Abstract:
Customs union is defined as the third stage of Economic integration after preferential trade
area and free trade area where Country members decide to remove import tariffs between them
and adopt common import tariffs of goods imported from third country. This study covers the
period of 1999 to 2017 with the explanatory variable (GDP, EACM, ENG and POP) for EAC
Countries. With the help of gravity model this study evaluate the effect of East Africa Customs
Union on the trade Balance of Rwanda. We found that the explanatory variables GDP, EACM
and ENG as common language has no significant impact which means they do not influence
the trade flow between Rwanda with EAC Countries and Population has a significant impact
which means the population growth explain the trade flow of Rwanda with EAC Countries.
We have also found that the net export of Rwanda has increased negatively particularly in
2015 but after it has started to decrease the negative values which is the results of increase in
exports values where the net export of Rwanda has increased in 2015 to 2017 from -1,995.83
to -1,326.92 respectively. We recommended that the Governments and policy makers should
set policies that help in reducing the deficit by encouraging people to produce for local supply
and reduce the level of imported goods and to help them to standardize their products at
international level so that they can be exported abroad especially in EAC Countries.
