Assessing the Welfare Effects of the East African Community Customs Union s Transition Arrangements on Uganda

Assessing the Welfare Effects of the East African Community Customs Union s Transition Arrangements on Uganda

Regional trade arrangements are becoming an increasingly popular vehicle for the promotion of trade and growth. In East Africa the previously defunct East Africa Customs Union has been resurrected to improve trade between Kenya, Tanzania and Uganda. To facilitate the development of the East African Community, transitional arrangements have been put in place to liberalise inter and intra-regional trade. Using a partial equilibrium approach this paper quantifies and evaluates the trade and welfare effects of these arrangements for Uganda, particularly for products classified as sensitive products from the Ugandan perspective. Results vary with the level of product aggregation applied which questions whether transitional arrangements confer any real benefits on the stakeholders. The policy implications that follow suggest that selecting industries for protection should be based on predicted welfare outcomes rather than on pressure from vested interests for the partner countries to benefit from trade liberalisation within the customs union.