II. Findings of CRM 648. The CRM confirmed Tanzania’s commitment to regional integration as demonstrated by its membership of two regional groupings and the continental body, the African Union. Participation in these regional groupings holds huge potential benefits for Tanzania, including economies of scale in the exploitation of development opportunities, access to larger markets, better management of shared resources, and enhanced economic growth due to the free movement of people, goods, services and capital. Within this framework, Tanzania implemented both external and domestic trade liberalisation programs for close to two decades, geared towards facilitating and increasing the volume of trade within the various economic groupings. Some of the measures taken under global trade liberalisation include lowering applied and bound tariff rates, simplifying trade procedures, and abolishing licensing as well as administrative controls. Liberalisation measures on the domestic front include the elimination of state controls and phasing-out monopoly commodity marketing boards and state companies. Additional measures in this regard include liberalisation of foreign exchange markets and attempts to open up rural areas to markets through infrastructure development. A national trade policy was also adopted in 2003, responding to and building upon the afore-mentioned reforms. 649. These efforts have yielded some results. Since 2006, Tanzania‘s exports of goods and services averaged 22 per cent of GDP while imports averaged 35 per cent. Exports increased from $1.9 billion in 2006 to $3 billion in 2009, while imports rose from $3.9 billion in 2006 to $5.9 billion over the same period104. 650. The CRM noted that Tanzania’s participation in regional trading arrangements is yielding benefits in terms of increased trade volumes. Evidence of this comes from intra-regional trade statistics showing that trade volumes more than doubled between 2005 and 2010 due, mainly, to the removal of tariffs among member states, application of a common external tariff, and steps towards the creation of an EAC Common Market. Statistics show that Tanzania recorded a trade surplus within EAC throughout the period 2007-2010, except in 2009 when a trade deficit of $49 million was recorded. Exports to other members of the bloc increased from $289.4 million in 2005 to $450 million in 2010, a clear demonstration of the increased scope for intra-EAC trade. 651. The CRM also noted that a number of challenges beset regional trade flows and investment opportunities. Key among these is protectionism, with countries securing market share and companies resisting market enlargement, stemming from the fear that bigger economies in the region, like Kenya, would gain competitive advantage. The CRM observed the generally negative perception of integration, based on fears that more competitive neighbours are better placed to benefit from integration arrangements. Active steps need to be taken to address these negative perceptions. 652. In 1996, SADC member states signed the Trade Protocol, which came into effect in 2000. The Protocol aims at removing intra-regional trade barriers, turning the Community into a free trade area for 85 per cent of goods by 2008, and for all goods by 2012. Tanzania is making commendable progress in implementing the SADC Trade Protocol. Barriers to intra-SADC trade are progressively being dismantled, particularly those related to the removal of tariff and non-tariff barriers and import duties. The liberalisation of Tanzania’s trade regime resulted in a more than 7 per centage point tariff reductions since the mid-1990s. While other countries in Eastern and Southern Africa have adopted liberalisation as well, Tanzania’s import duties have fallen below the regional average105. 653. However, despite the above developments, Tanzania’s trade balance within SADC, remains largely negative, raising legitimate concerns among ordinary Tanzanians about the benefits of integration. The CRM considers this a major concern that needs to be addressed. Adequate steps will need to be taken to reverse this trend. This will require identifying and tackling binding constraints. 654. The CRM noted the existence of several constraints, including production, policy and trade barriers adversely influencing Tanzania’s effective participation in regional trade. In particular, any substantive benefits for Tanzania from participation in regional trade was retarded by inadequate supply and delivery capacity, characterised by low levels of technology, inadequate physical and human capital, and under-developed infrastructure. United Republic of Tanzania Country Strategy Paper 2011-2015, African Development Bank, June 2011. Oswald Mashindano, Dennis Rweyemamu, and Daniel Ngowi, Deepening Integration in SADC vol.9 (Feb. 2007): Tanzania- Torn Between EAC and SADC, 104 105 135