"The East African Community Customs Union (EAC) is our best hope for survival and prosperity," Kenyan Finance Minister David Mwiraria said of the four-year-old EAC economic bloc.
"Through the EAC, we seek to remove barriers to trade, facilitate movement of our people, money and capital," he said. The goal of East African economic integration has long been thwarted by rivalries between the three nations, home to entrenched and competing commercial and political interests.
Earlier plans to sign a customs union, originally set for November 2003, were delayed due to arguments over how to sort their goods into various tariffs bands.
"This is the first step in a long journey," Hirji Shah, chairman of the East African Business Council told Reuters. "The customs union recognises the importance of value addition aspect of manufacturing industry, industrial development will therefore be enhanced and given a better chance. Tanzania and Uganda have complained that Kenya's much bigger manufacturing base threatens their fledgling industries.
Kenya, Tanzania and Uganda will have a common external tariff with bands of 25 percent on finished goods, 10 percent for semi-processed goods and zero for raw materials. However, some farm imports such as milk, sugar and wheat, classified as "sensitive" will be liable to a surcharge of up to 100 percent. The three nations have eliminated internal tariffs and all non-tariff barriers such as quotas and import bans in the bloc.
The bloc will have a single policy on how to trade with other countries or blocs. The policy will give guidelines on how to enter preferential trading agreements with third parties.