner States shall co-ordinate and harmonize their economic and monetary policies to ensure macroeconomic stability, sustainable economic growth and balanced development. • Article 30 (3) - The Partner States undertake to adhere to the macroeconomic convergence criteria as determined by the Council. • Article 31 (1) - For the proper functioning of the Common Market the Partner States undertake to co-ordinate and harmonize their financial sector policies and regulatory frameworks to ensure the efficiency and stability of their financial systems as well as the smooth operations of the payment systems. • Article 32 - The Partner States undertake to progressively harmonize their tax policies and laws to remove tax distortions in order to facilitate the free movement of goods, services and capital and to promote investment within the Community.22

  23. Other Areas of Cooperation in the Common Market • Prohibited Business Practices and Consumer Protection • Article 33 (1) - The Partner States shall prohibit any practices that adversely affect free trade. • Article 34 (1) - The Partner States shall not grant any subsidy through resources in any form, which distorts or threatens to distort effective competition by favouring an undertaking, in so far as it affects trade between the Partner States. • Article 35 - The Partner States shall not discriminate against suppliers, products or services originating from other Partner States, for purposes of achieving the benefits of free competition in the field of public procurement. • Article 36 (1) - The Partner States shall promote the interests of the consumers in the Community by appropriate measures that: • ensure the protection of life, health and safety of consumers; and • encourage fair and effective competition in order to provide consumers with greater choice among goods and services at the lowest cost.

  24. Other Areas of Cooperation in the Common Market • Coordination of Trade Relations • Article 37 (1) - The Partner States shall coordinate their trade relations to promote international trade and trade relations between the Community and third parties. • Coordination of Transport Policies • Article 38 (1) - The Partner States undertake to evolve coordinated and harmonized transport policies to provide for adequate, reliable, safe and internationally competitive transport infrastructure modes and services for the development and consolidation of the Common Market. • Harmonisation of Social Policies • Article 39 (1) - The Partner States undertake to coordinate and harmonise their social policies to promote and protect decent work and improve the living conditions of the citizens of the Partner States for the development of the Common Market.

  25. Other Areas of Cooperation in the Common Market • Environmental Management • Article 40 (1) - The Partner States undertake to ensure sound environmental and natural resources management principles for the proper functioning of the Common Market, through prevention of activities that are detrimental to the environment. • Cooperation in Statistics • Article 41 (1) - The Partner States shall cooperate to ensure the availability of relevant, timely and reliable statistical data for: • describing, monitoring and evaluating all aspects of the Common Market; and • sound decision making and effective service delivery in the Common Market. • Research and Technological Development • Article 42 (1) - The Partner States undertake to promote research and technological development through market-led research, technological development and the adaptation of technologies in the Community, to support the sustainable production of goods and services and enhance international competitiveness.

  26. Other Areas of Cooperation in the Common Market • Cooperation in Intellectual Property Rights • Article 43 (1) - The Partner States undertake to co-operate in the field of intellectual property rights to: • promote and protect creativity and innovation for economic, technological, social and cultural development in the Community; and • enhance the protection of intellectual property rights. • Cooperation in Industrial Development • Article 44 (1) - The Partner States undertake to cooperate in the area of industrial development in the activities related to the production of goods and services in the Common Market, for the attainment of sustainable growth and development in the Community. • Cooperation in Agriculture and Food Security • Article 45 (1) - The Partner States undertake to: • sustainably develop and promote agriculture with regard to crops, livestock, fish, forestry and their products; and • ensure food security in the Community through access to quality and sufficient food. • Article 45 (5) - The Partner States undertake to establish an Agricultural Development Fund.

  27. General Provisions • Article 46 - Institutional Framework • Article 47 - Approximation and Harmonisation of Policies, Laws and Systems • Article 48 - Safeguard Measures • Article 49 - Measures to Address Imbalances • Article 50 - Monitoring and Evaluation of Implementation of the Common Market • Article 51 - Regulations, Directives and Decisions • Article 52 - Annexes • Article 53 - Amendment of the Protocol • Article 54 - Settlement of Disputes • Article 55 - Entry into Force • Article 56 - Depository and Registration

  28. Outstanding Work • Negotiations to continue on the following: • Annex on the Harmonisation and Mutual Recognition of Academic and Professional Qualifications. • Additional Commitments under the Schedule on the Progressive Liberalisation of services. • Additional Commitments under the Schedule on the Free Movement of Workers. • Annex on Social Security Benefits in the Community. • Institutional Structure of EAC • Study underway on the institutional structure that will support the effective functioning of the EAC Common Market – Council to decide on this in the FY 2012/13.

  29. Operational Challenges • Implementation of the Protocol by the Partner States is lagging far behind. • Institutional review of the Community is yet to be finalised for effective implementation of the Protocol. • Funding of the Community – need to amend Article 132 (4) of the Treaty to a formulae based method that takes into account equity and ability to pay. • Sensitisation – EAC citizens need to know and demand for the rights accorded to them by the Protocol. • Extended Jurisdiction for the EACJ to entertain disputes in the Common Market. • Issues of sovereignty vis-a –vis deeper regional integration - need for an optimal mix – principle of subsidiarity. Need to provide for organisational authority. • Multiple memberships specifically in COMESA and SADC – grand vision of an FTA encompassing EAC, SADC and COMESA should minimise the operational challenges. • Infrastructure bottlenecks – quality and quantity of telephone lines, mobile phone penetration, electricity capacity generation, length of road network stock and revamping of the railway network.

  30. Ongoing Interventions • Partner States are undertaking harmonization and approximation of national laws to conform to the provisions of the EAC Common Market Protocol. • Secretariat has developed a comprehensive framework for constantly monitoring and evaluating the implementation of the Protocol. • Partner States have established national implementation committees to expedite the implementation of the Protocol. • Council is undertaking an institutional review of Community aimed at revamping and empowering the Organs and Institutions of the Community. • Council is also exploring an alternative formulae, based on ability to pay, for financing the budget of the Organs and Institutions of the Community. • Council is also considering extending the jurisdiction of the EACJ to entertain disputes arising from the implementation of the Common Market Protocol.

  31. Ahsante Sana

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