The Impact of Non-tariff Trade Barriers on Economic Integration Between Kenya and Ethiopia

Abstract

The primary focus of the study is to examine impact of non-tariff trade barriers on economic integration between Kenya and Ethiopia. The study seeks to achieve three specific objectives. First it will identify the non-tariff trade barriers that affect economic integration between Kenya and Ethiopia, secondly, to investigate challenges of border clearance procedure on import-export relation between Kenya and Ethiopia and lastly to determine and examine the measures taken to improve the implementation of bilateral trade agreement, investment between Ethiopia and Kenya to facilitate economic integration. The study was conducted in Nairobi County where Ministry of Foreign Affairs of Kenya, Ministry of Trade and Industry, Kenyan National Chamber of Commerce and Industry, Embassy of Ethiopia, and business community involved in Export and import are located. This was chosen for the convenience of collecting primary data using interview guides from experts, diplomatic missions and traders who own firsthand information about the topic under investigation. The study used data collected from primary and secondary sources. The research applied quantitative and qualitative research approaches. The questionnaires administered to collect first-hand information from respondents. The study finds that non-Tariff trade barriers contribute to the poor performance of economic integration and Poor border clearance procedure management which causes delays in exchange of goods and services and hence affects import-export relations between Kenya and Ethiopia. Also the study hypothesis that poor implementation of the bilateral trade agreements between Ethiopia and Kenya does not affect the economic integration process is disproved. On the other hand, the study finds that poor implementation of trade agreements affects economic integration between Kenya and Ethiopia. The study recommends that the government of Kenya and Ethiopia needs to invest in both physical and soft infrastructure development to enhance trade relations between the member countries. Government and private sectors should also invest to modernize customs and transit systems and strategies (inclusive of developing one stop border posts and expand facilities such as inland container depots. Further, the customs of the two countries should exchange information using harmonized information data base that helps to clear good and services at the border. The study also recommends that the Ethiopia customs office at Moyale Border needs to deploy educated personnel and increase working hours as it is found by the study the customs office is functioning very short time. The Study additionally recommends that Ethiopia and Kenya must establish institutions and technical centers to collaborate their country wide Bureaus of standards that allows to harmonize stringent standards, rules and regulations put in place by respective customs for same products. For effective bilateral trade agreement implementation such as Special Status Agreement, both countries should establish separate institutions with the mandate to monitor, evaluate and follow-up the status of the agreements and their impact on the economic integration of the two nations.