The narrow road: Non-tariff measures, sensitive products, and the future of EAC free trade

Abstract

The East African Community (EAC) has made impressive strides in eliminating tariffs, yet intra-regional trade remains stubbornly
below its potential. This paper argues that the true frontier of integration now lies along “the narrow road” of non-tariff measures
(NTMs) and the politically sacrosanct “sensitive products” they protect. Blending newly coded NTM data for the period 2010-2023
with firm-level customs records and 74 elite interviews across the six member states, we construct the first comprehensive map of
how technical regulations, SPS rules, and discretionary licensing still segment the EAC market. Using a structural gravity model
augmented with fixed effects for each NTM-product pair, we show that NTMs depress intra-EAC trade in agriculture and light
manufactures by 19–27 percent—an order of magnitude larger than the gains delivered by the final tariff phase-out in 2015.
We then demonstrate that sensitive-product exemptions—embedded in the EAC’s 2015 tariff structure but perpetuated through
opaque NTM carve-outs—have become the primary vehicle for “re-bordering.” Case studies of sugar, dairy, and textiles trace how
domestic coalitions leverage phytosanitary rules, import quotas, and pre-shipment inspections to shield national champions.
Counterfactual simulations indicate that eliminating only those NTMs that are not justified by legitimate health or security concerns
would raise intra-EAC trade by USD 2.8 billion and real GDP by 0.9 percent within five years, with the largest gains accruing to
Rwanda and Uganda. The paper concludes by mapping three plausible futures: (1) “Fortress National,” in which sensitive-product
lists expand and the Common Market fragments; (2) “Regulatory Harmonisation Lite,” a technocratic middle road that trims NTMs but
leaves sensitive sectors untouched; and (3) “Mutual Recognition Plus,” a bold scenario where mutual recognition agreements,
region-wide risk assessment bodies, and sunset clauses on sensitive-product lists restore credibility to the Customs Union. Our
findings imply that without deliberate political bargains to discipline NTMs and shrink the sensitive-product schedule, the EAC’s next
integration milestones—the Monetary Union and Political Federation—risk remaining aspirational.

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