Personal finance
Harmonize all business laws to make EAC trading easier
Monday 17th May 2021
It is necessary to consider harmonizing major economic laws to facilitate trade between nations. SHUTTERSTOCK
The opening speech by President Samia Suluhu from Tanzania during her state visit to Kenya two weeks ago was: “Mko na Uhuru upande wa Kenya na upande wa Tanzania tuko na Suluhu.” Her witty remarks were derived from the names of the two Presidents Uhuru and Suluhu. Translated into English, their remarks meant that we have freedom in Kenya while Tanzania has the solution.
The visit raises hopes for increased trade between the two countries. Problems arose, including allegations of discriminatory trade practices and non-tariff barriers to trade. It is to be hoped that the Tanzanian President’s visit will be a sign of better times.
World trade is moving away from protectionism and towards liberalization, which is reinforced by the removal of trade barriers between two countries, be it customs or non-tariff doctors.
The East African Community (EAC), to which both Kenya and Tanzania belong, supports the liberalization and dismantling of trade barriers. The EAC Treaty and the EAC protocols, in particular the EAC protocol for the common market, contain very good provisions on liberalization. However, there are still many non-tariff barriers.
In order for the EAC Treaty to become a reality, these trade barriers should be removed. All Member States need to take proactive steps to remove barriers and avoid trade-related spats.
Each member state in the EAC is subject to national law and regional law applies at the regional level. Harmonization of key economic laws may need to be considered to facilitate trade between nations. This is especially true for companies that are represented in all EAC countries.
It is easier for such multinational companies to operate in a harmonized legal environment than to face legal conflicts in their business. Some important economic laws, such as customs and duties, have been harmonized, making intra-regional trade easier. It may be useful to harmonize other business laws, such as intellectual property law, to make trading easier.
While the place of national legislation cannot be ignored, one way to harmonize is to pass more business-related legislation at the regional level. In the case of trade with two or more Member States, regional commercial law may apply where appropriate.
Harmonization should be taken into account when resolving disputes. Currently, many companies include arbitration clauses for dispute resolution that allow the parties to determine the choice of law and place of law.
The East African Court of Justice (EACJ) is a judicial institution whose mandate includes the settlement of disputes when an arbitration clause designates it as the governing body. Reinforcing the EACJ in terms of capacity can be a great way to resolve trade disputes between regional companies.
Legislation on economic laws that would facilitate integration and trade between EAC member states has made very slow progress.
Mutual Recognition Agreements (MRAs) would liberalize the professional services sector. MRAs between Member States would allow professionals such as lawyers, doctors, engineers and other regulated professions to practice in other Member States with little red tape. This would mean that Kenyan lawyers, for example, would not have to take a bar exam to practice in Tanzania and vice versa.
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