Date Posted : 2010-07-01 10:03:05 | << Back to other news Stories
(i) What is a Common Market?
A Common Market is an area where goods, capital, labour and services are able to move freely. The idea of a Common Market seems simple on the surface but it is actually a very complicated process which cannot be put in place overnight.
To establish a Common Market the countries involved need to reduce the barriers that prevent people, money and businesses from their Partner States from moving around the region. Reducing these barriers for goods is relatively straightforward – taxes and tariffs at the borders are removed so that goods can move around at no additional cost. Reducing barriers for capital, labour and services is a more complicated and detailed process, it involves changing the legislation, regulations and administrative procedures which discriminate between people and businesses from different States, in this case the East African Community (EAC) Partner States of Burundi, Kenya, Rwanda, Tanzania and Uganda.
When a Common Market is fully implemented it means that all EAC citizens and businesses are treated the same in each EAC country. This does not mean that all the laws and regulations of each country need to be the same as each other, it only means that in Uganda, Kenyans, Tanzanians, Rwandese and Burundians are all treated the same as a Ugandan and in the other EAC countries, Ugandans will be treated the same as their own citizens.
(ii) Why do we want A Common Market?
The underlying principle of why a Common Market is that it allows countries within the region to specialise in those goods and services which they produce most efficiently. It also creates a larger market for Foreign Direct Investment and it allows for efficiency and economies of scale through increased production.
A Ugandan that sees there is a market for his skills or business products in another country within the EAC Common Market can move or supply services there because there are no barriers to working, supplying a service or establishing a business in another EAC Partner State. People are free to chase the highest wage and the best returns, and in doing so, each country will specialise in those goods, services, and labour that it produces more efficiently than its neighbours.
To give an example, without a Common Market engineers from Kenya do not come to work in Uganda because it takes too long and costs too much to get a work permit. This means that Uganda either has to supply its own engineers or would employ someone from out of the region that can afford the time and money to get a work permit, but also charges higher fees because of this. When the Common Market is in place, engineers from Kenya will find it easier to access the Ugandan labour market, consumers will benefit from lower fees and Uganda can concentrate on training other professions, for example, lawyers, which it can then export to the rest of the EAC. This benefits both individuals and the economy as a whole.
(iii) Are there any tangible examples of the benefits of a Common Market?
Yes, there are several benefits of a common market. A number of regions are in the process of implementing or have common markets in place like the Caribbean Common Market (CARICOM), which covers the islands in the Caribbean; Central American Common Market (CACM); and the European Union. The single most successful example of a common market is the European Union. Whilst the European Union has moved beyond a Common Market to a more complete economic and political union, the Common Market has provided the foundation for this progress. A quick glance at some statistics quoted by the European Commission gives an idea of how the Common Market has benefitted Europe:
Over the last 15 years the EU Single Market has increased prosperity by 2.15% of GDP. In 2006 alone this meant an overall increase of €240 billion - or €518 for every EU citizen - compared to a situation without the Single Market. 2.75 million extra jobs have been created; foreign direct investment has more than doubled as a percentage of GDP; phone calls, internet access and air travel have all become cheaper; trade within the EU has risen by 30% since 1992; the average cost for setting up a new company has fallen from €813 in 2002 to €554 in 2007; the time needed to register a company administratively was reduced from 24 days in 2002 to about 12 days currently; and new export markets have been opened up to small and medium-sized enterprises (SMEs) who previously would have been prevented from exporting by the costs and difficulties involved.
(iv) What will change from July 1, 2010?
July 1st marks the official commencement of the Common Market but this does not mean that everything will change overnight. Regional integration is a process, not a destination and July 1st marks the first step on the long road to implementation of a Common Market in Uganda.
The Common Market Protocol, the agreement which details what EAC Countries have agreed to do to implement the Common Market, specifically calls for implementation to be progressive. This is to ensure that the Common Market is put in place at a pace that is appropriate for Uganda and all the other EAC States. The Protocol is a foundation on which the Common Market will be built, and like all foundations, even when it is finished it can often be difficult to see what differences there are, but without it, your house would surely collapse. We as Ugandans should prepare ourselves for the changes that will take place over the next few years.
That said, there will be some differences that will be in effect from July 1st, for example, workers can more easily seek work and reside in other Partner States, though they will still need work and residence permits respectively. The difference is that work permits will have to be issued within specific time periods (at least 30 days) and Partner States are in the process of negotiating similar fees across the region. Businesses will have the right to establish in other EAC States, and many service providers will be able to supply their services in other EAC countries and receive equal treatment to domestic providers. To find out more details about how the Common Market can change the way you work, and how you can take advantage of the provisions in the Protocol, contact the Ministry of East African Community Affairs (MEACA).
(v) How prepared is Uganda for the Common Market and how can people get ready for it?
In Uganda we have in many ways been prepared for the Common Market for some time. Many of the commitments that Uganda has made in the Common Market Protocol only put into a legal binding document practices that have been in place for many years. In this way, we have an advantage when it comes to preparing for the Common Market. For example, Uganda is very open for workers and businesses in many service sectors to come and work in our country. This has been going on for some time for instance in the horticulture, hotel and retail industries. Seven Sectors have been fully liberalised under the Common Market Protocol including Business, Communication, Distribution, Education, Finance, Travel and Tourism and Transport.
We, however, cannot be complacent and there are many ways that different parts of the community can prepare themselves for the Common Market. Of critical importance is for us to ensure that information about the Common Market, its benefits and challenges is widely available and for the public and various stakeholders to seek and use this information so as to seize the opportunities and mitigate the challenges.
Often national regulations are still applicable in some cases and Businesses that want to move should familiarise themselves with the new rights that they have so as to provide services across the border or establish themselves in a Partner State. In addition, Businesses will have to become more competitive for instance by improving their internal governance and systems, customer service, quality and efficiency and pricing of products and services. They should also find out if their businesses have been liberalised under Annex V of the Protocol.
The current provisions of the Common Market limit the categories of persons who can move for work purposes to professionals highlighted in Annex II. Workers and persons that want to move around the region will need valid travel documents and are encouraged to apply for a passport. They will also need to get the documents required to effectively move and reside in another Partner State such as work and residence permits. Contact the Ministry of Internal Affairs, Immigration Department for more details on how to apply for the relevant documents.
The Common Market will open up opportunities for people and businesses to enter new markets, and they are encouraged to find out about these markets and find out if there are new skills or different ways of working that they need to learn to compete there. Contact the Uganda Export Promotion Board to find out more about how to promote your businesses in the EAC region.
(vi) What are some of the misconceptions about the EAC Common Market and why are they wrong?
- The Common Market is a good idea but has been rushed into
Regional integration is a process and not a destination. The launch of the Common Market marks the beginning of a gradual process of implementation of the Common Market Protocol, which will in the future, develop into a fully fledged Common Market that fully allows for free movement of goods, labour, services and capital. This is not what will be in place on July 1st.
The Common Market Protocol, the agreement which details what EAC Countries have agreed to do to implement the Common Market, specifically calls for implementation of the provisions of the Protocol to be progressive. This is to ensure that the Common Market is put in place at a pace that is appropriate for Uganda and all the other EAC States.
We should prepare ourselves for the changes that will take place over the next few years, but we should not be afraid that changes will happen overnight or without the care and attention that is necessary.
- Kenyans are going to benefit disproportionately from the Common Market
Concerns are often raised about Kenyan workers and businesses entering Uganda and taking over the jobs and establishing businesses that will drive Ugandans out. For Uganda, we should be concentrating on identifying where the opportunities are for us to benefit from the Common Market. Perhaps Uganda is a good market for the Kenyans, but Rwanda and Burundi, are excellent markets for Ugandans. Ugandans should be looking at opportunities to compete with Kenyans in Kenya, but also to provide services and skills in markets that need new entrants.
The Common Market is about identifying where Ugandans have a comparative advantage. Uganda has identified Agriculture, Tourism and Education as some of the areas where we have an advantage in the region. In addition, we have some of the best professionals in the region. Lawyers, architects, engineers, doctors should not be afraid of competition, we should see this as an opportunity to sell our impressive skills in our Partner States.
- All workers are able to move from July 1st
Not all types of workers will be able to move from July 1st. The movement of workers is governed by Annex II of the Protocol which lists the different types of occupations that are eligible to move into different countries. The lists of workers are long and are different for each country, so workers will need to find out either by looking at the relevant section of the Protocol or by contacting MEACA for this information to establish whether they are eligible to move.
The extension of the protocol to all workers has been agreed by Partner States and will be negotiated over the implementation period, taking into account the needs and concerns of all Partner States.
- People will no longer need a work permit to work in other EAC countries
The Common Market Protocol provides for work permits to still be a requirement for working in another Partner State. This does not mean that every EAC country does require a work permit, it only means that countries are allowed to maintain a work permit scheme if they wish to. It is up to each individual that wishes to cross the border to find out if a work permit is required and to produce the documentation required to obtain one.
Workers will enter Partner States by presenting their passports or national identification documentation at the point of entry, declaring the usual information and providing a contract of employment. For Jobs that will last less than 90 days, workers will need a Special Pass and for jobs lasting longer than 90 days, a Work Permit. Special Passes and Work Permits require different supporting documentation. Spouses and children may be allowed to travel with the worker if they apply as well.
Although work permits are still in place, the Protocol does make it easier to know how much time and effort is required to acquire one: the timeframe for obtaining a work permit is now limited to 30 days across the region, and applicants are entitled to know within 30 days whether you have been given one or not. If you are not successful, you are entitled to know why in writing and to challenge this decision. EAC countries have also agreed to harmonise the fees for work permits, and this is part of the ongoing negotiation process.
The Protocol also contains a very important principle which is that once a country has made its legislation, regulations and administrative procedures less strict towards other EAC citizens, it can’t go back on this decision. So if a country removes work permits, this decision cannot be reversed and they cannot be reinstituted in the future.
- Aren’t we giving away our land by entering the Common Market?
The question of how land will be addressed under the Common Market is a key one with fears expressed that Ugandans will lose out with land being bought by people coming from other Partner States come July 1st. This is not true. Land is a key factor of production and as such land control and ownership is a critical issue under the Common Market. Ugandans should however note that under the Common Market Protocol, access to and use of land will be governed by the National Policies and Laws of the Partner States. The Government of Uganda through consultation with the public is developing a National Land Policy and reviewing the Land Laws. The Ministry of East African Community Affairs has communicated some of the concerns raised by the public through the National Land Policy Consultation process. It is these policies once developed that will govern how Ugandans and those seeking to acquire and use land be they from the EAC region or foreigners in Uganda.
(vii) How will businesses benefit from the Common Market?
Businesses are dealt with in Part E and F of the Protocol. Businesses will now be able to establish in other EAC Countries and be treated the same as domestic firms. They will be able to bring over their supervisors and managers to work in that business and will have a right of residence to live in the EAC country in which their business is established. To find out more about what your business needs to do to establish in another EAC state go to Sections E and F of the Protocol and relevant Annexes. The Protocol can be found on the MEACA and EAC websites. We are also producing information packs including a summarised version of the Common Market Protocol and a brief guide for Ugandan businesses which lays out key steps that will be necessary in order to establish in another EAC country. These will be translated in key languages and disseminated widely.
Many service providers can now also supply services from their home country across the border to another EAC country and be treated the same as domestic providers in that country. The service sectors that are liberalised in each country is documented in Annex V of the Protocol, and businesses can refer to this document to see if they are covered. The EAC countries have also agreed that more services (including five sectors in Uganda: Construction, Environmental, Health related, Social, Recreational and Cultural) will be covered by the Protocol and there are ongoing negotiations to agree on these areas.
(viii) How will people and workers benefit?
The movement of people within the EAC region is not a new phenomenon. The benefit of the Common Market Protocol is that it provides a foundation on which movement can be made more predictable and reliable through setting the minimum level of access that countries have to provide (including the fees and time associated with obtaining visas and work permits). This is the commitment that EAC States made when the Protocol was signed. It is still the responsibility of individuals to ensure they fulfil the requirements of the Protocol, including obtaining the appropriate documents and permits.
People and Workers are dealt with in D, E and F of the Protocol which identifies four types of East African citizens who can enter, stay, work and reside in another East African state from July 1st; these are individuals who wish to travel for any purpose other than earning money (such as visitors, students, medical tourists, people in transit), self-employed individuals, intra-corporate transfers of managerial & supervisory personnel and workers.
For workers, free movement will be in progressive stages depending on profession and the country in which you wish to work. To access the full list of professions that are able to enter into each EAC State visit resource websites such as the Ministry of East African Community Affairs (www.meaca.go.ug). At its launch on 1st July 2010 the Protocol will only apply to certain professions but the number of professions will expand gradually over time.
The introduction of the East African Common Market provides an opportunity for business and entrepreneurship to flourish through the movement of workers. Professionals will be able to cross borders, increasing their employment opportunities, while businesses will have a wider field to choose from when recruiting or expanding. The increased competition amongst individuals for these opportunities can lead to much better individual and business performance, which may then be multiplied across the economy.
(ix) What are the challenges remaining?
The Protocol has been negotiated and signed. This is a first step and there is much to do to make sure it is implemented. The Ministry of East African Community Affairs working with other Ministries, Departments and Agencies has developed a Common Market Implementation Plan (CMIP) to enable us follow up on key actions, responsibilities and timelines required to implement the obligations of the Common Market. The Private Sector and Civil Society are engaged at the Technical level and maintain their oversight function to ensure that the Protocol is implemented to benefit Ugandans and that challenges are minimized.
We are also developing complementary policies to enhance Uganda’s competitiveness and support Ugandans to take advantage of the potential benefits of the Common Market policy. Such measures include the formulation of an SME Policy; the need for improved infrastructure, the streamlining of immigration procedures, and linking education and market gaps to enhance professionalism.
The Ministry of Internal Affairs (Department of Immigration) is in the process of developing a complaints mechanism to enable aggrieved applicants to lodge their complaints and seek redress.
MEACA will work to ensure that relevant information is available to enhance awareness and enable Ugandans take key decisions in the integration process. However, all EAC citizens too have a responsibility to find out how they can benefit from the Common market. Together we can ensure that Uganda benefits from the Common Market.
(x) What are the next steps in common market implementation and regional integration?
The Common Market Protocol was signed in November 2009 and commences on July 1st 2010, however, there are still many areas in which work is ongoing or has been planned for the future. Negotiations continue on extending the liberalisation of services to a greater number of sectors, as well as for Annexes on Mutual Recognition and Social Security. EAC Countries have also committed to cooperate and coordinate in many other areas including financial sector policy, harmonisation of tax policies and laws, transport policy, environmental management, statistics, research and technological development, intellectual property rights, industrial development and agriculture and food security. These are areas of ongoing work and will be taken forward at the regional level by the EAC states.
At the national level MEACA is coordinating the implementation of the Common Market though the Common Market Implementation Plan which feeds into a Monitoring and Evaluation System that being developed in our Ministry. This system and will enable MEACA to quickly identify where there are gaps in implementation and what must be done to address them.
The Implementation Plan will assist MEACA in mainstreaming regional integration work into the work plans of all other MDAs. As a coordinating Ministry, MEACA cannot implement the Common Market or any other regional integration initiative alone. It requires a cross-governmental effort, as well as adequate funding and resources. All Ministries are now aware that EAC issues must be taken into consideration when they are carrying out their normal business, and we hope that these issues will be included in their work plans, budgets and processes.
(xi) How can the public acquire more information about the Common Market and what it means?
MEACA is now implementing a communications strategy which aims to reach out to all sectors of society and provide them with information about the Common Market and regional integration in general.
Part of this communications strategy is engaging the public through the media, including television, radio and the newspapers, and engaging people at the local level through sensitisation workshops, for example, Ministry staff have conducted sensitisation sessions in the border regions, including Busia, Cyanika, Masaka, Katuna as well as in the universities in Kampala and we will continue this over the coming months. We also encourage people to go to the MEACA website for further information on regional integration, or contact the Ministry for more detailed responses.
(xii) How are Uganda’s interests protected in the ongoing integration process?
MEACA coordinates the development of government positions at the regional level. These positions are a result of consultations both within government and with the private sector, civil society and other relevant stakeholders. Uganda’s interests are therefore enshrined in the positions that are taken to the regional negotiating process and our delegations, made up of the most relevant representatives for Uganda, promote Uganda’s interests at those regional processes when they advocate for those positions to be adopted by other EAC states.
Regional integration will not always deliver results that favour all countries all the time, however, we hope that through negotiation, and through balancing the needs of all the Partner States, overall benefits will be attained for all EAC citizens in the long term.
Contact Details:
Ministry of East African Community Affairs
2nd and 9th Floor
Postel Building
67/75 Yusuf Lule Road
P.O. Box: 7343
Kampala, Uganda
Tel: +256 414 340100
Fax: +256 414 348171
Email: meaca@meaca.go.ug
Web: www.meaca.go.ug
|
