| dc.description.abstract | This study examines the impact of the EAC customs union on trade,
revenue and welfare on the Kenyan economy over the 5-year transitional
period. Using a simple partial equilibrium method to measure static
effects, the analysis suggests net benefits in trade creation, revenue
generation and welfare gains for Kenya from the EAC trade regime.
The simulation results also indicate that there have been net positive
trade effects in Kenya under the EAC customs union regime. The largest
trade impact occurred in the products designated under the EAC list of
sensitive products. These include prepared foodstuffs (24.9% of total
trade), textile and textile products (22.8%), paper products (20.3% of
total trade) and vegetable products (17.2%). In addition, net welfare
effects were positive, implying that producers and consumers in Kenya
are better off under the customs union regime. The welfare gains can
be attributed to realignment of prices and the reduction of domestic
prices induced by Kenya’s tariff reforms, which create opportunities
for investments, reallocation of resources and efficiency gains. Besides,
there are regional efforts towards trade facilitation and addressing
non-tariff barriers, including improvement in customs administration,
reduced police check-points, and improved clearances at the Port
of Mombasa. Finally, fiscal disruptions have been minimal, largely
attributed to improved trade and economic performance coupled
with better customs administration. The study recommends the need
for Kenya to expand its production and export base in order to take
full advantage of the expanded regional market and to sustain fiscal
reforms with a view to minimizing the impact of tariff revenue losses,
among others. | en |
