NAIROBI (Reuters) - Heads of state from the East African Community (EAC) trade bloc signed a common market protocol on Friday that they hope will boost commerce between their five countries when it comes into effect in July 2010.
Tanzania, Kenya, Uganda, Rwanda and Burundi are confident that the deal allowing the free movement of goods, services, people and capital within the bloc will make their region easier to market to overseas investors.
“The protocol of the establishment of the East African Community Common Market is so approved,” Tanzanian President Jakaya Kikwete told a ceremony in Arusha, northern Tanzania.
Foreign direct investment inflows to the region leapt to $1.73 billion in 2008 from $692 million in 2002, with Uganda and Tanzania receiving the largest proportion, according to data from the EAC and U.N. Conference on Trade and Development.
The bloc has an estimated population of 126.2 million and a gross domestic product of $60 billion in 2008.
The EAC launched a customs union in 2005 for its three largest economies, Kenya, Uganda and Tanzania, with the phased introduction of common tariffs for goods entering the region.
In July, Rwanda and Burundi joined the customs union, which is due to take full effect in January 2010.
Trade among EAC member states has jumped 49 percent since the union started being implemented, the EAC Secretariat says.
The EAC was first set up in 1967, but it collapsed a decade later because of political and economic disagreements between its three original partners, Kenya, Uganda and Tanzania.
The new EAC came into effect in 2000 after a treaty was signed the previous year. Rwanda and Burundi became full members in 2007. The bloc aims to have a monetary union in 2012 and to eventually transform into a political federation.
Earlier in the year, the EAC heads of state agreed that Friday’s deal would not take precedence over any national laws.
Tanzania had objected to an earlier draft that included a provision on land ownership that it had said would conflict with its legal system.