An Assessment of the Trade Effects of the East African Community Customs Union on Member Countries

Abstract

This study uses a modified gravity model to estimate the trade effects of the recently implemented East African Community (EAC) customs union on individual member countries. The analysis is based on bilateral import data for seventy potential trading partners for the EAC bloc. It covers the period 1996 to 2009. The results suggest the customs union has generated disproportionate impacts on intra bloc exports and imports for individual member countries. Kenya, Uganda and Rwanda have seen a significant increase in their intra EAC exports, while Kenya and Tanzania have seen a significant increase in their intra EAC imports. Significant changes are seen in Kenyan exports and Tanzanian imports up to three years prior to the actual implementation.