Change Through Trade? East African Community Starts Accession Negotiations with Somalia

The East African Community (EAC) is one of the fastest-growing regional economic blocs in the world. It currently comprises seven partner states, including Congo (since 2022), the Republic of Burundi, Kenya, Rwanda, South Sudan, Uganda and Tanzania. The EAC is home to approximately 283 million people and covers approximately 4.8 million square kilometres of land. The gross domestic product of the Community is currently about 305.3 billion USD.[1]  The basis for the cooperation is an international treaty that came into force on 7 July 2000.[2] The founding countries were Kenya, Tanzania and Uganda. However, the EAC’s enlargement and deepening strategy has gained considerable momentum recently. Now Somalia could become the eighth member state of the EAC soon. At the EAC Heads of State and Government meeting on 6 June 2023, Somalia’s application for membership was officially approved, and the EAC Council and Secretary were mandated to conduct accession negotiations with Somalia. However, what does this step mean for both sides?

The East African Community: A single market based on the European model?

The EAC is, first and foremost, a customs union and a community for creating a common internal market (organised in a market economy), Art. 2 of the founding treaty.[3] To achieve this goal, membership is linked to certain preconditions. For example, the partner countries must respect the fundamental values of the EAC, commit to good governance, the rule of law and respect for human rights. For Somalia, its neighbours would recognise membership that it has achieved specific standards. However, it is also about establishing a free-market economy and basic social security systems. The Community aims to create peaceful coexistence and coordinate on particular issues of foreign and security policy, economic and security policy vis-à-vis third countries and internally. In addition to the usual political bodies, the EAC has created a Legislative Assembly, a Development Bank and a Court of Justice. The latter has to review the partner countries’ compliance with their treaty obligations. More than 150 articles define the tasks of the other organs and the legal effect of decisions of the Court of Justice. In addition, various additional protocols define further guidelines for the Community’s policy. The parallels to the structures of the early EU are, therefore, very clear.

The Expansion of the EAC: a win-win situation

For the EAC, Somalia’s accession could therefore become another important milestone. With over 3,000 km of coastline, Somalia is considered one of the most important logistical hubs to the European, Asian and Arab regions. It could thus play an essential role in connecting large markets and intra-regional trade.[4] However, the country in the Horn of Africa would be more than just a gateway for the other partners. Besides a large livestock economy, fish and frankincense, the country has excellent agricultural potential. Moreover, raw materials such as oil and gas are suspected offshore and onshore. Somalia could therefore become an important economic partner for the EAC.

For Somalia, it could also be an important step. Not only would the country take a further step towards becoming a full member of the international community again. The step would also have an important function within the regional stability policy in East Africa. For decades, the focus was on the conflicts between Somalia and its neighbours. Regional integration could be an important signal that this era is finally over. Nevertheless, Somalia also has a considerable economic interest. Not only did frequent border closures affect trade, and they were a popular means in the past to either heat up or cool down the mood between the countries. Tariffs and other import restrictions have also led to high food, consumption and energy prices in Somalia. Integration into the EAC can therefore bring the government under President Dr Hassan Sheikh Mohamud a vital success in improving living conditions in the country.

For success, both sides need reforms

For these high mutual expectations to be fulfilled, however, the existing partner countries, as well as Somalia, must be prepared to engage in regional cooperation in the spirit of the treaties, which has unmistakable borrowings from the European Union. The EAC’s record so far is mixed. It is true that, at least superficially, a uniform customs policy for the internal market has been achieved, and a uniform External Tariff (CET) has been established vis-à-vis third countries. Similarly, various additional protocols have been adopted to deepen economic cooperation between the partner states, and a monetary union[5] has been envisaged.

However, despite these clear objectives and many political decisions at the highest level, the EAC has repeatedly encountered difficulties implementing these principles. For example, there have been delays in ratifying the decisions on intensified economic cooperation and monetary union, and individual partner states have created numerous new hurdles to trade within the EAC. In the past, the countries’ national economic strategies often counteracted the interests of the Community. In 2014, for example, there was a “Buy Uganda, Build Uganda” strategy. However, similar strategies also existed in Rwanda and Kenya. In Tanzania, there was a stipulation in 2016 that regional products should be preferred in national tenders. Some partner states have also allowed exceptions to the uniform customs tariff for imports from third countries in order to support national industries. These contractual exceptions, initially intended for emergencies, have been used so often that they have become more standard than exceptional in the EAC. In doing so, however, they disavow the implementation of common protocols and objectives to exempt, in particular, the agricultural and extractive sectors from the liberal rules of the Community. However, if one takes these two sectors out of the overall equation, comparatively few goods remain for EAC regional trade. The EAC, therefore, not infrequently appears like a paper tiger whose goals are more ambitious than its will to implement them.

Joining the EAC is part of “Soomaali Heshiis Ah. Dunidana Heshiis la ah[6]”- strategy from President Dr Hassan Sheikh Mohamud

Joining the EAC is nevertheless a good idea for Somalia. It opens markets in principle and in both directions. On the one hand, Somalia can hope for falling food prices, not least because its own fallow agriculture can hardly ensure the country’s self-sufficiency, and the elimination of export duties by the neighbouring states will lower prices. Accession would be less of a problem for its livestock industry, which in any case, primarily supplies the Arab world. On the other hand, accession is essential for Somalia’s medium- and long-term positioning as a logistics location as a gateway to and from East Africa. International investors could thus export their goods via Somalia to a market of almost 300 million people. On the political side, it would also be not only a crucial interim success but also a commitment on the part of the Somali government to continue on the path of stability, market economy and security. As stated above, the EAC is also a community of values in terms of good governance and the rule of law. In this respect, accession has also been an important part of the president’s political reconciliation strategy with his neighbours.

The European Union should cooperate more with EAC and support Somalia’s accession

Precisely because Somalia brings these potentials to the EAC, it can become a driving force for deeper economic integration. Somali business people are considered particularly capable and skilful. They will quickly discover the potential of regional and intra-regional trade for themselves. The European Union should accompany and actively support the accession process. Not only does it have a vital interest in having an intensive trade with the large internal market of the EAC, but the national egoisms described above also accompany the history of the emergence of the European internal market. In Europe, mechanisms to ensure economic equality of opportunity in all parts of the EU calmed the discussions about distributive justice within the Community.[7] In addition, the strengthening of the ECJ and its acceptance in the member countries were decisive in counteracting ever-new obstacles to the free movement of goods, workers, services and capital. Here, the EU could provide important support through experience transfer. Germany could contribute its experience and expertise, e.g. in the constitutional opening clause of Article 23 GG in supranational entities, to the current constitutional review.

Therefore, the government under President Dr Hassan Sheikh Mohamud should be congratulated on starting accession negotiations. The term change through trade takes on a new meaning here. Accession to the EAC creates the basis for economic success after the long struggle against Al Shabab. Somalia and the entire region are to be expressly wished this!

[1] https://www.eac.int/overview-of-eac (last access: 18. July 2023).

[2] There was already a predecessor institution, which was founded in 1967.

[3] https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2487/download (last access: 18. July 2023).

[4] This reference can also be found in the official EAC press release: https://www.eac.int/press-releases/2817-summit-adopts-verification-report-of-somalia-to-join-eac (last access: 18. July 2023).

[5] In the sense of coordinating monetary policy.

[6] Which translates into “If Somalis live united, they will live at peace with the world”.

[7] Agricultural and Cohesion Funds.