This paper quantifies the trade and welfare consequences of the East African Community (EAC) customs-union-cum-common-market integration using a multi-country, multi-sector computable general equilibrium (CGE) model calibrated to the latest available social accounting matrices and WITS-COMTRADE tariff-line data.

Simulation results:

Simulating the progressive removal of intra-EAC tariffs, the harmonisation of the Common External Tariff (CET), and the reduction of selected non-tariff barriers since 2005 reveals a 12–18% increase in intra-EAC merchandise trade relative to a 2000 baseline, with Kenya and Tanzania experiencing the largest trade-creation gains.

Welfare distribution:

Aggregate real income for the EAC as a whole rises by 0.6–0.9%, but the distribution is uneven:

Landlocked members (Uganda, Rwanda, Burundi) register welfare gains of 1.1–1.4% of GDP, while

Kenya and Tanzania record modest gains of 0.4–0.6%.

Consumer and producer effects:

Consumers benefit from lower prices and wider variety, whereas import-competing firms in textiles, food processing, and light manufacturing face contraction and job reallocation.

Fiscal effects:

Revenue losses from forgone tariffs amount to 1.5–2.2% of government receipts, partially offset by higher VAT and excise collections on expanding trade volumes.

Deep integration gains:

Extending the analysis to include trade-facilitation measures and behind-the-border reforms doubles the estimated welfare gains, underscoring the importance of deep integration.

Robustness checks:

Robustness checks using partial-equilibrium SMART simulations confirm the CGE results and highlight sensitive product lines where phased liberalisation or safeguards may be warranted.

Conclusion:

The findings inform ongoing negotiations on EAC monetary and political union by demonstrating that further integration yields positive but heterogeneous welfare effects that can be mitigated through targeted compensation and revenue-enhancing tax reforms.