Essay: Major trade effects on regional integration

This project is part of a requirement of the University of Nairobi examination bodies in fulfillment of once Degree course. It enables students to learn how to carry out researches in practically rather than in theory form only. It enables students to be ready to work in an organization. To some extent it tests students’ critical thinking skills.
The research and preparation of this research paper was prompted by the popularity of the concept of regional integration. This research project examines how trade among member States has affected the regional integration in the East African Region. Its main focus is the East African Community.
This study sought to establish whether major trade effects on regional integration and to what extent does regional integration affect trade in the region. The research is a form of an explanatory research design. The population consisted of all East African Community.
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CHAPTER ONE
1.1 Background of the study
1.1.1 Growth of Regional Integration in Africa
Regional integration is regarded as coming together of particular independent States within geographical proximity to enhance partnership. Thus regional economic integration is when nations within a geographical region come together in form of a partnership to enhance trade and development. According to William J. Kehoe regional integration can be manifested as a Free Trade Area, Customs Union, Common market, Economic Union and Political Union. Africa’s regional integration is growing. Regional integration in Africa has been felt through the formation of the OAU which was formed in 1963 in Addis Ababa which was later devolved to African Union. Their main aim was to not only eradicate all forms of colonialism but also according to Article 2 Sub ‘ section 1of its charter, to co-ordinate and intensify the co-operation of African States in order to achieve a better life for the people of Africa.
According to globalist, economic inter dependence and international economic integration has grown the international economy is becoming truly globalized (Giddens 1999-10). The global economy is characterized by growing trade and investment flows that can be moved due to new technology, enabling companies to relocate and produce according to their interest increasing the power of cooperation’s. This mobility has forced governments to adapt similar economic policies, reducing their policy options thus undermining their sovereignty (ohame 1995, 11-13)
With division of Africa into sub-regional such as East African Region East Africa Community was formed. Though prior to that the drive towards regional integration had begun through the British colonialist due to the construction of the Ugandan railway in 1896 which connected Kenya and Uganda with an aim of exploiting resources and protect the source of River Nile.
One of the well-known major steps it took in enhancing regional economic integration in Africa was through the help of the U.N. it set up the African Development Bank for economic projects intended to make Africa financially stronger. Efforts for regional economic integration have continuously been seen in Africa with emergence of regional organization such as the EAC, SADC, and IGAD. Some of these organizations have formed partnerships enhancing interregional co-ordination or co-operation though it faces challenges due to overlapping memberships.
The process of regional institutions in Africa has tried to embrace globalization and its positive effects at the same time trying to redefine roles of religion, ideology and culture that have been undermined by globalization. Globalization has opened up the region Kenyans can now get education from Uganda and vis-??-vis for example and their education qualifications accepted in other partner States.
Globalization has in turn eroded the classical meaning of Statehood. The traditional understanding of the State associated with the theories realist-neorealist based on the assumption that the State is the main actor in the international system and has the power to act autonomously on an anarchic international system no longer holds ground, mostly for the African States. Some States sovereignty has been threatened by the development of research and technology which has facilitated free flow of information.
Institutions such as World Bank, International Monetary Fund and World Trade Organization are trying to mitigate with effects of globalization on States’ economy by drawing crucial rules of global economic engagement. Institutions such as the EAC are trying to find a common ground, a unifying vision, to assist its members in attaining positive effects of globalization.
The EAC is an intergovernmental organization compromising of five countries Burundi, Kenya, Tanzania, Uganda, and Rwanda. It was founded in 1967 and collapsed in 1977 due to disagreements among States especially with Kenya. Following its dissolution the member of States negotiated a Mediation Agreement for the division of Assets and liabilities which was signed in 1984 with this led to the signing of the Agreement for the Establishment of Permanent Tripartite Commission of East African Cooperation in 1993. Full E.A.C started in 1996 when headquarters were launched in Arusha, Tanzania for E.A.C. The treaty for the Establishment of E.A.C was signed in 1999 and entered into force in 2000
The EAC comprises of about seven major organs. The EAC has gone a step in enhancing regional economic integration in the E.A. region. It offers the EAC Partners an opportunity to combine markets, harness factors of production, increase in competitiveness in trading in the international markets. It offers a variety of benefits for its partners such as the promotion of increased intra-regional trade both among its States and other regional economic community such as SADC and COMESA, reduction of tariff and non-tariff barriers to trade , harmonization of tariffs , taxes and standards and negotiation of trade agreements from a single platform.
1.2 Statement of the problem
This research study seeks to understand how trade within member States has contributed to regional integration as a whole and more specifically towards regional economic integration. The key gap in literature that the researcher seeks to fill is to paint a clear picture of how exactly trade enhances or discourages the growth of regional economic integration. This study will focus more so on the East African Community. Through understanding the regional institution the researcher will have a clear picture of its integration process while relating it to trade thus enabling the measurement of its benefits.
The EAC partner States are working tirelessly to ensure that regional integration is a success for the community. The EAC seeks to ensure that all member states are integrated in all aspects with the highest level been political integration. This has been the major goal that EAC seeks to achieve. The question is will Member States interest merge or will the national interest of all member states come before the EAC interest. All partner States rely on mostly agricultural items as their basic export commodity. Most partner States are ranked as third world countries and are still facing major problems such as poverty, poor institutions, corruption and conflict that are hindering their growth.
Currently trade in the East African region is increasing due to removal of certain trade barriers that will be discussed in chapter two. This study will seek to understand and identify if the benefits of trade in the region are equally distributed among all Member States. To understand whether the benefits acquired are distributed on the basis of the States global position or economic growth.
Regional economic integration has proven to be an important necessity for a state to survive in the international system. It leads enormous economic benefits for the partner States in the cooperation. It brings in development and infrastructure growth to States. Despite constant efforts Africa today is still neither politically or economically integrated. There has been various explanations for Africa’s failure in integration according to the Economic Commission for Africa 2002 , the existing mechanism is too loosely defined or insufficiently equipped with human, material and financial resources to do its work and that there is lack of political will in member countries that is necessary to see integration succeed. Trade is essential for a State to build up its financial capacity but how a State conducts its trade matters. Most of E.A.C partner States still pursue their colonial ties in trading rather than with partner States. The presence of intra-regional trade agreements enhances regional integration. Is trade a key entity in integration and can it encourages integration or in the long run dissolve integration?
1.3 Objective of the Study
The objective of this study includes general and specific objectives.
1.3.1 General Objective
The general objective is to study regional economic integration in the East African Community and to understand the need of regional economic integration in the East Africa region and how well the structures that have put in place for cooperation enhance regional economic integration.
1.3.2 Specific Objectives
i. To establish the situation of trade in the East African region.
ii. To understand how regional integration affects trade.
iii. To evaluate the distribution of trade benefits acquired through the integration process.
1.4 Research Questions
i. Does regional integration affects trade?
ii. To what extent does trade affect regional economic integration?
iii. Are trade benefits acquired through the integration process distributed equally?
1.5 Significance of the study
i. Policy makers and scholars agree that there is enormous benefit in regional and political union as way of enhancing development. This study will therefore provide policy makers with insights and valuable information useful as a reference material in their policy making process.
ii. This research project will also enable the E.A.C to understand the issues facing it and how it is contributing to its growth or failure in economic integration.
iii. This research project will make contribution to academic literature.
1.6 Limitations of the Study
i. The researcher will not be able to move other countries in E.A.C to gather data. Thus the credibility of the data collected might be challenged since sentiments in one state should not necessarily reflect sentiments of others.
ii. The cost of acquiring finance to perform the study is expected to be very high.
1.7 Hypotheses
i. East Africa integration process has affected trade in the region.
ii. Trade has been a key factor in the East Africa integration process.
iii. Trade benefits in the East African Community have been unequally distributed.