In the theory of economic integration, a Customs Union is supposed to be the third stage of integration after a Preferential Trade Area and a Free Trade Area.
However, the Treaty for the Establishment of the East African Community provides that a Customs Union shall be the first stage in the process of economic integration. Therefore, real economic integration in the region commenced with the coming into being of the Customs Union.
The Protocol for the Establishment of the East African Community Customs Union was signed by the three East African Heads of State on 2 March 2004 in Arusha, Tanzania. The Republics of Rwanda and Burundi joined the Customs Union in 2008 and started applying its instruments in July 2009.
The Customs Union allows East Africa to operate as a free trade area where Partner States reduce or eliminate taxes on goods originating from within the community and have a common tariff on goods imported from other countries. It has resulted into the increase of volumes of intra EAC trade and the sustained GDP growth rate in all the partner states averaging 6% annually for the last 10 years.